4 Tips To Prevent Busted Software Implementations

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4 Tips To Prevent Busted Software Implementations

Gabriel Safar

CEO, Co-Founder | LeasePilot

Today CRE executives are navigating multiple tectonic changes in how we develop, use and monetize the built environment.  WFH, e-commerce, climate change and technological disruption are just a few of the challenges the industry is wrestling with, each of which, on its own, is really big and hard to process. The impact of all of these forces acting on the industry simultaneously, however, is more than any company can reasonably expect to figure out. In the face of so much uncertainty, the best strategy is to make your company as nimble as possible so you can adjust and stay relevant.

As the CEO and Co-Founder of LeasePilot, it should come as no surprise that I think the best way for CRE owners to become agile and resilient and to stay relevant is to convert manual processes into software driven systems.  That’s easier said than done!  Successful software implementations are hard and even the best software can wind-up a fantastic failure and huge waste of money if any one of a seemingly infinite number of things goes wrong.

Fortunately, there are a number of simple strategies that you can use to dramatically increase software implementation outcomes and ultimately ROIs. Here are the 4 that I think make the biggest difference.

1. Design Agile Procurement and Implementation Processes

Software solutions promise a lot. And with enterprise software, the ability to truly test out a solution before making an investment can be very hard. In these situations the best course of action is to think small. By thinking small I mean try to break the software purchase into units that have independent value and stand on their own and then implement each of those units piece-meal in small group settings. The benefits of doing include:

  • Reducing risk by focusing on those components of the ROI that are the most uncertain,
  • Simplifying feedback loops by working with fewer users,
  • Delivering units of value faster to key constituents to sustain user enthusiasm, and
  • Creating reportable wins early that executives can point to to justify the investment of individuals’ scarce time and energy.

When I suggest this approach to customers I often get a lot of push back. Some of that pushback is reflexive since thinking small when you are trying to achieve ambitious objectives seems counterintuitive.

There are potential drawbacks of taking such an incrementalist approach to software procurement.  For example, important benefits may be deferred until a later date, the total system implementation time-frames may be longer than they otherwise would be,  and you may need to go through multiple user training cycles. In my experience, however, the benefits of taking an incrementalist approach to buying enterprise software solutions are so profound that they easily outweigh any drawbacks.

 

2. Include Users in the Procurement Process

A successful software deployment starts with the sales process. I can’t tell you how many times I have met with user groups that resist adopting a solution that will clearly make their lives easier simply because they feel they didn’t have a voice in the decision (this is especially true with knowledge workers). Giving users a voice, however, doesn’t mean they should have a veto.

Change often requires executive leadership, and the most effective software procurement processes have strong sponsors that own a vision and genuinely seek input from users to understand their needs and pain points. I recommend having users give their input in a group setting such as a departmental meeting and subsequently documenting that input in a brief that accompanies any materials supporting the purchasing decision. That way the user group’s input is public and acknowledged which is generally sufficient to make critical stakeholders feel included.

 

3. Make sure any software rollout directly aligns with pre-existing objectives

One of the biggest reasons software projects fail is a lack of user adoption. There are lots of obvious reasons for poor user adoption, including a bad user interface, insufficient training, inadequate customer support and the like. But one of the most common reasons, which is less obvious, is users just don’t have a good reason to care. Too frequently software has some amazing enterprise benefit for executives or other constituents, but for the day-in and day-out users, the software is just a burden and the individual users chaff at what they see as an additional obligation. Framing a software investment as a tool to help achieve a pre-existing objective that users are already accountable for will create a powerful incentive for users to make a personal investment in learning a new system.

Imagine, for example, an office tower owner has set its sights on being recognized within the next 12 months as the best in the industry for tenant satisfaction, and the engineering team has a corresponding key result to cut the number of service requests in half. In this case, the engineering team will view implementing and using a tenant experience platform as directly helping them achieve their pre-existing target to cut service requests. Without the tangible connection between adopting a specific software solution and important initiatives users are personally accountable for, users often don’t have the incentive to work through the growing pains that inevitably come with adopting new ways of doing things. (For a separate discussion on using a goal setting methodology called Objectives and Key Results to help you CRE company change its business trajectory with astonishing speed see the blog post I wrote called OKRs for Commercial Real Estate.)

 

4. Agree on Success Metrics and Measurement Methodologies Before Going Live

Enterprise software systems generally have the potential to create value for multiple stakeholders in a company. But in many cases, those stakeholders have competing objectives which can result in uncoordinated and incompatible definitions of success. When this happens, it’s pretty clear, even if the rollout is perfect, someone will be unhappy and consider the initiative a failure. To prevent that from happening, make sure you work with your vendor to put a customer success plan in place before the software goes live.

At a minimum this success plan should:

  1. Define what the software is intended to do
  2. State the desired impact on the business
  3. Identify metrics to determine if that impact is achieved
  4. Lay out a measurement methodology

A representative of each constituency should contribute to the development of the plan and then get listed on the title page as a co-author. At the time the software goes live, the first success meeting should already be scheduled and a representative of each constituency should confirm they will attend the meeting to review progress against the plan.

CRE owners have to become agile and resilient to stay relevant in the current business environment. That means implementing software systems to replace manual processes.  Doing so isn’t easy. Fortunately, I can tell you from experience that adopting the 4 simple strategies described in this post will make implementing new software faster, less expensive and ultimately more effective.

OKRs for Commercial Real Estate

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OKRs for CRE

Historically, one of the chief characteristics that made commercial real estate (CRE) attractive to generations of investors was its relative stability and predictability. It should be no surprise then that the industry as a whole doesn’t move fast and break things.  

Today, however, real estate organizations need to be a lot more like tech companies if they are to successfully manage a whole host of challenges stemming from things like climate change, WFH, e-commerce and Covid.  How can an industry conditioned to value staying the same adapt to such a rapidly changing business climate?

As a proptech company, LeasePilot has a foot in both the CRE and the technology industries, which gives us a unique perspective on how real estate organizations can become more agile and resilient. In this blog post I want to share with you my take on a goal setting methodology called Objectives and Key Results (generally referred to as OKRs) that was developed by tech companies like Intel, Google and Microsoft. These companies have used OKRs to pivot their entire organizations with astonishing speed in the face of changing circumstances. I think there is a lot real estate companies can learn from their example.

What are OKRs?

The definitive work on OKRs is a book called Measure What Matters, by John Doerr, a Partner at the Silicon Valley venture capital firm Kleiner Perkins. Measure What Matters is an amazing read and I highly recommend checking it out.

In the book, John Doerr explains what OKRs are through case studies largely drawn from the tech industry. I thought that was a great approach, so here I’ll describe OKRs by sharing 2 hypothetical OKRs for a fictitious office tower owner I call OfficeCo. I’ll then zero in on a handful of characteristics of OKRs that make them useful and relevant for CRE owners.

OfficeCo Sample OKRs for 2021

Company Objective #1:

For OfficeCo to be recognized by our tenants and the CRE industry as top-of-class for customer service and satisfaction

As measured by:

KR1: Attaining a net promoter score of 68 or higher from tenants currently occupying space in our portfolio.

KR2: Achieving a tenant retention rate of 80% (including relocations within our portfolio).

KR3: OfficeCo being selected as a Finalist for the Excellence in Customer Service awards at National Association of Office and Industrial Properties’ (NAIOP’s) annual Gala.

Leasing Team Objective #1:

Materially increase customer responsiveness over the course of a lease negotiation

As measured by:

KR1: Reducing initial lease draft time-frames from 7 business days to no more than 1 business day after the LOI is finalized.

KR2: Reducing the overall LOI to signed lease cycle by 15 days.

KR3: Reducing average tenant legal spend by 15%.

OKRs are made up of Objectives which are aspirational and Key Results, which are measurable.

The first thing that is worth noting about OKRs is that they are made of two components: “objectives” and “key results”.  

Objectives are aspirational statements that represent the direction management wants to move in. For example, OfficeCo’s objective is “For OfficeCo to be recognized by our tenants and the CRE industry as top-of-class for customer service and satisfaction”. This is a great objective because it gives a team something to strive for that has meaning and purpose.  It is not, on its own, however, measurable.

The key results (or KRs), on the other hand, are entirely objective and are either achieved or not achieved.  For example, one of OfficeCo’s KRs is “achieving a tenant retention rate of 80% (including relocations within our portfolio)”. OfficeCo’s tenant retention rate at the end of 2021 either is or isn’t 80%. There is no gray area.

KRs release the creativity of an organization because they are framed as outcomes rather than activities.

Well crafted KRs express what needs to be accomplished (i.e., outcomes) without prescribing how that thing should be accomplished (i.e., activities). For example, “achieving a tenant retention rate of 80 % (including relocations within our portfolio),” is a good KR. What needs to happen is crystal clear, while the way to get there is left for the team to figure out.

Alternatively, “having a leasing representative reach out to each tenant 180 days before a lease expiration to understand their needs” may be a good activity within an overall tenant retention plan, but it is not a KR because it describes how to do something without specifying any desired impact on the business.

OKRs force teams out of their comfort zone because they are ambitious and time bound.

It’s easy for a team to think incrementally when it comes to change, and that is especially true for an inherently conservative industry like commercial real estate. To force people to think out-of-the-box goals need to be big and happen fast. OfficeCo, for example, has an objective to become the best in the industry for customer service and satisfaction by the end of 2021. If they are at the bottom of the pack today, cleaning the common areas more frequently won’t cut it. Instead, OfficeCo will have to do something big like roll out a tenant experience platform like HqO in the next 90 days that gives occupants a universal remote control for the building to gain access, make service requests, and provide feedback.

OKRs keep teams in sync because their objectives have to come from a company KR.

OKRs help each team within an organization stay in sync because that team’s objectives have to be derived from one of the company’s KRs. For example, one of OfficeCo’s company KRs is “attaining a net promoter score of 68 or higher from tenants currently occupying space in our portfolio.” In turn, OfficeCo’s leasing team set one of their objectives as, “to materially increase customer responsiveness over the course of a lease negotiation” with one of their KRs being to reduce “initial lease draft time-frames from 7 business days to no more than 1 business day after the LOI is finalized”.

OKRs can help CRE companies become agile and resilient

So, how can an industry conditioned to value staying the same adapt to such a rapidly changing business climate? As the technology industry has learned, the best way to manage change is to make your organization capable of changing faster than your competitors. That is the essence of building an agile and resilient organization. Developing these capabilities requires having management set the vision, direction and required outcomes, while giving individual contributors the freedom to figure out how to make it happen. That’s exactly what OKRs are designed to do and why I think they are a valuable tool for CRE organizations. 

If any one reading this post is already using OKRs in your CRE business, please reach out. We’d love to hear your stories and possibly include them in our upcoming eBook on digital transformation in the real estate industry!

“It’s all in my head!” – The risks to business continuity planning lurking in your manual processes

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“It’s all in my head!” – The risks to business continuity planning lurking in your manual processes

Business continuity is understandably a big topic today. Boards are talking about it, consultants are advising on it, and executives are implementing plans to promote it. There is, however, an enormous risk that isn’t getting the attention it deserves in the current discourse: many of our critical business processes are manually carried out and essential business knowledge is concentrated in a limited number of individuals’ heads.

The solution is to “institutionalize” these processes in software so that they are agile, scalable and redundant. This topic is often referred to as “Digital Transformation.” However, organizations tend to have a structural bias against addressing these risks, and consequently, business continuity plans are often left incomplete.

The structural bias against institutionalizing processes and knowledge in software

Staff that execute critical business functions often say they don’t need software solutions that streamline their workflow. These processes are in their head and they can do them as well and as fast as computers. Therefore, the thinking goes, the effort and expense of implementing a new software initiative is not necessary.

This thought process is completely understandable. After all, most of the staff that carry out these processes aren’t generally tasked with business continuity planning and systemic risk assessment. The metrics by which their performance is judged do not include things like process durability or the flexibility to adapt to rapidly changing conditions (the next article in this series on digital transformation will cover strategies leaders can use to better align all the members of a company to support these objectives).

This thought process is completely understandable… The metrics by which [staff] performance is judged do not include things like process durability or the flexibility to adapt to rapidly changing conditions

As the founder of a company that sells software to support drafting commercial real estate leases (which is both a highly manual and utterly existential activity), I do a lot of software demos for critical staff on in-house legal teams. So to make this point a bit more concrete, I’ll share a hypothetical drawn from personal experience. Here is an example of how a conversation could go after concluding the demo:

Me: Any questions or comments about how LeasePilot might fit into your team’s workflow?

Senior attorney: Software looks great! I can see how well it might work for other teams, but for us, we don’t really need it. Our team has worked together for years and we’ve become highly efficient.

Me: That’s fair. Can you tell me a little bit about the process? Is it documented anywhere?

Senior attorney: It’s all in our heads!

What’s the backup plan? When it comes to critical business processes, efficiency only matters when things are running smoothly. People and staff tend to move on for a whole host of reasons: promotions, transfers, retirements, parental leave, global pandemics, massive volcanic eruptions, asteroid impacts… you get the idea.

Business continuity during a global pandemic

COVID-19 offers a tremendous case study in how real estate companies with agile, scalable, and redundant processes in place are able to weather the storm with confidence. Whether it’s your sales team, finance team, or operations team, there are lots of fantastic software solutions out there that are purpose-built to help modernize the core processes of a given business unit. Dealpath, for example, is a software solution that allows investment teams to centralize their deal management and recently released a case study worth checking out on how Hutton developed processes for shifting to work from home. But for the purposes of this post, I’ll stick to what I know best: leasing.

Let’s run through a few different scenarios that illustrate how a landlord with a mixed portfolio of 50 assets across several states might use LeasePilot to build scalability, agility, and redundancy into the leasing team’s operations.

Scenario #1: Scalability

You’re facing a deluge of rent relief amendments.

Due to nationwide lockdowns, many of your tenants can’t pay rent. Hundreds are clamoring for a rent relief agreement

If your operation isn’t scalable:

You don’t have the capacity to churn out rent relief agreements, you’re left with three realistic options:

  1. Pay exorbitant fees to outside counsel in order to increase your drafting capacity
  2. Overwork your existing team and accept that you’re going to be unable to respond to tenant requests in a timely manner
  3. Quit. Build a cabin in the woods and figure out what it means to live deliberately.

If your operation is scalable:

After a few tweaks to your software automation, you’re able to draft and send rent relief amendments in under 30 minutes.

Scenario #2: Agility

You need to update all of your lease forms

In light of the chaos this pandemic has caused, your existing force majeure clause(s) will need revisions. Your janitorial specs could probably be updated to include more specificity, too. Is your operation agile enough to track all of them down and make sure that all of them are brought up to the latest standard? Can you guarantee that everybody on your leasing team knows where to find the latest version of the form? 

If your operation isn’t agile:

You’re lucky if you even know how many forms are kicking around on the hard drives of your leasing team. Or maybe you have a dedicated form for each of your 50+ assets. This is beginning to look like quite a headache…

If your operation is agile:

Push one update to the cloud-based master form that your whole team uses. Maybe add a few asset- or state-specific clauses as a checkbox. Go have a nice long lunch and treat yourself to an afternoon cocktail.

Scenario #3: Redundancy

A long-time regional general counsel submits notice of retirement.

S/he has seen enough of the chaos (and frankly, you’d probably consider retirement if you could, too). Now what? Do you have the operational redundancy to manage the transition of responsibilities?

If your operation isn’t redundant:

Whelp. Everything is now on pause until you can make sense of all the cryptic post-it notes. And hopefully it won’t take too long to compare the files scattered around their computer desktop. Is 19Commerce_Form_Final(2).docx the right form? or is it 19Commerce_Form_Final_V2.docx?

If your operation is redundant:

Your workflow and language library is already known to the whole team, so just focus on finding the right leader.

While the focus in all of these scenarios was specifically on leasing operations, the main takeaway applies to any core business team: the most effective solution is to institutionalize processes and knowledge in software. Note, this does not suggest or mean it’s efficient to displace people. Rather a flexible, agile and redundant system stitches together a thoughtful plan where people and software work together each doing what it is best equipped to handle.

The importance of digital transformation

As a real estate lawyer turned tech entrepreneur, digital transformation is a topic that I think about a lot. And if the current environment has shown us anything, it’s that digital transformation in commercial real estate is more important now than ever before. Over the next few weeks, I’ll be writing a few more posts on other areas where I think CRE companies could benefit from digital transformation. Next up: OKRs for Commercial Real Estate.

What We’re In it For

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Since so many of us are struggling right now to find direction given the epic uncertainty Covid-19 is creating, I thought it would be useful for me to share with our team, customers and the broader community what LeasePilot is working to build and why I believe it’s important.

What’s the Big Idea?

Our big idea at LeasePilot is to eliminate unstructured documents as the principal technology that underlies virtually all commercial transactions and replace it with a structured database. That may sound pretty dry, but the ultimate impact is huge: radically more efficient markets that will free up a massive amount of wasted human potential. Let me explain…

From Paper & Ink to Bits & Bytes

In an economic context, the term “technology” can be applied to any tool that converts inputs of labor, capital, and energy into something more valuable than they were previously. For commercial transactions, a document does just that: two parties write down their expectations and goals and trade that paper back and forth a few times until they come to an agreement. Once signed, both parties place the document in a file cabinet for future reference. When other people need to understand those expectations and goals, the document can be sent to them via courier.

Documents as a technology have served businesses of all kinds very well for centuries. In modern times, email may have largely replaced the need for a courier and documents may be stored electronically, but the underlying technology itself hasn’t changed. That’s a problem since documents are fundamentally an analog technology and today’s commercial world is digital.

The Problem with Language

Documents are written in natural language. When it comes to creative and intellectual pursuits, the malleability of natural language is a great strength: a single idea can be expressed in a near-infinite number of ways. But commercial transactions don’t have an infinite number of outcomes. Our markets rely on patterns. Sure, those patterns may be complex and varied, but the parts that matter are finite and can be cataloged and inventoried in a database. This means I can prepare a lease or a loan by pulling the appropriate information from a database, and then I can manipulate that information, reorganize it, and store it in that same database.

Computers aren’t very good at manipulating natural language (which is analog), but they are great at manipulating information in a database (which is digital).  So taking a data-first approach to constructing commercial agreements opens the door to hyper-efficient transactions facilitated by computers.

And that’s precisely what we’re doing at LeasePilot. In converting leases and other agreements into structured digital information, LeasePilot’s software can assemble, manipulate, store, share, and understand these commercial agreements in ways that were previously impossible.

Reconciling an Ideal with a Messy, Imperfect Reality

All of this sounds great in theory, but in our actually-existing reality things are not so simple. Most complex transactions contain elements that are unique and defy the kind of binary categorization that a database requires. We also have to be honest about the fact that computers aren’t enforcing these agreements. The courts are. And in courts, it’s the words that matter, not the data. Natural language serves us well here since it is both nuanced and flexible. Nuance allows parties to express intentions that courts can interpret, and flexibility offers those same parties the ability to customize their agreement to meet specific and unique requirements.

And now we’re back to square one…

Back to square one? Not so fast…

Even though lawyers need the nuance and flexibility that comes with manipulating specific combinations of words, that doesn’t change the basic truth that a lease, for example, has a logical structure and is made of interrelated business concepts. These concepts have consistent, universally-understood meanings throughout the real estate industry. To reconcile these competing realities, LeasePilot has created what we call an “illusion of a document” to act as a familiar user interface.

In this “illusion,” the end-user sees a document written in natural language on their screen. The user is able to edit the text of the lease in much the same way that they would in a traditional word processor. But behind the scenes, the lease is still a collection of database values which are updated to reflect the user’s interactions with that “illusion”. This gives users the freedom to change specific words while (1) retaining the ability to manipulate the lease using automation and (2) maintaining the underlying structure of the agreement.

Where the Roadmap Leads

If you think that sounds like a lot of work, it is. But it’s worth the effort.

Just imagine: Getting a deal done in 10 days that used to take 90. Printing automated abstracts rather than spending countless hours summarizing deal terms.  Never re-keying the same information into multiple systems.  Generating transactional reports for lenders, investors, and buyers rather than have lawyers read and re-read the underlying leases ad nauseum. 

Ultimately, the impact is radically more efficient markets that free up a massive amount of wasted human potential so it can be re-directed toward pursuing more meaningful objectives. 

This is what we are in it for.

What you need to know about leasing automation (and why it’s so hard to do)

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Document automation is nothing new. Microsoft Word has been helping us for decades with features like mail merge, but despite years of technological advancements, the commercial real estate industry has not been able to truly benefit.

Why is that, you ask? The simple answer is because the commercial leasing process is different. And much more complex to automate.

What follows will take take you through the leasing process and demonstrate where the breakdowns in automation often occur. More importantly, it will show you what you can do to combat these challenges and become more efficient.

A note: The next few sections probably won’t say anything that those in the CRE industry don’t already know. But they’re an important read as they lay the groundwork and set the context for the information that follows.

What is a lease?

A broad definition of a lease might be, “A legally-binding document that describes/defines the relationship between a landlord and a tenant.” While that’s true, it’s not very precise. Let’s dig a little deeper.

An executed lease contains various “hard terms” which have objective, often quantifiable meanings. Things like rent, commencement dates, CAM charges, etc. are examples of this. Although all leases will inevitably contain some subjective language, both the tenant and the landlord strive to eliminate these instances whenever possible. As a result, the overwhelming majority of the terms in a typical commercial lease are objective and straightforward.

A lease, then, can be thought of as a means to organize all these terms into a single, legally-binding document in a familiar format.

Negotiation

Once a tenant and leasing rep reach a tentative agreement, the terms are recorded in an LOI. It’s at this point in the process that leasing reps hand things off to the legal department and a first draft is generated.

First drafts are generally straightforward as they’re a re-statement of the LOI in a formal document. Because they’re so predictable, legal teams often use some level of automation to generate initial drafts. In a more traditional workflow, this is usually done by opening a base lease form in Word, referencing the LOI, and copying/pasting the necessary language from an existing library.

By building a platform that reinvents the leasing process, we’ve found that we also need to reinvent the language used to describe what it is we do.

In more modern workflows, document automation and/or contract management software is used to generate a first draft. Usually this means typing tenant and asset info into an MS Word plugin and then selecting relevant language from a searchable library (LeasePilot does this somewhat differently, but we’ll cover that shortly). Form inputs and selections are then automatically assembled and formatted in an MS Word document.

If traditional automation software could speak to the user, it’s at this point that it would say, “Ok, I’ve assembled the first draft. You’re on your own now.” If any custom language is needed, a lawyer will manually add or change the text right in MS Word.

As soon as the tenant’s lawyers get their hands on the first draft and the red pens (real or digital) come out, things start to get messy. With no further automation tools at their disposal, lawyers are left to process 2nd, 3rd, and nth drafts by hand in MS Word.

This brings us to an important question: Why aren’t standard document automation platforms equipped to handle a leasing process with multiple rounds of revision and negotiation? What’s so different about the nth draft that it can’t be automated?

Interconnected terms

A commercial lease is full of what software programmers and product managers would call ‘dependencies.’ As a simple example, consider the commencement date: if the commencement date changes, what other parts of the lease also need to change? In other words, how many other parts of a lease are dependent on the commencement date? Expiration, option notices, free rent schedules and letter of credit burn-downs to name a few.

Further, if landlord work is introduced during negotiation, a “hard” commencement date often becomes a “soft” one, and all the dates in the lease will need to be changed to reflect this (30 days after, 3 days before, etc.).

General-purpose document automation platforms just aren’t built to track the dependencies in a commercial lease. As a result, they aren’t particularly useful after the first draft is generated. Some contract management platforms do offer limited support for revisions by allowing the user to search an existing language library, place his/her cursor in the right place and insert text, but there’s still no underlying structure/logic in the software. It’s fundamentally an MS word document with no built-in logic.

It takes a seasoned lawyer who knows his/her leases inside and out to ensure that the different components of the lease still make sense and “agree” after each and every change. This is typically an incredibly tedious process and mistakes happen far more often than they should.

Simply put, the lease document itself—whether drafted entirely in Word or with the assistance of automation software that outputs a Word document—has no inherent, underlying logical structure. The logic is in the heads of the legal team.

Master of none

If traditional automation software could speak to the user, it’s at this point that it would say, “Ok, I’ve assembled the first draft. You’re on your own now.”

To this point, we’ve focused primarily on the status-quo in leasing workflows and why the complex dependencies in a lease limit the usefulness of general-purpose document automation software to first drafts. In order to overcome this limitation, a document automation platform would need to have a built-in logical framework that can monitor, track, and, most importantly, react appropriately and automatically to every change in a lease, no matter how large or small.

General-purpose document automation software simply isn’t built to handle the complexities of a commercial lease. Doing so would require specialized software built specifically for commercial lease-drafting and negotiation. 

A new standard: Context-aware automation

As anyone who has worked in business operations before can attest, “It’s all in my head!” is one of the most terrifying phrases that a COO can hear. Mission-critical knowledge should never be owned by an individual.

The needs of commercial landlords have become increasingly specialized and their tools must follow suit. They need to handle the inherent complexity of a commercial lease document in a way that was previously not possible.  Not only will this speed up the lease-drafting and revision process, it will also drastically reduce the risk of errors and create ‘quality control’ by standardizing language and processes across the portfolio.

By now you’ve seen the unique challenges of automating the commercial leasing process. LeasePilot was developed to provide the first truly context-aware automation platform and offer commercial real estate organizations a means to institutionalize and operationalize a process that was previously in the heads of a select few individuals.

The elephant in the room

At this point, the lawyers reading this might be getting a bit nervous, so let’s address the elephant in the room: No, this does not replace lawyers or make them expendable.

Rather, LeasePilot liberates lawyers from the tedium of drafting and revising a lease, allowing them to focus their attention on high-level strategic matters that require critical and creative thought well beyond what is possible in software. And isn’t that what the original promise of automation was supposed to be? To free us from banal, robotic, and uninspiring work?

Introducing Version Control |

The Lease Negotiation Process Just Got Easier

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Introducing Version Control

Lease Negotiation Just Got a Whole Lot Easier

While teamwork and collaboration are commonplace among most professional organizations, inevitably, projects that require input from multiple stakeholders can present a complicated situation. The arduous task of keeping track of changes and incorporating everyone’s feedback and ideas usually falls to one poor individual.

The commercial real estate leasing process is no different, with many stakeholders all working together on one document (the lease). After the legal team drafts the hundred-page long document, the marathon process of negotiation begins. In most cases, the attorneys are the ones responsible for juggling and incorporating all of the feedback, negotiations, and change requests through a complicated and convoluted process consisting of countless rounds of back-and-forth redline edits and hard-to-follow track changes. Careful review is necessary to ensure all of the details are accurate, slowing down the time between LOI and final lease execution.

True to our mission to transform the antiquated commercial real estate leasing process and ensure easier collaboration, greater transparency and increased efficiency, we put our best and brightest on the case to fix the broken commercial real estate lease negotiation process.  Starting in November, our existing clients will be able to integrate our newest solution — Version Control, a better way for property owners and tenants to work together on leases.

What is Version Control, you ask? Simply put, it’s a set of features that brings property owners and tenants together on the same cloud-based lease-drafting platform to streamline edits, eliminate the confusing redline process, and take conversations out of email and into an environment that makes collaboration easy. Ultimately, this all boils down to getting leases closed faster.

What’s wrong with the leasing process? How does Version Control fix it?

The current lease-negotiation process involves seemingly endless email chains, long conference calls, word-of-mouth suggestions, memos, and multiple versions of the document with redline changes. Legal teams must tediously and manually incorporate this feedback. Edits are often inadvertently accepted or rejected, slowing down deals and forcing additional rounds of legal review to negate human error and ensure accuracy.

Version Control is here to help. The new LeasePilot product cuts down the number of channels in which edits are communicated. Proposed changes are clearly outlined in the sidebar of the LeasePilot platform, making before-and-after comparisons easy. The legal team can rest assured that agreed-upon edits are clearly outlined and can be easily imported or sent back for additional counsel review. LeasePilot’s context-aware automation ensures that when a change is made in one part of the document, it is accurately reflected throughout the entire lease, saving commercial real estate attorneys even more time.

The slow-down in the leasing process due to outdated tools often causes tension between property owners and their soon-to-be tenants. Version Control alleviates lease negotiation pain points by providing a simple and collaborative cloud-based platform accessible to both owners and tenants. Unlike traditional word processing software that isn’t interactive, Version Control invites all parties to participate seamlessly in the editing process, providing a central location for negotiations to take place.

At LeasePilot, our vision is to eliminate the need for antiquated paper documents in commercial real estate and we are always thinking about the next way that we can save real estate companies time, money and headaches. Version Control is the latest solution that will help cut down the time between signed letter of intent and executed lease and get tenants into vacant space sooner.

If you’re an existing LeasePilot customer who would like to learn more about how Version Control can help your organization, let’s chat. And if you aren’t a LeasePilot customer yet, what are you waiting for?

Expectations Versus Reality |

A Constant Struggle for Attorneys Client Review

By Gabriel Safar

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Expectations Versus Reality

A Constant Struggle for Attorneys Client Review

By Gabriel Safar

We’ve all been there, setting what are seemingly realistic expectations for an event — like a fun family beach vacation. But then, the reality is that it rains the whole trip and the kids constantly fight. Forces outside of your personal control get in the way and lead to disappointment. This gap between expectations and reality is a major issue in the professional world too, and no one is more negatively affected than commercial real estate attorneys.

In the commercial leasing process, lawyers are often viewed by their peers as “deal killers.” The leasing team locks in a tenant and executes a letter of intent. Life is good. But then, they’re forced to wait while the lawyers hash out the details of the lease, in a process that often takes up to three months. Business leaders grow frustrated because that’s 90 days they’re not collecting rent. A deal that seems to be moving so quickly reaches a bottleneck once it’s in the lawyer’s hands. And that drives the rest of the team crazy.

Why is it that lawyers, these successful, Type A professionals, are unable to meet the seemingly reasonable expectations of their colleagues and customers? In the commercial real estate leasing process, lawyers are essentially set up to fail due to the tools — or lack thereof — they have at their disposal.

This phenomenon — what we call the expectations gap — is a huge problem in the commercial real estate industry. Despite all parties working toward the same business goals, an adversarial relationship emerges, creating internal tensions that benefit no one. While CRM software like Salesforce has helped salespeople become more efficient, commercial real estate lawyers are stuck using good-old-fashioned email and Microsoft Word, which are not tailored to their needs or workflow. Ask a salesperson to conduct business on a cell phone from 1993 and watch their efficiency crawl to a halt.

These inefficiencies slow down the deal-making process and create unnecessary animosity across departments. Acknowledging and understanding the expectations gap is the first step in finding a way to solve it.

How has the legal industry fallen so far behind?

To explore this issue, we have to understand who becomes a lawyer and why. Typically, successful lawyers are hardworking, intelligent, analytical, effective communicators. After toiling away in law school, these individuals come into the working world with an abundance of newfound knowledge, ready to add value and drive results.

Upon entering the industry, commercial real estate lawyers quickly uncover a problem. Leases, one of their key deliverables, must be completed quickly and accurately. Throughout the process, the lawyer is faced with the time-consuming task of tracking and compiling multiple rounds of edits, which come in the form of conference call discussions, tracked red lines and in-line email feedback from multiple stakeholders. For each change, there are likely dozens of other places within the hundred-page lease document that also must be changed. And as everyone with a law degree knows, even one seemingly small mistake can lead to drastic legal and financial consequences for any organization. Under the enormous weight of that pressure, lawyers spend hours with painstaking attention to detail to get it all right.

The thanks lawyers get for their hard work? Broker colleagues are upset that the deal takes too long to close. In their mind, the deal is done the minute a letter of intent is signed. Because their commissions are tied to the deal, brokers want it closed as soon as possible. However, it’s unfair to place blame solely on brokers for creating the expectations gap. After all, the tools at the brokers’ disposal enable them to do their job efficiently, so it’s only reasonable to assume lawyers, peers within the same organization, are afforded that same luxury. But because brokers aren’t privy to the inner-workings of their legal team’s processes, and lawyers don’t effectively communicate the complexities of their jobs, brokers simply can’t understand why something that seems so simple can take so long.

Imagine that two people are tasked with painting a rainbow. One is given red, orange, yellow, green, blue and purple paint, while the other only has red, yellow and blue. While the second person can certainly accomplish a rainbow painting, it will take more time because the tools they are given are less efficient. Without knowing the second person wasn’t given the same paint, the first person might assume the second should be able to complete the picture just as quickly as they did.

The asymmetry of expectations causes lawyers to be viewed in the minds of brokers as intentionally slow-paced deal killers. But the reality is that lawyers are not, nor do they want to be, deal killers. They know they’re smart, capable and successful, and would much prefer to be dealmakers. Outdated tools, busy schedules and lawyers’ perfectionist mindsets create the perfect storm, resulting in the grueling 90-day lease cycle.

In commercial real estate organizations, it’s important that all of the players within a deal understand the roles, responsibilities and most importantly, limitations of the others on their team. This is a two-way street, where brokers and lawyers need to communicate with each other about their expectations and feasibility based on the tools available to each of them. Fostering a sense of understanding bridges the divide between departments, improving the well-being and functioning of the organization.

While this touchy-feely idea can certainly help combat the expectations gap phenomenon, you might also think: but isn’t there a way to set lawyers up to succeed in the first place? Investing in the right set of tools is a good start. Although there are a number of software solutions on the market that automate the first draft of a lease, the majority are not capable of handling subsequent drafts, nor do they integrate the tenant into the process. While that type of automation does save some time, once the edits start rolling in, it’s back to the old-fashioned, inefficient word processors that haven’t changed in three decades.

Lawyers need to be given comparable tools to what other departments have that can handle each phase of the lease, not only the first draft. With the right technological help, the expectations gap can be closed and these Type A professionals can become the dealmakers they know they can be.

As a practicing commercial real estate attorney, I quickly experienced firsthand the expectations gap that plagues our industry. Frustrated by this, I made the decision to stop practicing and start LeasePilot to help commercial real estate organizations bridge the divide.

A Lesson in Entropy | How a Clean Lease Form Becomes a Mess (And What to do About It)

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If you’ve ever spilled a glass of milk, congratulations! You’re familiar with what physicists call entropy. And if you’re not a barbarian who leaves spilled milk on the floor, you’re also familiar with the fact that cleaning up the milk is going to take some energy/work. Entropy describes what is essentially a natural tendency for systems to move toward a state of disorder. Re-organizing or maintaining order in a system requires additional energy inputs.

Astute readers who have spent time on the legal side of commercial leasing probably see where we’re going with this entropy introduction: as time goes by, a once-organized library of lease forms and boilerplate language will turn into a mess. Keeping things tidy requires a sustained investment in time and energy.

An all-too-familiar story

Once upon a time at a CRE company far, far away in Cleveland, there was an exceptionally talented general counsel called Nadine (this is totally hypothetical). When she started her GC role, she took the time to draft a fantastic—nay, flawless—lease template that took into consideration the company’s current assets, business goals, etc.

I had neither the time nor the spare budget to get things cleaned up. For most [GC’s], this state of affairs is just the (un)natural order of things. It took me stepping out of my GC bubble to see otherwise.

But it wasn’t just the lease form that was beautiful. Our heroine even took the time to draft and organize a comprehensive library of fall-back language that covered every imaginable contingency that one might encounter during a lease negotiation.

As the years passed, the company grew. New assets were bought, some were sold, some expanded, and some reduced. Tenants came and went, and when disputes arose from time to time, modifications were made to the lease language. Due to the “get it done yesterday” pace of things in Nadine’s company, it wasn’t uncommon for the legal team to take the I’ll-clean-it-up-later-I-swear approach to re-incorporating these modifications back into the base form. But to the surprise of nobody, 95% of the time these modifications weren’t reincorporated back into the base form, leaving them confined to the specific assets for which the changes were made.

What started as a single clean, concise document turned into dozens of disparate, unorganized documents spread across the company’s servers and on various personal computers.

This lack of organization wasn’t necessarily an impediment for the in-house team’s day-to-day operations. After all, Nadine and her team spent most of their days staring at these documents and knew them by heart.

To many, this might not seem like a major problem. If a lack of organization isn’t slowing things down significantly, why bother trying to clean things up? But where some didn’t see an issue, Nadine saw a major risk: her team held the keys to the kingdom. If she left, leasing velocity would slow considerably. The next GC would have to face questions that even Nadine can’t answer:

“Why does the lease for Omni Plaza use ’Lease Premises’ while the form for Corporate Park just uses ‘Premises’?” Nadine wondered. “That happened so long ago I have no idea. And CAM… Why are we charging it back for Omni Plaza but not for Corporate Park? Another excellent question…I really need to spend some time reviewing our base forms, updating them, adding that early termination clause we keep talking about…”

“But first I need to get these three leases out the door, review that financing agreement, draft that purchase and sale agreement, and review those bloody redlines our tenant just sent us. But I swear I’ll have time to get organized after I’m done with all of that…” She was lying to herself and she knew it. But what other options were there?

An ounce of prevention

In theory, every GC knows s/he should take to heart the old adage that says an ounce of prevention is worth a pound of cure. Yet, for most GCs in the industry, my (mostly true) story above is par for the course. Things move so fast that there’s rarely any time or energy left to keep things tidy. A more realistic idiom to describe our approach to document organization might be, “We’ll cross that bridge when we come to it.” In fact, I think that’s what I’ll title my memoir (coming to a bookstore near you in 20never).

While it’s not uncommon for an in-house team to have outside counsel review their base forms and language, it’s an expensive proposition and as we all know, expensive proposition means most likely not going to happen. Unless there’s a clear and emergent need for that kind of service, it’s not likely to make it into the budget (assuming I had a budget). In my case, I had neither the time nor the spare budget to get things cleaned up. I suspect other GCs would feel similarly. For most of us, this state of affairs is just the (un)natural order of things.

It took me stepping out of my GC bubble to see otherwise.

Hidden benefits

When I joined LeasePilot, most of the benefits that the software would provide to legal teams were obvious: it saves drafting time and makes revisions a breeze, and ultimately gets leases out the door faster, thus enabling the business to begin collecting rent sooner.

It took a few weeks before I saw a hidden but hugely significant benefit: the implementation process naturally solves the problem I just spent the last 750-ish words describing: not only does it transform the lease into a living, breathing document, it takes a disorganized mess of forms and language and turns it into an efficient, organized library. In this sense, the value of LeasePilot to the user doesn’t begin when the first lease is drafted in LeasePilot, it starts the minute we get a new customer’s forms.

LeasePilot’s Customer Success team has two primary responsibilities: (1) managing the implementation process for every new customer, and (2) providing the necessary training and ongoing support to ensure that every user is utilizing the platform to its fullest. In my view, our ability to provide the ongoing training and support is highly dependent on how successful we are during implementation. That’s why we take the onboarding process so seriously.

Building Customer Success

It’s highly important that the language in an institutional landlord’s leases is their own. A one-size-fits-all lease agreement won’t cut it. That’s a major reason why, prior to LeasePilot, purpose-built automation for lease drafting and revisions didn’t exist. Automating a commercial lease is really, really difficult, and it’s not just a software challenge. Commercial leases are full of complexities, and understanding the ins and outs requires considerable expertise and years of industry experience. That’s where our Customer Success team really shines.

Between my experience as a former real estate GC and the lawyers and senior leasing paralegals who round out the rest of the crew, we’re doing a lot more than copying and pasting during the onboarding process. We’re thoroughly reviewing a landlord’s documents, running redlines, identifying inconsistencies between forms, and a whole lot more. When we find issues or inconsistencies, we’re flagging them and drawing on past experience to offer advice about best practices. We’re asking the customer how they’d prefer to resolve the issues and giving them the opportunity to strengthen/improve their lease form.

The result is a comprehensive document that embodies predictable changes/language/clauses, is up-to-date, free of inconsistencies, and better than when the process started. Every LeasePilot customer that has been through Implementation reports that they saw significant improvements to their lease and amendment language as a result of the process.

Remember my earlier lament about wanting to clean up a language library but not having the time? Turns out, a LeasePilot implementation would have solved that problem for me.

Why is it so Hard to Automate a Commercial Lease?

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“How does LeasePilot actually work?”

 

“What’s the difference between LeasePilot and other document automation tools like A, B, and C?”

These are questions we get all the time, and answering them in a way that is clear, concise, and not overly-technical is a challenge. LeasePilot doesn’t quite fit into an existing product category, so descriptors like “document automation” don’t accurately convey what we do or differentiate us from what’s out there already. By building a platform that reinvents the leasing process, we’ve found that we also need to reinvent the language used to describe what it is we do.

A note: The next few sections probably won’t say anything that those in the CRE industry don’t already know. But they’re an important read as they lay the groundwork and set the context for the information that follows.

What is a lease?

A broad definition of a lease might be, “A legally-binding document that describes/defines the relationship between a landlord and a tenant.” While that’s true, it’s not very precise. Let’s dig a little deeper.

An executed lease contains various “hard terms” which have objective, often quantifiable meanings. Things like rent, commencement dates, CAM charges, etc. are examples of this. Although all leases will inevitably contain some subjective language, both the tenant and the landlord strive to eliminate these instances whenever possible. As a result, the overwhelming majority of the terms in a typical commercial lease are objective and straightforward.

A lease, then, can be thought of as a means to organize all these terms into a single, legally-binding document in a familiar format.

Negotiation

Once a tenant and leasing rep reach a tentative agreement, the terms are recorded in an LOI. It’s at this point in the process that leasing reps hand things off to the legal department and a first draft is generated.

First drafts are generally straightforward as they’re a re-statement of the LOI in a formal document. Because they’re so predictable, legal teams often use some level of automation to generate initial drafts. In a more traditional workflow, this is usually done by opening a base lease form in Word, referencing the LOI, and copying/pasting the necessary language from an existing library.

By building a platform that reinvents the leasing process, we’ve found that we also need to reinvent the language used to describe what it is we do.

In more modern workflows, document automation and/or contract management software is used to generate a first draft. Usually this means typing tenant and asset info into an MS Word plugin and then selecting relevant language from a searchable library (LeasePilot does this somewhat differently, but we’ll cover that shortly). Form inputs and selections are then automatically assembled and formatted in an MS Word document.

If traditional automation software could speak to the user, it’s at this point that it would say, “Ok, I’ve assembled the first draft. You’re on your own now.” If any custom language is needed, a lawyer will manually add or change the text right in MS Word.

As soon as the tenant’s lawyers get their hands on the first draft and the red pens (real or digital) come out, things start to get messy. With no further automation tools at their disposal, lawyers are left to process 2nd, 3rd, and nth drafts by hand in MS Word.

This brings us to an important question: Why aren’t standard document automation platforms equipped to handle a leasing process with multiple rounds of revision and negotiation? What’s so different about the nth draft that it can’t be automated?

Interconnected terms

A commercial lease is full of what software programmers and product managers would call ‘dependencies.’ As a simple example, consider the commencement date: if the commencement date changes, what other parts of the lease also need to change? In other words, how many other parts of a lease are dependent on the commencement date? Expiration, option notices, free rent schedules and letter of credit burn-downs to name a few.

Further, if landlord work is introduced during negotiation, a “hard” commencement date often becomes a “soft” one, and all the dates in the lease will need to be changed to reflect this (30 days after, 3 days before, etc.).

General-purpose document automation platforms just aren’t built to track the dependencies in a commercial lease. As a result, they aren’t particularly useful after the first draft is generated. Some contract management platforms do offer limited support for revisions by allowing the user to search an existing language library, place his/her cursor in the right place and insert text, but there’s still no underlying structure/logic in the software. It’s fundamentally an MS word document with no built-in logic.

It takes a seasoned lawyer who knows his/her leases inside and out to ensure that the different components of the lease still make sense and “agree” after each and every change. This is typically an incredibly tedious process and mistakes happen far more often than they should.

Simply put, the lease document itself—whether drafted entirely in Word or with the assistance of automation software that outputs a Word document—has no inherent, underlying logical structure. The logic is in the heads of the legal team.

Master of none

If traditional automation software could speak to the user, it’s at this point that it would say, “Ok, I’ve assembled the first draft. You’re on your own now.”

To this point, we’ve focused primarily on the status-quo in leasing workflows and why the complex dependencies in a lease limit the usefulness of general-purpose document automation software to first drafts. In order to overcome this limitation, a document automation platform would need to have a built-in logical framework that can monitor, track, and, most importantly, react appropriately and automatically to every change in a lease, no matter how large or small.

General-purpose document automation software simply isn’t built to handle the complexities of a commercial lease. Doing so would require specialized software built specifically for commercial lease-drafting and negotiation. As you’ve no doubt already guessed, this is exactly what LeasePilot is built to do.

A new standard: Context-aware automation

As the needs of commercial landlords become increasingly specialized, the tools they use must follow suit. LeasePilot is the first and only software platform built specifically for commercial lease drafting and negotiation, and as such is able to handle the inherent complexity of a commercial lease document in a way that was previously not possible.

Not only does this speed up the lease-drafting and revision process, it also drastically reduces the risk of errors and creates ‘quality control’ by standardizing language and processes across the portfolio.

It’s for all these reasons that we’re not quite happy with the “document automation” moniker. It’s not a classification that accurately describes what we do. Instead, Context-aware Automation more accurately describes and differentiates what LeasePilot was built for.

A familiar feel

 

Incorporating new software into a business workflow isn’t a decision to make lightly. While there are licensing and setup costs to consider, those are predictable and relatively easy to plan for. What can’t always be predicted is what happens on the user side: Is the software easy to learn? How long will it take to train new users? Will productivity slow while the team acclimates to the new process?

While there will always be a learning curve as users learn the ins and outs of a new software platform, we’ve taken a lot of care to ensure that text-editing, navigation, and overall feel of LeasePilot is immediately familiar to any MS Word user.

Greater than the sum of its parts

Individually, the aforementioned benefits bring substantial efficiencies to what is currently an antiquated process. But combined, these efficiencies do something far more important for a profit-driven enterprise: they institutionalize and operationalize a process that was previously in the heads of a select few individuals. And as anyone who has worked in business operations before can attest, “It’s all in my head!” is one of the most terrifying phrases that a COO can hear. Mission-critical knowledge should never be owned by an individual.

At this point, the lawyers reading this might be getting a bit nervous, so let’s address the elephant in the room: No, this does not replace lawyers or make them expendable.

Rather, LeasePilot liberates lawyers from the tedium of drafting and revising a lease, allowing them to focus their attention on high-level strategic matters that require critical and creative thought well beyond what is possible in software. And isn’t that what the original promise of automation was supposed to be? To free us from banal, robotic, and uninspiring work?

[Webinar] The Cost of Time

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The commercial lease drafting and revision process is a waiting game: The tenant waits for the first draft. Then you wait for the tenant’s lawyers to review. Then you wait for everybody on both sides to find time get on a conference call to negotiate changes. Rinse and repeat for every round of negotiation.

Ask yourself: How much time do you spend waiting compared to actively working on the lease? How much is this wasted time costing you? Most importantly, what can you do about it?

On Friday, October 12th from 12:30pm – 1:30pm (EDT) join LeasePilot co-founder and CEO Gabriel Safar for a webinar to answer these questions and more. Register by filling out the form below and we’ll send you a link to join. Looking forward to seeing you on the call!