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  • Writer's pictureAnna Clare Harper

Getting deals done


Anna Clare Harper and Deepa Deb

Deepa Deb is Head of International Real Estate Investment at law firm Watson Farley & Williams, with accolades including regularly being ranked in Chambers & Partners as a leading lawyer in real estate and being rated as one of the Hot 100 most influential lawyers (The Lawyer).


Anna and Deepa chatted on the podcast about:

  • What innovations (in particular the use of AI) can improve efficiency and reliability of legal work in transactions

  • What UK residential can learn from other parts of real estate and from other countries about transactions

  • Career advice for aspiring lawyers


Listen in here: bit.ly/returnpodcast


This transcript is AI generated. Please excuse any typos. If you’d like to see a human-edited version, please reach out to Katy@GreenResi.com


[Anna Clare Harper]

Hi and welcome to The Return Property and Investment Podcast. I'm Anna and I'm delighted to be joined by Deepa Deb who is Head of International Real Estate Investment at the law firm Watson, Farley & Williams with accolades including regularly being ranked in chambers and partners as a leading lawyer in real estate and being rated as one of the hot 100 most influential lawyers by The Lawyer. So welcome to the podcast Deepa and thank you so much for joining me.

  [Deepa Deb]

Thank you so much Anna, delighted to be here.

[Anna Clare Harper]

So today we are going to talk about what UK residential can learn from other parts of real estate and from other countries about transactions as well as discussing career advice for aspiring lawyers. Firstly, as an expert in transactional real estate, what valuable lessons can the residential real estate sector glean from other segments of the real estate industry?

 

[Deepa Deb]

Well, very interesting question. Implicit in the question is an assumption that other segments of the real estate industry are necessarily ahead of the residential real estate sector, which I'm not entirely sure is accurate. And also, Anna, I can't resist the lawyer-like tendency to dive into what do you mean by residential?

 

Because of course we've become so adept, haven't we, at labelling our asset classes these days and residential covers a whole wide number of asset classes ranging from student down to senior. But to answer your question and in terms of what we see at Watson Valley, the difference between successfully executed deals and those that fail is preparation. And what I mean by that is a lot of our clients seem to dive head first into getting a deal done on the back of sort of heads of terms that have been written on a fat packet basically.

 

And it's of course challenging in a market where demand outstrips supply, so there's real pressure to transact quickly. But actually, those of our clients who take the time to map out their business plans and share that with us are the ones that we've seen achieving their returns. So to give you concrete examples, do you know who your counterparty is?

 

What is their track record in successfully transacting? That doesn't mean they have to be transacting in the UK. Wherever it is that they are based in, have they got a track record in transacting successfully?

 

If not, you can be sure that your transaction will not run smoothly. And actually, there's probably a 50% chance that you won't transact. Equally, the other element that we've seen our clients fall down on quite a lot is, have you got your financing stack in hand?

 

That's both debt and equity. Do you have clarity on the funders' requirements? Because trying to work funders' requirements into a deal halfway through or towards the end is pretty tough.

 

And actually, in the market that we're in now, where funders are taking a zero intolerance approach, it becomes impossible. So actually, being able to be prepared with what your funders' requirements are day one and working that into the parameters of your deal really helps you get there quicker and more efficiently. Similarly, is your supply chain solid?

 

Do you have the right value as surveyors, contractors? Do you know what they need? Have you worked that into the parameters?

 

And the other element we've seen is that in our industry, it seems that a lot of businesses are very siloed. And so, it's not at all clear who has what role and responsibility, who's doing what client side. And the problem with those silos is that inevitably, during those deals, you're going to have gaps.

 

So it's really important client side to be clear who's doing what. And my rule of thumb in the sort of 25 plus years that I've been doing this is that if something feels and looks like it's too good to be true, it most likely is. Exactly.

 

And by the time you've uncovered what the water is, you've probably already spent a ton of cash.

 

[Anna Clare Harper]

Yeah. Super interesting. And it's also interesting to me that everything you reflected on there, everything that you described is kind of very, there's a really strong parallel between running a solid business versus running a solid transaction.

 

It's about the people, it's about the financing and so on.

 

[Deepa Deb]

Absolutely.

 

[Anna Clare Harper]

And I guess just reflecting on international practices, are there any insights or approaches that the UK real estate market could adopt or learn from from other countries to enhance how real estate transactions are done here?

 

[Deepa Deb]

Yes, absolutely. I'm very fortunate to work closely with the Watson Farley Global Real Estate team. And whilst it is the case that English law can often prevail on multi-jurisdictional transactions simply because English law is common law and England colonized most of the globe for a long time, it is true that we recognize we do need to reform a lot of our practices.

 

A lot of what we do is still grounded in historical land laws that were enacted in the 1800s and 1900s. Some of the key observations I suppose I would make that I've particularly observed in the last year is I think it'd be a good start for us to either dispense with heads up terms or start being honest in them, particularly as to timelines. It's a unique feature in the UK that we bother with heads up terms where both parties know at the outset that nobody has any intention of adhering to them.

 

And you just don't get that in other countries. You certainly don't get that in the US, in the Far East. Similarly, we have a system that allows for gazumping and we also have a system that allows for contract tracers, which is when a vendor can issue a multitude of contracts to a multitude of people as long as they're all informed and it's first past the post who gets the deal.

 

We haven't seen contract tracers in recent years, but I have to say since January this year at Watson Farley, we're currently involved in three transactions which are contract tracers. And that does threaten the stability of deals done in the UK because you just don't have any certainty of deal execution. Similarly, we've got concepts such as long leasehold ownership.

 

And if you look at residential alone, as you know, we've got all these various tenures. Try describing what affordable housing means to an overseas investor. They just don't have a clue.

 

We've got a unique set of taxes that apply on our transactions, none of which are that transparent. And we've got vagaries like, for example, our rights of light systems and procedures in places like the US and other parts of Europe. Rights of light are dealt with in the planning process.

 

So once you've got your planning permission, you can just go ahead and build, obviously not so in the UK. So I guess, look, no system is seamless or free from complexity. And there are, of course, many aspects of UK law that recommend it.

 

But we know from our involvement on global transactions that there is a lot to learn from jurisdictions with more streamlined and clear processes.

 

[Anna Clare Harper]

Yeah, super interesting. Okay. And looking ahead, what trends or innovations do you anticipate shaping the future of real estate transactions?

 

And how can professionals prepare for these changes?

 

[Deepa Deb]

Again, great question. Change is, of course, not something that the real estate sector does well. But like all other industries, technology and AI are already disrupting the real estate industry.

 

Modern methods of construction are now very much part and parcel of what we do, data collection, analytics. And certainly in the legal sector, we are now regularly using technology tools such as Avail or with Witness Contract Express to automate legal processes. These are basically tools that allow you to reduce the amount of human work that goes into due diligence.

 

And I see this trend set to continue. I think we're going to see changes, for example, in the valuation process. I think we're going to develop AI algorithms that will be able to take account of, for example, physical dimensions of a property, analyze location-based data, proximity to amenities, other factors, and leverage recent comparable sales data to draw parallels so that they can work out price per square foot.

 

We already have automated customer service processes, you know, chatbots, FAQs, and I think that'll impact asset management. We already have virtual tours and augmented reality. I was really fascinated to see a presentation by a very well-known team of architects on some of the work they're doing in Saudi Arabia with some of the new developments there.

 

And they had these presentations, just these AI augmented reality presentations to show these smart cities built and working. So, you know, undoubtedly, in my view, there will be a layer of tasks that are currently carried out by people that will be taken over by AI. But that's going to free people up to work smarter and to upskill, or they're going to get left behind.

 

[Anna Clare Harper]

Yeah, yeah. And it's really interesting some of the changes or the innovations, I suppose, that you mentioned in there. It really rings true for me, because a big part of what we do is around making acquisitions more efficient.

 

And a huge part of that is de-skilling those processes so that the things that would cost a lot of money for an expensive employee to do can actually be done by a machine or by, like, it just simplifies the process, right, without error.

 

[Deepa Deb]

Absolutely. And that's the key thing. A, it simplifies the process, it makes it quicker, but the without error is quite key.

 

Back in the day, you know, a typical trainee lawyer task was to produce a spreadsheet summarising, for example, all the break rights in a lease. Well, you can now get that done within half an hour for a portfolio of 300 leases by an AI programme. And by the way, and that will be 100% accurate.

 

[Anna Clare Harper]

Yeah, to me, that's a really exciting bit, because we've all been there late at night when we're trying to finish some piece of work that we're doing manually. You know, like you lose your focus after a bit and you forget things and humans make errors. But actually, humans are really good at some things that machines are not.

 

So it's about using, again, it comes down to, like, smart business, right? It's like using the best people or the best machines for the job. Absolutely, absolutely.

 

[Deepa Deb]

And I don't think it's anything to be scared of. And you know, to answer your question as to, you know, how do we professionals prepare for it? In my view, you've got to A, accept it, embrace it and try to keep up.

 

In the ideal world, you'd want to stay ahead, but to deny that it's there, and that it's happening, it's counterintuitive.

 

[Anna Clare Harper]

Oh my goodness, I can think of so many examples of recent experiences speaking to people in this industry. For example, recently, someone was telling me about how they had to do bank reconciliation that took two days every month. And you know, when you're like, you know, there's a software that can do that automatically.

 

I don't know if I want to tell you that, but unfortunately, but I think, yeah, it's just being open to change. And it's hard. It's hard for everyone, I think.

 

One source of frustration that I know we share is the difference in how people think, or at least say what they think that, I guess, on a very different topic, diversity and inclusion, people say that it's working in real estate. And that is not, I don't think, the reality. In your view, how has progress in diversity and inclusion unfolded within the legal and the real estate industries?

 

And I wondered if you could also, as part of that, just explain the concept of benevolent prejudice and its impact on our collective progress?

 

[Deepa Deb]

Well, I think, what a big question. And you know, this is a subject very close to my heart for very obvious reasons. I started my career in the city in 1999, there I go, giving away my age.

 

And you know, I was the only Indian girl, daughter of first generation immigrants, state school educator than my then firm. And I remember feeling both privileged and terrified. No one looked or felt like me.

 

And when I fell pregnant with my eldest daughter in 2005, I didn't tell my line manager partner until I was more than seven months pregnant for fear of being removed from partner travel. Now in 2024, as my eldest daughter turns 18 and ventures into the world, I've been asking myself, have things indeed changed? And on the face of it, you could say, yes, there has been progress.

 

There is much better equity, diversity and inclusivity across our industry. And look, I can proudly confirm that our managing partner, Watson Farley, Lindsay Keeble, is female and a mother. And she is girl and woman, Watson Farley, having started her career at the firm as a trainee.

 

But Lindsay is one of the few exceptions when it comes to law firm senior management in 2024. And I know that your listeners are going to agree with us that whether we're women, people of colour, people from different socioeconomic backgrounds, have disabilities, whether we identify as being heterosexual or not, we belong in places where decisions are being made and we should not be the exception. So despite decades of education on the subject of inclusivity, combined with policy designs to achieve change, I'm afraid that in my view, there's not been enough change and the pace of progress is unacceptably slow.

 

When you scratch the surface, the issues I experienced in 1999 very much remain. Leadership in our industry remains largely privileged, white, male, across sectors. To give you an example, I'm heading to Mippin on Monday with my global team at Watson Farley.

 

And I've been looking at people's posts on LinkedIn of folk in our industry also heading to Mippin. And it's staggering, really, so many images of men who look and sound identical. And when you scrutinise some of the events that some of the largest organisations are hosting, it's clear they're designed by men and for men.

 

So, you know, and as for benevolent prejudice, well, let me give you an example. At my last firm, I queried with a fellow partner why a particular transaction was not assigned to one of our senior female associates, given she was the most experienced in the field. And the response I got was, oh, well, she's not long returned from maternity leave, so I imagine she's got other priorities.

 

And this is very much the issue. So I guess what I'm saying is that our challenge now is to undo this benevolent, largely unintentional, but built-in prejudice that still underpins our industry and our processes. And we need to and must call it out whenever we can.

 

We need to see more collective responsibility, collective intolerance of poor behaviours, whether intentional or not. None of this sort of let's have a quiet word with so and that just doesn't work. Yeah.

 

[Anna Clare Harper]

Oh, my goodness. I know we've also had several conversations offline about this kind of topic, and it's really unavoidable. I find it actually kind of amusing in a way when people think that we've dealt with the issue now, because we definitely haven't.

 

[Deepa Deb]

Yeah.

 

[Anna Clare Harper]

Sometimes I play a game. This is kind of childish, actually. But sometimes if I'm at a lunch or I'm doing a pitch and I look at the senior leadership team of the people who are making the decisions or whatever, I play a game where I tally up the number of Jameses or Andrews versus the number of women.

 

And usually there's more people with one particular male name than there are women. And it doesn't necessarily help anyone to know that. But I think as an example of how it can feel a little bit like you can get a little bit on the outside being in any way different from that.

 

I think to me anyway, that I guess it's a call to action just to like celebrate the women who are doing great things, but also just to acknowledge that it's quite difficult because you can feel a little bit isolating at times.

 

[Deepa Deb]

Yeah, absolutely. And it's a little bit akin to the conversation we just had as to AI and technology. You know, we now have reams and reams of empirical studies that demonstrate that the most successful boards are the ones that are diverse.

 

And it makes sense, doesn't it? Because if you've got people with different views, that is going to be accretive. If everybody thinks in the same way because of their life experience, inevitably you're going to limit the growth of your business.

 

Whereas if you introduce that difference, you know that you will do better from it. So it actually goes to the bottom line apart from being the right thing to do. And so I agree with you.

 

I think, you know, there are lots of fantastic women doing really well now and there are also fantastic men doing really well and good things. But what we need to do is really start sort of collectively making it clear that that should be the norm. You know, we need to stop celebrating the exceptions because actually in the year 2024, these should not be exceptions.

 

That's failure. Yeah.

 

[Anna Clare Harper]

OK, so drawing. Thank you for talking about that. I really appreciate it.

 

And then drawing from your experience, is there any advice that you would offer to aspiring lawyers or indeed aspiring partners and law firms to navigate their careers successfully, particularly in real estate law?

 

[Deepa Deb]

Absolutely. So here's the advice that I share with our trainees and apprentices at Watson Farley and also with our newly made up partners. Number one, I always say you need to recognise that you're a salesperson.

 

You're the equivalent of a maitre d' at a top restaurant. You're selling a legal service that our clients can obtain elsewhere. So you have to give them a reason to buy specifically from you.

 

And yes, of course, you might be incredibly bright, straight A student, first class from Oxford. You've never failed. But if you cannot effectively sell and deliver a service to the highest standards, this is the wrong job for you.

 

Number two, I always say you have to be resilient. You're ultimately dealing with people and people suffer from stress. So your job is to absorb it.

 

If you crumble the first time you're criticised for missing a deadline, this is the wrong job for you. And finally, I always say you have to be meticulously well organised. You will have a multiple of transactions going on at any given time, and each client needs to feel like they are your only client.

 

So there's just no room for daydreamers in this profession.

 

[Anna Clare Harper]

Great advice. Love that. So if listeners want to find out more about you or business or what you do, or just get in touch, what's the best way for them to do that?

 

[Deepa Deb]

Oh, thank you. Well, look, I'd be delighted for people to reach out to me. So please do so.

 

It's really easy. My email is ddeb at wsw.com. And you also find me on LinkedIn.

 

Amazing. Thank you so much for joining me. Thank you.

 

Bye.


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