21 April 2003
Structadene boss David Pearl hates paying lawyer’s fees. Emma Vere-Jones reports
David Pearl, chief executive of private property company Structadene, is not all that keen on lawyers. Well, not so much the lawyers them-selves, more their fees… as well as the fact that lawyers tend to make things complicated.
Pearl starts the interview with a story that I suspect would make most lawyers’ hair stand on end. “I have 27 joint venture partners and I don’t have [legal] joint venture agreements with any of them,” he says. “We buy properties together. We shake hands, do a deal and that’s the way it is.
“However,” he continues, “I have two other joint venture partners where I’ve got joint venture agreements that have been done by top firms of lawyers: one cost £16,000 to put together and the other cost £6,000 to put together. I’ve never done a deal with either of those [joint venture partners], because the agreements don’t even let you do a deal. Too complicated.”
It does not take me too long to realise that the topic of lawyers’ fees is one Pearl is happy to return to time and again.
Pearl is a colourful and flamboyant entrepreneur. He also possesses an enthusiasm that is obviously contagious. Entering the Structadene offices, one is hit by a wave of energy - people rushing to and fro, and others swapping gossip on the Property Week awards the previous evening. In front of the reception desk stands a mountain bike - one of Pearl’s collection of 30. He rides into work every day.
Mind you, it is not just mountain bikes he collects. His large, glass-walled office contains a collection of china cups, iron keys and other trophies and mementos he has has picked up over the years. He collects property in a similar way.
Pearl, as he readily admits, is a “property man through and through”. He bought his first property in 1965, when he was 19 years old, prior to which he worked for a wholesale knitwear firm on Oxford Street. That same year he set up his original company, Pearl & Coutts - an estate agency and management business. Property investment business Structadene was set up 13 years later, although Pearl & Coutts still operates alongside the investment operation.
Most of the deals are small in size, although last year the company’s larger deals included the purchase of Grosvenor Gardens House for £20.4m and the purchase of 19 buildings around Percy Street for £28.5m. Despite the smaller size of the deals, Structadene now has around £1bn invested in properties throughout the UK.
Pearl uses quite a number of firms across the UK (see box). There are also a number that he has not seen eye to eye with - inevitably over fees. “I’ve fallen out with so many firms of lawyers over fees,” he says. “But I think they’re going to come round to our way of thinking, because times are a bit tough at the moment.”
He is also prepared to stand up to the banks now and again when it comes to financing a deal. “Invariably we’ve had to use firms that the banks want to use. But we sometimes say, ’No, we won’t use that firm because they’re going to be too expensive’. So we now discuss this with the banks and say, ’Look, if we’re going to borrow money from you, we want to know what lawyers you’re going to use. Because there are some lawyers that we can live with and some lawyers that we can’t’.”
While Pearl has always been involved with private companies, he is now considering a shot at making his mark on the world of public companies. He has already announced his interest in Newport Holdings, a small public real estate company that has been attracting interest from a number of canny investors of late. The shares in the company are still relatively undervalued - and Pearl is quick to sniff out a good deal. He has already spent around £3m buying up 12 per cent of the shares. “So we’re serious about it,” he says.
Obviously, some may consider this a fickle or foolhardy venture - especially in the current climate. “All my pals that have got public companies are privatising them. They say, ’Don’t deal with the City, they’ll drive you bonkers’. But I really fancy the idea, so I’ll have a go.”
Mind you, depending on how “the punt” on Newport Holdings goes, Pearl may not stop there. “I’ve got bigger fish to fry, because there are other public companies out there. Bigger ones than [Newport],” he says.
Although the company uses a number of law firms for property-related matters, Pearl says he does not instruct lawyers on other issues such as employment. He is, however, looking for an in-house lawyer. “I’ve been looking for someone for a couple of years, but I just can’t seem to find the right person,” he says. He is hoping to be able to get someone to undertake some of the smaller property litigation for the company. Undoubtedly he is also on the lookout for someone who is a deal-maker rather than a deal-breaker. But I suspect this man would make the most foolhardy of lawyers a little nervous.
Still, if there is one thing that Pearl has proved time and again, it is that he certainly has an eye for a deal, and no doubt he will find the lawyer he is looking for in the end. But whoever it is will certainly have to put up with, if nothing else, a barrage of jokes about lawyers.
Chairman and chief executive
|Amount currently inversted in UK properties||£1bn plus|
|Chairman and chief executive||David Pearl|
|Main law firms||Barlows, Berwin Leighton Paisner, The Commercial Law Practice, DLA, Eversleys, Fladgate Fielder, Mackrell Turner Garrett, Measures Franks & Co, Nicholson Graham & Jones, Richard Pearlman & Co and Taylor Kirkman & Mainprice|