General Counsel Challenges In Foreign Real Estate Markets By Anthony Palazzo Countries worldwide have an enoemous thirst for seal estate and specifically infrascucture ‘advancements from technologies and capital ‘amailable in the West. The need for new roads, ports, railways and other key infrastructure has far outpaced spending in emerging markets “McKinsey & Co. estimates global infrastruc tute investment needs chrough 2030 will rocal $57 cillion.” (Wall Street Journal - Monday, March 23, 2015), India, South African and Brazil lead the pack with the European ‘Union nor far behind. Only China and Japan have ourpaced (in fac far outpaced) their domestic need for infeastuccure with na- tional spending. Without daring to vencure into the caustic world of the Foreign Corrupt Practices Act, there are numerous obscacies awaiting the International Real Estate Developer. Bu the lure of easy money is... well —you know che rest. Yet demand necessitates supply and the duty ofthe In-house counsel isto circumvent the roadblocks and mitigate the inequities. Here ace afew issues. Capieal. All t00 often, private sector corporate leaders engage in «cost analysis utilizing the Industry capital standards of modern development. To avert cerain disaster, che atorney representing the privae sector developer must engage the engineers and archi- tects and as importantly the sub-contractors who bid on the proj- ects in a more comprehensive analysis. The analysis muse not be performed inside the confines of a Wall Stree Investment Bank f- nance group. Many costs are intangible and few are ever measured in the event of a governmental fulure a5 goveramencal failures are often covered up or purposely withheld from management. A study must be done of past project cost assumptions as compared to actual costs for completion. And the cosc milestones must be shortened @ beter determine a carn in che wrong direction. In this manner, the attorney must assume a breach and an inabiliey © redvess.A path for the private sector company and the correspond ing Government agency to stop the activity without controversy muse be planned wel in advance. This simple adjuscment in the project documentation can deter, avoid or immediately stop issues of poor functionality as well as unfortunate but possible concur rentissues of bribery and corruption. An attorney’ role is not only «co pecform legal analysis but to asise business managers ro under- scand the consequences of legal analysis and act accordingly Technology Constraints. The la-house attorney must ascercain if ‘your company’s rechnological advancements are compatible even, ‘with modifications regardless of cost parameters. The mechanics utilized by cargered Governments of Foreign Markets, even uti- lizing focused modifications may be unavoidably incompatible. Often, projects begin wich assumptions of compatibility with in- tentions of modification as they are required in the work sicuation during test scripts, when what is needed is aa actual “Go Live” | testcase in a “real world” environment. Despite the best efforts of | i many, Governmental agency functionality remains fundamentally different from the private sector. However, ics the private sector ‘hich must unclog the pipeline. And In-house counsel, the draft es of agreements and documents of cooperation must identify and present the challenges as well as provide the methodology or policies and procedures for mieigation of functionality challenges. Adaptations and Engagement: In the mid- 20th Century, pric vate sector corporate engineers were rebuked for “reinventing the wheel” through heir habit of cuscom-building cach IT and engineering solution from scratch. In the 2000, the pendulum has swung too far the other way. private sector corporate IT and engineers in developing and transitional countries too readily try o install ceadymade digital solutions that have been designed for private sector firms and force feed their designs. ‘To combar such problems, attorneys and their company project managers must be ccomperent enough and confident enough vo demand designs that ‘will perform within the parameters ofthe Governmental agencies specifications and not expect these Governmental agencies to bend ‘quickly and effcenely no marter how much they ate incencivized. Policies and Procedures: In-house counsel designed policies and procedures can provide substantive solutions when applied across various Governments. This will also affecr selection of third party vendors. One key criterion will be both Governmental and third party vendor willingness and ability ro understand and comport ther usual standards to that of your compatibility constraints and the mitigation of chose constraines through communication and ‘cooperation with all corresponding employees. Simplification: Administrative simplification is by no means embedded in the mandate of government institutions. It needs 1 be pushed forward in a coordinated and cooperative manner, ‘The establishment of government administrative simplification units alongside private sector engineers and management is 2 practical solution and the In-house counsel can be very influen- tial in this process by sertng forth and establishing the mandate for such cooperation These are merely suggestions of a process that each In-house ‘counsel must inevitably determine themselves for their company ‘when embarking on foreign sol in search for success in new ven- ‘ures in real estate.