PikeNet Dispatch, June 19, 2003
Vol 8 No. 48 (677), "More than 9,000 subscribers"

The Legal World vs. the Real World... How can you simultaneously advocate for your clients and share information with professional colleagues? Here are some final comments on last week's Dispatch What (Real Estate) Information Should Be Confidential? (June 10) and this week's Private vs. Public Real Estate Information (June 17).

David Noonan at Colliers Turley Martin Tucker in Cincinnati, OH, writes, "Comparing notes over the last 16 years with my stockbroker brother, the differences in regulation are like night and day. We in this industry constantly struggle with the propriety of sharing lease rate information that's ours only in the context of a transaction -- but used more widely. All kinds of conflict of interest issues pop up -- as they do with agency, too, as lawyers try to model our gentleman's agreement business after their own adversary 'win-lose' business."

Chuck Smiler writes, "The Merrill Lynch policy you quote (see June 10 Dispatch) covers not only disclosure to those outside the firm, but also by one employee to another. This rule highlights the so-called 'Chinese Wall' problem, where investment bankers are privy to information which would be useful to traders and brokers or their clients. Real estate firms need, with no maybe about it, internal disclosure policies between portfolio managers or sales brokers and tenant representatives within their firms...

"It is very peculiar to me that your timely raising of this issue seems to assume that real estate brokerage and management firms and the industry as a whole do not have conflict and nondisclosure policies. Is that really true? Fundamental agency law requires the agent to keep the principal's confidences and not to make personal use of information against the interests of the principal."

Actually, I don't know what to assume. I believe that all service providers have employment or independent contractor agreements with their professionals. My assumption is that these agreements include at least a pro forma legal restriction on the disclosure of confidential information. But in practice, I'm less confident that these policies have been proactively translated into day-to-day operating procedures.

--Peter Pike