These days, rather than go it alone with a personal attorney, most landowners band together as a group, choosing one law firm to represent them with pipeline companies looking to acquire a right-of-way across their lands. Understandably, this can be an emotional, even painful, time. It is unsettling to think that a pipeline company can exert the power of eminent domain, and just come in and take your land, very often failing to provide “just compensation” in line with the property’s true market value. The impression is that these companies are looking to make even more money for their billion-dollar business, leaving you, the little man, out in the cold.
For the landowner, this is an infuriating situation. While the knee-jerk reaction may be to fight, to make it as difficult as you can for the pipeline company, employing a “take-no-prisoners” attitude that is aggressive may not be the best decision.
At Sitterley, Vandervoort & Davis, Ltd., we always ask whether we have the ability to meet the landowner’s expectations. If he comes to our firm wanting to receive a million dollars for a very short run across his land, then we know we can never achieve that for him. We cannot meet those expectations, and, in the end, the landowner will be disappointed with our firm. Instead, we are frank with potential clients, letting them know how we work, explaining that the key to our success is in the way we negotiate on their behalf.
Past experience – more than two decades worth – has taught us that our approach DOES work. We recommend a “please-and-thank-you” tactic initially, recognizing that there is plenty of time to switch gears and change strategies. This approach sets landowner expectations, but, more importantly, gives the pipeline company the opportunity to do the right thing right off the bat. It demonstrates that if we, the landowners, treat you, the company, well, then you will treat us well, and with respect. This avoids contentious, prolonged negotiations that, more often than not, please no one.
We usually pose it this way, on our very first group meeting. “We know that you are frustrated, scared, even angry. But let’s put emotions aside and look at this in a way that will be most profitable for everyone. Are we going to the pipeline company and asking it to pay us for being rude and aggressive, or are we asking it to pay us for being cooperative?” The landowners accepted to our group, once they put emotions aside, usually decide that our way is the most logical and honest approach, and will get them the best possible deal.
We have a lot of examples to back up our claims. Recently, these two basic, yet different, approaches stood out in stark contrast during negotiations with the Utopia pipeline in Ohio. Our landowners settled quickly on a reasonable rate per foot. Other groups in the same, or adjacent, counties, elected to aggressively litigate over the company’s power of eminent domain, some wanting more money, others just wanting the pipeline to go away. In the end, it was determined that Utopia did not have eminent domain, so rather than electing to pay off the litigants, the company decided to reroute its pipeline. This pleased everyone. However, since our landowners had cooperated and come to terms early on, they avoided months of stress and aggravation and were rewarded with settlements at the negotiated price, even though the pipeline was not crossing their land. Not so with the litigants. Many wound up with nothing.
This underscores the fact that beating one’s chest and butting heads with a large company can turn out to be a non-productive strategy. The outcome could have gone several ways for the combative litigants. The pipeline might have followed the original route, yet the litigants received only a fraction of the cost-per-foot we negotiated. True, these litigants might have gotten more money, but the point is, landowners must be aware that the overly aggressive approach has significant risks associated with it. Our landowners were winners no matter the outcome. The much safer approach we used – from a risk-reward standpoint – was to begin negotiations in a much more positive way. If the company had demonstrated an unwillingness to work with us, then another option could have been explored.
Here’s another example of a situation in which being nice was the best approach. Recently, in a negotiation with a large pipeline company, many of our landowners settled on a price-per-foot price early in the process. Some of our landowners, negotiated successfully for a higher price. We went back to the pipeline company and reminded it that our early landowners were cooperative. We thought they deserved the opportunity to be paid at the higher rate. The company consulted its internal files – where the prior deals were signed, sealed and delivered – and recognized that our landowners had been agreeable and responsive. The company ultimately decided that our prior group, which did not go back on its word, should be compensated at the higher price. Our landowners were, of course, pleasantly surprised and delighted.
Our job at Sitterley, Vandervoort & Davis is to decide when to push, when to pull, when to be nice, and when to question whether the please-and-thank-you approach is working or whether the strategy needs to be adjusted. We do this on a case-by-case basis to determine the most profitable route for our clients.
While I’m not saying that an aggressive approach has never worked, in the decades I have been representing landowners, I have discovered that being cooperative rather than thumping one’s chest is the better way to go, at least initially. It is counterproductive to pretend that you are going to beat up on a 10 billion dollar pipeline company. The firm you choose should fight to get you the best deal possible, of course, but we are saying that you have nothing to lose by starting negotiations cordially and cooperatively, putting your best foot forward. You can change strategies if this approach doesn’t work. But give it a chance; it’s a very simplistic yet powerful way to do business.