This transcription belongs to Episode #35, please watch the complete episode here!
Morgan Friedman (Host): Hey everyone! Welcome to the latest episode of Client Horror Stories. Today, I have an honor of having a second lawyer to be on this show, but the first Australian, Jeremy Streten. I’m happy to have you around today.
Jeremy Streten (Interviewee): Thanks so much, Morgan. I’m really looking forward to it.
Morgan Friedman (Host): Yeah, me too, especially with that crocodile on the accent. Let’s jump right in. I’m excited to learn your client’s clients horror stories.
Jeremy Streten (Interviewee): Yeah, so as a lawyer, I’ve got plenty of horror stories, Morgan, but the one that I wanted to focus on today was really one that came from acting for a client who had had a company that they’d set up, and it was a company structure here in Australia where they had gone into partnership with two other people to build or to get approval to build a high-rise building here in Australia.
I won’t say where. I won’t give too many details away. You’ve always gotta keep quiet. Confidentiality.
Morgan Friedman (Host): Totally.
Jeremy Streten (Interviewee): And they entered into this agreement where… Well, sorry, not agreement. They entered into this company where they wanted to go and get approval to build up a high-rise building, 30-storey high-rise building.
And my guy wanted to get the approval and then sell off the development to another company, but his business partner or his main other business partner thought that they could develop the property. And Morgan, these gentlemen, between them, had the experience of building a house here in Australia, and they had about $30,000 of equity in one of their properties.
Now, a 30-storey building. Sorry.
Morgan Friedman (Host): Yeah, it’s basically… so I have a question. It feels like if you’re developing a 30-storey building, which is huge. It’s huge. I’m from New York. It’s big, even for New York, that whether you wanna develop yourself or like sell the rights are entirely opposite strategies.
They didn’t talk through their opposite visions before they entered in together?
Jeremy Streten (Interviewee): No. So, Morgan, they both made the assumption that the other knew what the other one wanted to do, and they never actually talked through what the end goal was. My guy just assumed that they would just get the approval and package it all up and sell it off to a developer.
You know, in Australia, it’s probably the same in the US. There’s only really a handful of developers who can actually build a 30-storey tower.
Morgan Friedman (Host): Yeah.
Jeremy Streten (Interviewee): Like that they would have the finance, that have the experience than all the rest of us. And the other gentleman was stuck on this fixation that this was gonna be his big score.
He was gonna make millions of dollars of profit because he could develop it. He was an architect and so he’d seen other people do it. He should have seen the fact that other people had done it and weren’t able to fund it, except with the big guys. But he was convinced that he could put together the package and actually develop the property himself.
And so these gentlemen were completely at polar opposites of what they could do. And there was a, I should say two more. There was a third investor, who had put up a bit of money. He only had a small 10% stake in the business, but he’d put up, you know, a fair chunk of money for his 10% to, in his mind, he was on the same page as my client who was going to, you know, just build up the package and then sell it off to other developers to build in the future.
So we had three business partners, two of whom were on the same page, one who had dreams of grandeur, as it were, to make his big score and he was gonna make a heap of money.
Morgan Friedman (Host): So, I’m kind of fascinated that on something so big and so huge, they didn’t check this most basic assumption.
Like, what do you actually wanna do with this thing? I’m curious where your like psychological analysis, cuz like maybe it’s just so far into me, not just cause it’s Australia. Maybe I’ve just had too much client experience of questioning assumptions that…
How do you even arrive at the point where you and your business partner don’t even realize that you agree on the most basic things?
Jeremy Streten (Interviewee): Morgan, I wasn’t acting for them. Whilst I knew my client previously from a previous job that I’d had, but this was before I’d acted for him when I was working for another law firm, and I was conflicted from acting for him at the stage. He didn’t go and get any advice.
They just set up the company decided to go. I wasn’t there at the time, so I can’t say what actually happened at the time. But Morgan, the scary thing is I’ve talked about this story in various forms in Australia, in all different parts of Australia, in the US, in the UK.
And whenever I talk to lawyers about it, a lot of the time I’ll have one or two that come up to me and say, “I had something similar,” and not necessarily in a property development context, but in another business context where the business partner started this business with no alignment on where they were going and it cost millions of dollars and caused ’em to go bankrupt.
So it’s not an Australian thing. It’s a very much a business people jump into things without actually talking about it.
Morgan Friedman (Host): Okay, so actually I think so far, just at the opening lines before we get to the meet, there are already three lessons.
I think we can say one, like, not just talk with your partner, but talk with your partner before anything happens and about the most basic assumptions, like what do you actually wanna do with the thing? And like what is the actual business model? And sometimes I kind of put down all these like really cheesy business plans and these business plan models, but actually when in a state where people aren’t even talking about “Do you wanna develop the building and sell it or you just wanna sell the rights?” then the lesson is important.
Second one is you threw out in passing that they didn’t get legal advice at that point then, and I think a lot of people want to save the money and not hire professionals. I think this is a really good example of how a little bit advice from you beforehand would’ve saved massive amounts of pain later.
Jeremy Streten (Interviewee): And on that point, Morgan, it’s actually a huge problem. You and I have talked about this before. It’s a huge problem with the legal profession that we have positioned ourselves as a profession to solve problems after they arise. And as a profession, we don’t do enough to be proactive to prevent problems from arising before they actually occur.
And this happens in a small-scale business to a large-business. It’s early in the morning here, and I love to get up early, Morgan, and read, and I got hooked in the last week by a book by a gentleman by the name of Dan McCrum. It’s called Money Men.
And it’s about the Wirecard fraud. I dunno whether you or your listeners know about that. We don’t need to go into too much detail about it. Essentially, it was a German company that, for many years, was accused of fraudulent activity, and it turned out that they were. And they were like one of the largest companies in Germany and were a tech darling of the European scene.
But again, you could see in the flavor of that book. This is a company that, at its best, had a market capitalization of like over 150 billion euros. I should say euros, not dollars, which is even more. And they didn’t get legal advice on so many little intricate things, like the people involved in the story just didn’t get legal advice.
And I see that as a real problem in the industry. It’s something that I’m trying to change. I want to change the legal profession to being more proactive to stop things like this happening, whether it be on the case of a multibillion-dollar fraud or even just a small startup company.
There’s a better way of doing things, and lawyers are too, in my experience, and from what I’ve seen around the world, that they’re too caught up in solving the problem that they never get around to fixing the problem before it arises, and then that, in turn, leads clients to just go and do things like these gentlemen did.
They just went and started a company. They didn’t get advice. What advice do they need? They just start the company, and they’ll figure it out as they go. And it really, you know, in this case, it cost them. They both went bankrupt. It cost ’em a million dollars of their own and and mostly other people’s money.
And for what? You know, they could have solved their problem at the beginning if they hadn’t just made assumptions about what each other was thinking.
Morgan Friedman (Host): So, first problem is they didn’t tell you there was basic assumptions. Second problem is they didn’t get good legal advice. But I think your point is interesting and your vision for treating legal profession is fantastic.
What I would add to that is I think it’s actually not a legal thing and not a legal profession thing, but the same happens for all professionals and I think the challenge is actually on the other side, which is human nature. People are kind of cheap, and very few people wanna diet now so they don’t get cancer in 30 years.
Instead, they’ll eat like a pig today knowing that there’s a higher risk of getting cancer in 30 years. You see this all time. People come to you with startup ideas all the time, and rather than paying a few thousand dollars to a good software architect for good advice, “Okay. Use this system, build it like this, do it like this,” they’ll just like slack together whatever freeware is out there because these people, they’re just trying to do quick, cheap, and easy without putting in the hard money to get good advice.
Jeremy Streten (Interviewee): I think you’re a hundred percent right, Morgan, and I think it is… yeah. I don’t blame the legal profession. I’m saying there’s a better way that we can market ourselves.
Morgan Friedman (Host): Oh, yeah.
Jeremy Streten (Interviewee): And there’s a better way of changing the story in people’s head. You know, you hear Mark Zuckerberg move fast and break things, but you know that he wasn’t just making all these Yes furious things as he was going. He was being very methodical in what he was doing. And so I think that you’re absolutely right.
There’s a change in mindset that entrepreneurs need to have around “Okay. Get the advice. The investment now is cheaper than the cost in the future.”
And, you know, you can solve most problems if you just be proactive about it.
Morgan Friedman (Host): Well, thinking about it in real time, I think that part of the reason why people are like this trying, to model human minds, is the search cost for a good professional are really high. And what I mean by that is, “Okay, I wanna hire… I’ve started something. I wanna hire a lawyer. How do I know who is the right lawyer, who’s good? If their advice will be good at all.”
And that compounds this problem of not getting advice even more.
Jeremy Streten (Interviewee): Couldn’t agree more. I think that definitely does.
Morgan Friedman (Host): Okay. Okay, so second conclusion is, while mark Zuckerberg says you need to move fast or break things, but we need to remember that most of us are not Mark Zuckerberg, and he just made a thousand little decisions correctly.
And as mere mortals, we’re likely to mess up. So, therefore, we may wanna get professional advice. 15 years ago, I was in a major lawsuit and with a guy on the other side who would send us law, quoting laws from Wikipedia. And I always remember my lawyer then said, “Yeah, you always wanted to go up against the people whose like legal counsel is Wikipedia.” And and that was like a funny way of making a variation of your same point that a little professional advice can go a long way.
You actually can have a third point in passing that I think is worth mentioning where you said that one of the partners was an architect and he viewed this as his big dream and the big chance to like build the dream tower. He had been wanting the dream, and that’s actually a really, really interesting point to dive into or unwind for a moment because a common pattern that I found is that when the business you’re doing, or the work is tied into someone’s hopes and dreams for their emotional definition, “I’m an architect, I’m a builder, I’m an algorithm thing,” it clouds up all judgment and irrationality goes away.
So to me that’s like, just knowing that there’s this emotional connection is a really interesting sort of yellow flag to be on the lookout for as well.
Jeremy Streten (Interviewee): There’s so many biases out there. It’s the confirmation bias in a lot of senses, isn’t there?
Morgan Friedman (Host): Yes. Yeah.
Jeremy Streten (Interviewee): And when you are stuck in that profession, you see other people being successful, you think, “Oh, I can do that too. How hard could that be?”
But you don’t see the struggle that goes on in the background. You don’t know all the hard work and yeah, I acted for, and I have acted for over the years like hundreds of developers, property developers, and you know, it’s always the ones, Morgan, who go for the big score that lose.
The ones that I’ve acted for who have, say, bought a block of land and they might split it in half as their starting point and then, you know, build a house on each one and then sell those off and then, you know, maybe do that a couple of times and then graduate up and up and up to, you know, doing small-scale developments and then doing the big thing, they’re always the more successful ones.
Whenever a person comes to me and says to me, “I wanna become a property developer. I’m looking at doing this.” I’m always, “Start small. Don’t go for the big game.” You know, this example we’re giving, the 30-storey tower, is just one that I’ve seen over the years. I’ve had people come to me who are gonna, you know, get a big block of land, divide it into a thousand house units, but they’ve gotta build all the infrastructure, they’ve gotta build all that stuff, and they have no idea what they’re doing.
And people who go for the big game, whether that be in property or in business in general, or just in life in general, are always the ones who end up failing. And it’s the people who take the small, methodical steps. And, you know, it is why podcasts like yours are so great because we can get the message out to people that just because you see and what you think is an overnight success over here, there’s no such thing.
They’ve always put in the hard yards. I mean, if you listen to any interview with any successful business person, property developer, whoever, they’ve always put the hard yards in. They’ve built on the experiences. They’ve gone, they’ve learnt their lessons. They’ve, you know, not only have they learnt their lessons, but they’ve made sure that they don’t make the mistakes again or may make different mistakes cuz we all make mistakes, right?
So yeah, they’ve gone up. And so, whenever I see someone looking for the big win and the big score, I now, well, I’ll advise them, you know, to not do that and to start smaller or I just won’t act because it invariably ends in disaster.
Morgan Friedman (Host): Okay, so I have a couple of thoughts, comments, questions on that. First, it reminds me, I recently read some super cheesy biography of Led Zeppelin. Yeah. I’m that sort of guy, but one of the incredible things I learned is that London, in the late sixties, early seventies, was like the world center for like all the rock bands and everyone who wanted us to rock band went there.
And there was this whole industry of studios, session musicians, this whole infrastructure there to support that, and what’s interesting is that made me realize there’s this huge parallel between startup land and starting a rock band.
Like everyone knows starting a band like, “You’re gonna fail.” Yeah. garage band, you do it for fun. One in a million is the next Beatles, although that’s such an outdated reference, I don’t even know if anyone knows who the Beatles are these days, but what’s interesting is while everyone knows starting a rock band is a superstar economy, that you’re gonna fail, what few people realize is that starting your own entrepreneurial project or a company is equally risky.
It’s equally a superstar economy. Almost all startups fail, which is why everyone thinks I’m gonna be the next Mark Zuckerberg in the exact same way everyone with the guitar thinks I’m gonna the next insert name of a favorite guitarist here.
Jeremy Streten (Interviewee): Yeah. And, to be fair, that is, again, human nature.
We need to be positive. We wouldn’t start these things if we weren’t positive people. And, you know, we’ve all got egos and we all have all of our biases where we think through, you know, “Yep, I’m gonna be successful. Yes, I’m gonna be able to do that.” And I think that the real challenge is just acknowledging that that’s the case, that that’s what we do, that that’s what we, as human beings, will do and identifying it in ourselves when that happens.
So I know that for myself. You know, if I see myself going in some big area where I’m thinking that I’m gonna, you know, make a million dollars, it’s now a flag for me where I go, “Well actually, hold on a second.”
You know that that’s not gonna happen. So you need to temper yourself and come back to a bit more grounding and actually look at it a little bit more methodically. And I think that, again, it’s human nature. Human nature says that we will feel that we’re gonna be successful.
And it’s about identifying, “Okay, where’s the evidence for that?” And really working that through so that we make sure that we’re not falling victim to tho to those biases.
Morgan Friedman (Host): So I have a question. You said a few minutes ago that the ones that are building huge buildings and know nothing are the ones that fell, while the ones that start with the subdivision and then break it up are the ones that succeed.
What’s interesting about your comment is it goes counter to conventional wisdom. Conventional wisdom, dream big, so are you suggesting people dream small?
Jeremy Streten (Interviewee): No, not at all. I’m not suggesting people dream small. I’m suggesting that you definitely wanna dream big, right? I’m just saying that just don’t think that you’re gonna make it quickly and that there’s gonna be one big, you know, one big thing that’s gonna give you the million dollars tomorrow, right?
Morgan Friedman (Host): Dream big, start small.
Jeremy Streten (Interviewee): That’s right. And so I’m not saying… I dream big. I, yeah, I wanna change the legal profession. I wanna change the way that people engage with the law. That’s a huge change, you know. Changing people’s attitude about lawyers around the world? That’s huge, Morgan. That’s a lifetime’s work and something that I’m committed to.
I’m all for doing that, but I know that that takes small, methodical steps where I need to come onto great podcasts like yours, talk about what we’re doing, talk through the stories about where people do things incorrectly and where they can do it better for the future. So, I’m all for dreaming big, but just know that it’s not gonna happen tomorrow and you’ve gotta look at the way that other people have been able to change things, how other people have made, started movements, or done whatever and follow that path.
Because there’s no quick win and there’s no quick… yeah, going back to that wirecard story that I talked about before, and listeners can check that out. It’s a really fascinating story. They thought they could dream big, so they got involved in fraudulent transactions, allegedly.
It hasn’t actually been prosecuted, I think it’s true, from what I’ve read, and so there’s no quick fix to it. There’s a process that you’ve gotta go through. So by all means, dream big. Just know that it’s gonna take time to get there.
Morgan Friedman (Host): I like summarizing that point as something like dream big, but start small, or big leaps, start with small steps. And I think, going back to one of the themes of this conversation, which is the challenges of human nature, I think the human ego is such so that, “Oh yeah, I’ve built this house. I can now build a tower.”
Jeremy Streten (Interviewee): Yeah, I think that’s right. Yeah.
Morgan Friedman (Host): And I think this goes back down to when the heart of what is a professional, because part of being a good professional is dealing with these idiosyncrasies of human nature in your clients and like managing them, knowing that they’re flawed people.
Jeremy Streten (Interviewee): Yes, absolutely. And that’s where the reactive nature of the law really doesn’t help to get people the value that they need and where they need to be more proactive in helping people before the problems arise. Now, you can’t help someone if they don’t come and see you. And you can’t help someone if they don’t do it.
So that’s why it comes back to changing people’s attitude, to getting advice, and to dealing with professionals in the beginning so that they know that they should go and do it and that they go and get the right advice early on.
Morgan Friedman (Host): This also reminds me of Alexander Pope’s poem 300 years ago of ” Drink deep” or oh, “a little knowledge is a dangerous thing. Drink deep or not from the period in spring.” So I think part of this problem that you’re outlining is people using Wikipedia will use a little bit of knowledge and that’s what causes problems, while the professionals are the ones who, by definition, have spent their careers in education becoming fountains of knowledge in the chosen subject.
Jeremy Streten (Interviewee): Yeah, and I think that using resources like Wikipedia, you know, from the legal point of view, we have heaps of free resources on our website, podcasts, all the rest of it, where we go through and explain legal advice.
And we do that because we want people to be empowered with the knowledge. We don’t want ’em to go off and do the work themselves, right? They still need the professional to do the work, but they need to know what they need to know about. And, you know, in a time, you know, we’re in 2022, middle of 2022 when we’re recording this, just if people listen to it in the future, and you know, right now in, in the palm of my hand, I have a phone which has more power than what the president of the United States had and access to knowledge that you had like 30 years ago. And we’ve all got so much information.
It’s about knowing that, okay, we might have all that information, right? And we have access to it all, but we don’t know all the nuances of it too. Now, a little bit of knowledge is a dangerous thing if you then just assume that you know everything because you know a little bit. And so it’s around recognizing the fact that, “Okay, I don’t know everything. I know a little bit, but I know enough to know that these are the questions that I need to ask.”
And that’s where Wikipedia and the website resources, which yeah, the million, billions of webpages out there that have information that is useful for you, but it’s around knowing that, “Okay, that information’s there. I can use that information so that I know, but then I need to go to the profession to help me to actually solve the problem. And aren’t I lucky that I know what I need to do?”
Because 30, 40 years ago, you really had no idea and you were just guessing what you needed to do. And most of the time, nothing ever happened because you never know what you don’t know.
Morgan Friedman (Host): Makes sense.
So, I wanna get back to the original story cuz I feel like there’s some more flushing out we can do. So one of the, and just thinking as we’re talking about this original story that sparked all this analysis, like what is a professional, one of the things that stands out to me is that by them not having done this, and not having questioning each other’s assumptions and their shared mission before they started, it also feels like they were screwed before they even started.
And I feel like that’s another important lesson from the point of view of professionals cause the target market for the podcast, professionals to avoid and learn from horror stories, that I think there is a subtle point here, which is there’s just some clients that you just can’t save no matter what.
And I actually think this is a point that hasn’t yet come up on the podcast. I was trying to get a new insight in every episode and this might be this episodes. But like, is there anything you mentioned in passing that like… Can you remind us what was the ending and then is there anything you could have done to have saved it?
Jeremy Streten (Interviewee): Well, I actually haven’t got to the ending yet. That was just the setup to give everyone a taste of what happened. So, by this stage when all this stuff happened, I hadn’t actually been involved at this stage.
What happened just before I got involved was my client, well, the gentleman who ended up becoming my client and the other business partner, they went approached their accountant to remove the other gentleman as a director. So in Australia, like the US and the UK and and most other countries, when you have a company, you have shareholders or the members of the company, and then you have the directors or the managers. They’re the people who have the day-to-day control.
Morgan Friedman (Host): Yeah.
Jeremy Streten (Interviewee): My guy and this other gentleman were the directors of the company, and they get to make all the day-to-day decisions, and they can be voted in and out by the shareholders.
And generally, if you have 50% plus one of the voting capital of the business, you can remove a director, especially if there’s no agreements. Generally, you can do that. So these gentlemen, armed with that dangerous piece of knowledge, which that you know is good to know, went and held the meeting to remove the other gentleman as a director.
But I say it’s dangerous knowledge because they didn’t get advice about doing it properly. They just went.
Morgan Friedman (Host): Ooh.
Jeremy Streten (Interviewee): So what happened was they didn’t…
Morgan Friedman (Host): The story’s getting more exciting.
Jeremy Streten (Interviewee): They didn’t do it properly and they just removed this guy as a director. And where I got involved was actually, this is about three or four years ago now, actually, probably five years ago now.
I got involved. It was Christmas Eve, and my guy had just been served with a court summons on Christmas Eve to appear in court in the New Year to basically overturn that procedural decision that had been made to remove the other guy as the director. And the reason for that was they didn’t follow the right process.
Morgan Friedman (Host): Fascinating.
Jeremy Streten (Interviewee): So, my guy’s come to see me in a mad panic. He’s like, “Can you act for me now?” “Yes. Tell me what happened.” Told me all of that… well, he didn’t tell me all of that background. He told me bits and pieces of it. It was Christmas Eve, and over here, the courts closed between Christmas and New Years unless it’s life and death, and this isn’t life and death.
So, it was like the, the first business day back in the new year that we were back in court. So I sat down with him and went, got the story between that Christmas and New Year period, figured out what I did, reviewed all the documents, realized that they’d followed the wrong procedure, and so we went to court in the new year.
And we were on a hiding… What I would term in maybe an Australian term, a hiding to nothing where we were gonna lose badly. So we…
Morgan Friedman (Host): What is that phrase?
Jeremy Streten (Interviewee): A hiding to nothing, which means that you’re gonna go somewhere and lose badly.
Morgan Friedman (Host): Hiding to nothing. I love it.
Jeremy Streten (Interviewee): It’s an Australianism, and I’m sure. So, we went along and we had a barrister involved. Our guy couldn’t actually pay us. He had no money because he’d plugged it all into this business. So he plugged all his money in. The other gentleman plugged all his money in. The other gentleman had borrowed around a million dollars of his family’s money and put it into this business as well.
And so we went to court. So he had a lot to lose. I wanna frame that for everyone. He had a lot to lose. So we went to court, and we agreed to reinstate him as a director.
Now we did that because we’d followed the incorrect procedure. We we’re gonna lose in court. They then asked for basically a blanket ban on us from being able to remove him as a director because the parties were clearly in dispute, and as shareholders, they had this investment. And despite the fact that we argued otherwise, the judge made that order.
And the reason that he made that order was because my guy and the other gentleman hadn’t got advice. They had gone around everyone’s back, they’d done everything incorrectly, and this gentleman had put up a bunch of his own money and… Well not a bunch of his own money, but mostly his family’s money cause he only had a very small amount himself, into getting this deal to the stage that it was.
So they had entered into contracts to buy blocks of land with non-refundable deposits. They had spent hundreds of thousands of dollars on consultants to get the approval in place. And so the judge said, “Look, in all the circumstances, it’s not fair for you to be able to remove this gentleman as a director even though technically you can. So I’m gonna buy you from doing that.” And basically he said, and it’s a phrase that’s always stuck with me and it’s stuck with the barrister who helped me run this was, he said, “This is a bus hurling off a cliff at a million miles an hour with both directors trying to grab a hold of the wheel. You guys need to come to a resolution and try and resolve this.”
And he sent us out of the courtroom after to try and resolve it. And well, he sent us a way to go and resolve it. And went to mediation. Now, an important thing to know here, Morgan, is that in most Western countries, a court decides on legal disputes. They don’t decide on commercial disputes.
So, when you’ve got two gentlemen saying, one saying, “I want to build this development,” and the other one’s saying, “That’s stupid. Why would you do that? We don’t have the money, the experience. Or anything else.”
Morgan Friedman (Host): It’s a commercial.
Jeremy Streten (Interviewee): It’s a commercial dispute. So a judge can go… if you haven’t followed the legal procedure to change the director, they can change that. So we spent about two days in mediation trying to resolve it. It didn’t resolve. Both sides were just not willing to budge. And even though the mediator and everyone said to the other gentleman, “There’s no way you can build this thing,” he was lockhard that this is what he was doing.
No doubt, you know, and from talking to the other side over the time, he had made a, you know, a lot of grandiose statements to people. There was a lot of pride that he was gonna build this development, that he thought he could, that he told everyone he could. So he just couldn’t come back from that is my read on where he got to.
So what happened was, after that mediation, we went to court, and we knew that it was really a tough sell. We weren’t being paid for this. We didn’t do this for money. We did this cause we were trying to resolve it, as in the barrister and I. We went to court to try and get the court to make a decision on the commercial dispute, just on the off-chance that we could convince the court that we could.
And the judge said no, and then he sent us again out to court and said, you know, “One of you needs to relinquish control of the bus.” After another four or five hours of trying to negotiate in the courthouse, you know, with a sense of irony, we went back into the court and the judge asked my barrister had been resolved, and the barrister who was acting for my client said, “No. And now the bus has caught fire and is going off even faster” which we can laugh about now, but at the time was ironic and true.
It got even further apart. So what ended up happening, Morgan, was my guy, knowing that he was gonna lose everything, he’d given personal guarantees on all this stuff. He’d invested all of this money. He decided to just hand the whole company to the other guy. The third gentleman, he knew he’d done his money. He’d invested a couple hundred thousand. He had done his money. There wasn’t anything he could do about it, and he knew that.
And so my guy just handed the whole company to the other gentleman, and there were a lot of negotiations going on in the background, trying to get finance here and trying to do this and do that. We had buyers lined up. He wouldn’t sell. My guy handed it all to him and surprise, surprise, within a month, the whole thing was down the shoot and they had lost everything, including all the other clients’ money.
Over time, companies went to liquidation, people went bankrupt. There was all marathons. And it was all because, and we talked about this in depth before, it was all because they didn’t have a conversation at the beginning going, “What are we trying to achieve?” If they had had that conversation at the beginning, they probably would never have gone into business together, Morgan.
They would never have gone there. And if they had, they would’ve had a clear path of what they did if they sat down with a lawyer or even an accountant and worked out, “What are you trying to achieve here?” And just had that conversation. They wouldn’t have got there, and they ended up losing everything because of just not having a simple conversation.
And, you know, could they have resolved it further on? Of course they could’ve because they could’ve come to an agreement. They could’ve come to an agreement that had resolved the dispute at any time really. But they didn’t. But my guy, you know, would’ve realized very early on that he would have never gone into business with this guy if he had just realized what he was trying to do.
Morgan Friedman (Host): So, by the way, you started out gripping and exciting. You should sell the movie rights one day. But one of the details on this last part that stands out was your mention that one of the core reasons they couldn’t come to an agreement was because of this guy’s pride.
I wanna take a moment to discuss the role of pride and the ancient saying, “pride comes before the fall,” because one, it’s true, but also it’s incredible how often things that could have happened and things like, even if they had different visions in the beginning and they never had that conversation, if both of them were more humble and down to earth and didn’t have and didn’t have this pride issue, then it’s much easier to think more clearly and come to a clear conclusion.
So I think as a professional, one of the other challenges that we need to deal with is these human emotions like pride that to every other outside observer realized, “Clearly you should be doing this,” but pride just prevents ’em from doing that.
Jeremy Streten (Interviewee): Yeah. It actually forms a negotiating tactic, which is around really identifying…
Morgan Friedman (Host): Interesting.
Jeremy Streten (Interviewee): …what is someone’s motivation and thinking through what’s their motivation for taking a position. Often, and, you know, seeing this in hundreds of clients that I’ve acted for in disputes over the years, is most of the time, most peoples to both sides of dispute think that they’re right. And you know, when it gets to us as lawyers, it’s because usually both sides think that they’re right.
And what you’ve gotta recognize is the fact that as a negotiator, you’ve gotta recognize the fact that, “Okay, the other side actually thinks that they’re right. Why do they think that they’re right?” And often it’s that they’ve interpreted something differently to your side. Yeah. There’s always truth.
There’s always two sides to an argument. The truth is somewhere in the middle, right? And you look at a dispute and you go, “Okay. Why is there a difference? What is that difference? And then why is the other side thinking that way?” And often it’s, as I said before, they’ve interpreted something differently to the other side.
You see this quite often where people… they have a fight with someone and then they go and justify themselves to everyone else in sundry, right? And that’s their way of coping with the dispute. And they say, and I’ve seen this many times and you’ve no doubt seen it, “I won’t settle for this. I want this, I want that.” And then that’s where the pride kicks in.
And as professionals, we need to be able to recognize that. And you don’t accuse someone of getting to that pride point. What you’ve gotta do is you’ve gotta recognize the fact that, “Okay, that’s what they’ve gotta be. “And then you’ve gotta give them an excuse to change their mind.
One of my favorite authors that I love listening to is Zig Ziglar. He always says that you can’t change someone’s mind. He’s talking in the sales context, and he says when you get a no from someone, they’re not gonna change their mind with the same information. You’ve gotta give them new information. And the same goes for negotiating it. Same goes in many in all areas, really.
It’s people aren’t gonna change their mind with the same information that they always had. You’ve gotta give them new information. You’ve gotta find a new angle. And that was one thing. I didn’t recognize that back at the time, but in hindsight, I don’t know whether it would’ve changed anything. But if we could have given him some new information, some way of saving face, we may have been able to change something. We may have been able to change his view.
I don’t know whether that would’ve worked, Morgan, but you know, you can’t go second-guessing yourself. But yeah, it’s something that I look for now is ways how can I give someone a new piece of information for them to have the excuse to change their mind.
Morgan Friedman (Host): I like your often comment about how you could have given him an opportunity to save face because for someone who is so motivated by pride, then they’re not caring about making or losing the money. They’re caring about their ego and their reputation. So then, oh, saving face could be potentially smart.
A second implication of this end of the story that I find really interesting is this: sometimes as a professional, you need to let the house burn down. And I think it’s a powerful point. This will be out there on the internet, so I can be quoted on it forever. But I think it’s subtle, but interesting, which… and the, like, the implication there is some people… and there’s some people will only learn through a disaster.
There’s some situations that can’t be solved and it’s stepping back. Not only did you protect yourself and your reputation, but it’s the only way to help the people is to let the house completely, completely collapse.
Jeremy Streten (Interviewee): And, some people never learn too, Morgan. And as professionals, we need to help our clients as best we can and then recognize when that can’t go any further and be honest with our clients. Now be honest with people if they’re truly, you know, stuffed. I was about to use a different word, but if they’re truly stuffed, tell them that they are and be honest…
Sorry, what was that, Morgan?
Morgan Friedman (Host): Took me a minute to get the word stuffed. You’re you’re allowed to use R‑rated words on this podcast should you choose to.
Jeremy Streten (Interviewee): Oh, okay. No worries. I’m always mindful of that little e that might go onto the podcast, so… but I think as a professional, you’ve gotta recognize that, and what I’ve found is that when you give that honest answer to someone, they actually respect you more because they, you know, most people when they’re stuffed know that they are. They know that there’s not much they can do. And well, there’s nothing I can do.
So if you are honest with them, then they’re gonna appreciate that more. And one of the challenges, and one of the things that I’m very, very big on, Morgan, is around building those long-term relationships.
You know, going back to what we talked about earlier, we talked about the fact that people don’t get legal advice or in a lot of senses, they don’t get a lot of different types of advice because, they don’t wanna spend the money. They just wanna go on and ask for forgiveness later.
There’s a third area, and that’s that they actually don’t have the relationships with the lawyer or they don’t have the relationship with an advisor. So they don’t feel comfortable going and talking to someone about it. And so, you know, one of the parts that, that I’m very big with my clients, and I only have it now, have a very small client base.
So I have 10 people that I work with, and I have lifelong relationships with these people. You know, I know everything that’s going on. I go to their weddings. I, you know, go to their birthday parties. I’m a friend as well as an advisor, and the reason that’s so powerful is that you know what’s going on, and, you know, if you don’t have someone to that you can talk to, then you can’t get that advice. You can’t have that relationship.
And people always worry. You know, one of the things that I always used to hate in the legal profession was people would call you and they’d say, “Oh, the clock’s on now, is it? Are you gonna do this? You know, lawyers love to charge you in one-minute, six-minute, 10-minute increments, which is just a very, very poor way.
I’m sorry for anyone who does it who might be listening. It’s a very poor business way because you limit the amount of money that you can make because there’s only so many hours in the day that you can work. People much more appreciate being able to come to you knowing that they’re not gonna be charged by the minute that they talk to you, and it creates a better long-term relationship with people going forward.
I’ve kind of gone off-track there a little bit, Morgan, but I think it’s a really important point for people, especially professionals listening to this, to understand.
Morgan Friedman (Host): Yeah. But on that last point, I, once, I once had a lawyer that… I just got a huge bill from him and he like charged me five minutes for something, and I didn’t remember having a meeting, for a meeting with me. But I didn’t remember having a meeting with him that day, so I asked him about it. He was like, “Oh yeah, that was when I emailed you to schedule a meeting. And… but.…
Jeremy Streten (Interviewee): That in itself, that’s a whole other podcast that we could do about around time billing.
Morgan Friedman (Host): Yeah. Although by the way, as long as that also hasn’t been covered in previous episodes, but one way I like framing this point that I think probably it’s not just to lawyers, but to every professional is I think from the eyes of the consumer, either if you have a high hourly, then you need to be flexible and like not charge for every second or the opposite.
Or if you have a really low hourly, then it’s okay if you charge for this because because you’re super cheap anyway. So I think as long as you’re conscious of that balance, that’s fine. The problem happens when you’re $600 an hour and you charge for the five-minute email to set up a phone call.
Jeremy Streten (Interviewee): Yeah. And if you’re gonna charge on time, then absolutely, I agree. I agree. You wanna be at that higher end and actually giving people advice cause then they come to you and you can solve these problems before they arise. And that’s where we should be and where we should be helping people.
Morgan Friedman (Host): And it wraps back to how we started this story about your vision for changing the legal profession to be less reactive putting out fires and to be more in the fire prevention business.
Jeremy Streten (Interviewee): That’s right. I mentioned it earlier that this story and this client that I acted for actually really set me on a much different path.
Before this, I was going to be a lawyer, you know, for the next 30, 40 years. You know, I was happy doing what I was doing. And realizing that there’s a better way actually changed the course of what I was doing. And so, that’s where I developed the concept of the business legal lifecycle and really put all this information out there for business owners to be more proactive, to learn what they don’t know, and to figure out what they might need to do in their business.
And it’s funny how those kind of things happen. And at the time, Morgan, I didn’t really see that that was a change, but it was that matter. And there was another one where a gentleman almost lost about 2 million dollars of his own money all because he didn’t get legal advice. And they really set me on a path of how can we do this better?
And, you know, it’s a long-term change. It’s something that, you know, I, I’ve just gotten back from, from the UK and when I was there in London, I did a talk to lawyers in London, one of my partners over there. And you know, it’s something that takes time to change, but you can already see people starting to see that there’s a better way.
And it takes time and people need to get there. It’s something that will benefit everyone much more in the future.
Morgan Friedman (Host): I think a higher level psychological angle on this is people are kind of scared to just ask for advice in general. I think traditionally, asking for advice is a sign of weakness.
In fact, just yesterday, I talked with an old friend who’s an old client of mine as well, and he was telling me about how his Chinese partner told him, “Never ask a question and never communicate cuz those are signs of weakness.” And I was in awe that someone actually said don’t ask questions and don’t communicate.
It’s like they don’t even recognize that as a failing. It’s a point of pride for them.
Jeremy Streten (Interviewee): Yeah. I mean there’s lots that’s been said over the years around this that, you know, it’s like men don’t like to ask for directions. I even found myself doing that in the other times when I was over there in London doing sightseeing with them.
I have an eight- and seven-year-old, and we took them with us and so we’re doing all the sites with them. And you know, I find myself not liking asking for directions just even on the street, and my wife is completely fine with it. I think you’re right, and there’s lots said that it’s a pride thing in, you know, even kids don’t like asking for questions because it makes ’em feel stupid.
And so the lesson around that for everyone is that if you ask questions, you find out the answers. You solve the problems. You actually look more stupid if you don’t ask the questions because there’s something that you could do to solve it.
And so, you know, you gotta sometimes suck up your pride and move on. I think is something that a lot of people miss in their business and life.
Morgan Friedman (Host): Yeah. And, by the way, this goes back to the heart of being a professional cause I think some people are… some professionals don’t wanna ask questions because, “Oh, I’m the big professional. I’m the one that should know what I’m talking about. I don’t want to admit that I don’t know how this type of software works or how to build this sort of thing.” And it requires just another level of confidence to be able to say, “Hey, I know this. I don’t know this. Let’s ask questions about this.”
Jeremy Streten (Interviewee): And often, I say to the lawyers that I work with, so yeah, whether they be in my team or whether they be people I coach, cause I do business coaching as well, that when you are building a relationship with someone or they’re coming to you, there’s the principle. It’s called the Zero Moment of Truth.
Google did analysis many years ago. Zero Moment of Truth. ZEMOT is the shorthand. This study has been done many, many times, and it’s around the fact that people come to work with you when they’ve seen say, seven hours of content. They’ve had touches with you for 11 times, so they might have gone to your website, they might have watched videos over four different platforms. It’s in essence what’s been found to be true. I think that might have even increased over the pandemic years that the people need to do that.
And what I say to people was, it always is that people want that connection, right? They want to know that, and they need that 11 touches. So if someone asks you a question to saying, “I’m not sure. I’ll go and look at that and I’ll come back to you,” is not only the right thing to do, but it’s actually just another touchpoint that you have with people that builds trust with people and…
Morgan Friedman (Host): And it’s human too.
Jeremy Streten (Interviewee): It’s human. That’s right cause you dunno everything.
Morgan Friedman (Host): I dunno any…
Jeremy Streten (Interviewee): That’s right. And so I always say to them, “Just know that this is just another touchpoint.” You are building that trusted advisor relationship with the client because you’re admitting, “I don’t know everything, but I’m gonna go and find it out,” because we all know that we don’t know everything, right?
We all know that we don’t have all the answers, and so if you catch yourself trying to give all the answers at once and you’re not sure about them, just go back and think, okay, well actually, by having that relationship with the client and being able to say no, I’m actually getting another touchpoint. I’m actually having an excuse to contact them again.
So say from a professional point of view, we’re getting back into the time when we can do in-person conferences and things like that. If you’re asked a question, and I always say this to the people that I coach, if you’re asked a question and you dunno the answer, don’t make it up.
Just say, “I’ll get back to you about that.” And then guess what? That’s an excuse for you to go and have that conversation. I did that just a couple of weeks ago when I was in the UK talking about the life cycle and how that helps lawyers and all the rest that we do. I had a couple of questions.
I didn’t know the answer to them. I said, “When I come back to Australia, let’s jump on a call, you know, jump on a Zoom call and let’s have a chat about it.” There’s another touchpoint that I get to have with them to show them what they need to do. And I think it’s something that a lot of people miss out because of that pride and because they think that they need to know everything or they think that they need to know everything, I should say, that they don’t actually do that.
And actually the opposite is true. Knowing that you can not know everything and that you’ll figure that out is actually a bigger comfort I say to people than otherwise.
Morgan Friedman (Host): I love it. These are great points and a great way to wrap up our episode as well.
Are there any other points on this topic that we didn’t hit on that you wanna make or have we just wrapped up all these insights on human nature and being a professional in property development of Australia into a neat box at the ribbon?
Jeremy Streten (Interviewee): We’ve certainly covered a lot of different areas, and I think that for anyone who’s interested, look deeper into these things, and look for advice. Know that you won’t know it all.
I’ve made this point a few times, but it’s know enough so that you feel comfortable that you have a base knowledge, and then get advice from, you know, people further if that’s what you want to get. Hopefully, you don’t go onto the internet to get a diagnosis without then going to the doctor to find out whether or not that’s true.
And so make sure that you’re getting that advice because that’s what we’re here for. That’s what professionals are there to do.
Morgan Friedman (Host): But I think I would make an even stronger version of that, which is anytime you Google any symptom for anything, “I have a headache.: It’s always like, headache? Symptom of cancer and no matter what it was, it’s just all these websites that every symptom’s like a symptom of everything, so you immediately say, “Oh my God. I might have this cancer,” but the professional understands at a much more subtle level. Yeah, yeah, yeah. This could be a symptom of cancer but in one in a gazillion cases.
In your case, when you have this and also this and also this, we know from experience, it’s usually that. That’s what your doctor can tell you. But I can. So perhaps it’s better to not even Google at all.
Jeremy Streten (Interviewee): Yeah, oh definitely, especially in the medical space. I mean, you know, going through COVID as we have the last couple of years, it seems like everything that you have that you might be unwell is a symptom of COVID. So, you’ve just gotta go and get the advice rather than… You know, my point is if you start to feel unwell these days, it’s like, just go and get a COVID test.
Same is true for a lot of other ailments.
Morgan Friedman (Host): So, although… To end for three more minutes before we really wrap up, it’s unclear to me if the legal space is that different, and I’m not a lawyer, so I don’t know. But, for example, I know nothing about Australian law or the legal culture or anything.
But, for example, in the US, suing anyone is so cost-prohibitive. Like in in practice, it’s never gonna happen unless they’re like tens of millions of dollars at stake. So as a result, no matter what the law technically says, the practical difficulty of actually doing it just leads to a whole bunch of other different sorts of conclusions than you would’ve had in this very theoretical circle.
Well, theoretically, this is the right answer. It doesn’t matter if it can’t be enforced.
Jeremy Streten (Interviewee): Yeah. The last day of law school, the lecturers said to us in our ethics class, and lawyers do ethics despite what a lot of people think, at university. She said these words that have always stuck with me.
The principle of the thing always makes lawyers rich. So when people pursue something because they think that they’re right or that the principles… yeah, that they’re gonna do this on the principle, right? The only people who end up winning are the lawyers because they get to charge lots of money. And you know, I said before, in any dispute, whether you’ve got two parties or three parties, if you go to court, a judge will always think to themselves that you’ve got your story, the other side’s got their story, and the truth is somewhere in the middle. Always. That’s one of their founding principles is that the truth is some always somewhere in the middle.
And so, you’re never completely right, and if you can’t resolve it, you’re better off having things in your own hand.
But yeah, the principle of the thing always makes lawyers rich. And whenever I have a client, Morgan, who says, “it’s the principle of the thing,” and they stand their hand down on the table, I always tell that story about what the ethics lecturer said and they always kind of look at you sheepishly and go, “Okay. Yeah, you’re right.” And you come to a resolution.
Can everything be resolved? No. But most things can be if you just have a conversation around it.
Morgan Friedman (Host): That is a beautiful phrase to end with. Lots of awesome insights and a great story.
And everyone who’s made it to the end, I hope you enjoyed this and gotten as much value from it as we have as well. Thank you for coming, Jeremy.
Jeremy Streten (Interviewee): Thanks so much, Morgan.
This transcription belongs to Episode #35, please watch the complete episode here!