Legal Trickery – Eric A. Parzianello

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Revitalizing Detroit Requires a Leap of Faith and Solid Preparation

Posted by Eric Parzianello on January 30, 2014

It was a cold, February day in 2012 when my partner Mark Snitchler and I drove downtown on Woodward Avenue from Oakland County to view possible Detroit office space for our new law firm Hubbard Snitchler & Parzianello PLC. Despite the passing of more than a decade since moving from Detroit to Franklin, as I traversed the city streets, it initially appeared not much had changed in the city. My immediate thought was “maybe this isn’t such a good idea.” Over the next couple hours, however, my confidence would be restored.

Our “idea” to move downtown was inspired by Detroit’s recent rejuvenation. As companies and organizations moved back to the city, we believed a boutique business law firm, like the one we planned to open, would thrive in Detroit. We met with Bruce Schwartz, Quicken’s Detroit Relocation Ambassador, for what we thought would be a building tour. As Snitchler recalled, “Although we visited a number of buildings, what stood out more was the vision Bruce laid out for us.”

Schwartz shared Dan Gilbert’s plan for downtown, which centers on redeveloping Woodward Avenue and surrounding districts like Capitol Park and Grand Circus Park into a thriving urban environment made of new and renovated residences, offices, stores, restaurants and cultural attractions.  After we examined projection drawings of the Woodward corridor and reviewed artists’ renderings of renovated buildings, we were captivated by the matter-of-fact confidence in what was planned. Still, we were making a huge bet on the city making a comeback. While every new venture has risk, Snitchler, John Hubbard and I knew advance research and planning was a necessity to minimize our risk.

Taking our own advice, we focused on the following items, key to starting any new business:

Develop a business plan. A discussion between owners of the “how,” “why” and “where” of the business is important. For us, our individual expertise had been established, but we still needed to address the markets and clientele we would target. The industry outlook, analysis of competition and financial projections are additional elements of a good business plan. And for us, incorporating Detroit into our future marketing would be important. 

Decide on a business structure. The decision to form a business as a limited liability company, corporation or other entity depends on various factors. Regardless of the type, a company needs a legal entity to limit the owners’ personal liability and maximize tax benefits.  We worked with CPAs to determine the most appropriate structure for our business.

Obtain start-up capital. All ventures need to establish banking relationships. Loans for equipment and lines of credit should be explored. We’re starting to see banks that are more willing to extend loans to start-ups. That has positively affected the downtown area. At the same time, there are grants, tax abatements and other funding programs that should be explored.

Draft an operating agreement. One of our busiest practice areas is business breakup litigation. When partners don’t plan an exit strategy, it can lead to court battles. Discussion of the terms on which one partner can leave or be asked to leave the business may take the “romance” out of the initial stages of a professional relationship, but it is essential. Non-solicitation agreements also should be considered with a new venture so departing partners or employees can’t attempt to take customers on their way out.

Negotiate a lease.  A lease agreement may a new venture’s largest obligation.  Seeking counsel to help understand all lease obligations – such as taxes, insurance, and common area maintenance charges – is important.  Negotiating terms such as length, tenant improvements, and options for additional years is also essential. 

Recruitment.  There’s no question a vast majority of graduates, entrepreneurs and professionals are looking to work and live in a cool, urban setting.  Detroit has that.  As a case in point, when the David Broderick Tower at Woodward and Witherell was redeveloped into 125 apartments last September, every residence was leased.  As more residences, offices and merchants are added, we believe it will attract the best and brightest professionals in the world.  Instead of brain drain, Detroit is experiencing a brain gain. 

As for our firm, there have only been a couple unanticipated growing pains in moving downtown.  As Hubbard jokes, “We’re still working on patience – waiting for elevators or driving to the top level of the parking garage to find a space. But that means more people are coming back to Detroit, so it’s a good thing.”

Our bet on the city’s comeback is already paying off.  Mark noted, “We’ve attracted new clients who either have businesses located in the city or are looking to move here. Our downtown move to the Chrysler House is a big reason for that, and it uniquely positions us to assist those clients.”

Each day we are reminded of Detroit’s potential by the wall-size Fathead photos of a bustling downtown, taken in 1917, adorning our office. The photos are as much a nod to the city’s rich history as to our belief that the city is coming back. At our firm, we think it’s actually already back.

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This article was originally published in dBusiness Magazine in its July/August 2013 Edition.

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