Michael Tuchman: Bringing a Blue-Collar Work Ethic to White-Collar Deals
January 15, 2008
by Pat Milhizer
Ask Michael Tuchman what he does for a living, and he'll tell you that he finds ways to accomplish deals that others think can't happen.
If that sounds more like bravado than reality, consider that Tuchman has guided a real estate transaction valued at $1 billion and has provided advice on international corporate acquisitions and joint ventures.
The Levenfeld Pearlstein LLC partner also was part of a team of attorneys this year that crafted one of the largest single-property real estate deals in Chicago in recent memory.
If that's not enough, listen to his clients.
His creativity in structuring deals has definitely made us money," said Scott Goodman, a principal in Sterling Bay Companies, a real estate investment company.
For example, Goodman said that Tuchman is an expert on handling 1031 exchanges, which allow companies to sell property and use the profit to buy more real estate without immediately having to pay income taxes on the gain from the initial sale.
"When I say he's a great value, he has definitely made us money in many, many, many cases that we might not have otherwise," Goodman said. "He's the best. You always believe that he's the guy who is speaking reason and saying the right thing."
In his practice, Tuchman represents buyers and sellers in high-dollar corporate mergers, acquisitions, real estate transactions and joint ventures.
The veteran attorney doesn't bring an ego to the negotiating table, and his clients notice that.
"It's really unusual," said Michael Silver, former chairman of Equis Corp., which Tuchman represented when the company was sold for $132 million in 2006. "Because usually, it's the 'ego factor' of the attorney that is a stumbling block for success. And you'll never see that in Michael no matter who's in front of him."
Perhaps that's because of how far Tuchman has come.
Tuchman, 49, grew up in a working-class Skokie family as the oldest child of three who had to grow up faster than most. Both of his parents are deaf, and Tuchman served as their conduit to the outside world on everyday tasks.
A prescription had to be ordered? Tuchman called the doctor. Plans needed to be made with a family friend? Tuchman set it up.
As a result, he developed more of a sense of responsibility-and worry-than other kids.
"In those days, deaf people didn't have the ability to communicate with telephonic devices, PDAs and all the things they use today," Tuchman said. "As a consequence of that, I grew up faster and was a little bit more, perhaps, too serious of a kid just because there were things that most kids don't see or don't know about that I was exposed to."
The sense of responsibility paid off, and Tuchman's father, Jerry, made sure his son knew the value of hard work and earning a paycheck.
Jerry Tuchman worked at the Chicago Tribune during the day, operating a Linotype machine before he headed to his night job cleaning offices on the North Side.
In the summer, all three of the Tuchman kids tagged along with their father on cleaning jobs.
"Growing up, we understood that you work hard, and you've got to give it your all. We saw parents who did work hard, so it was just natural," Tuchman said.
Janice, Tuchman's mother, stayed at home to raise her children, but once her youngest child started grade school, she went to work as a data entry clerk.
Tuchman got his first job around the time he became a teenager. Along with a friend one day, he wandered into a storefront campaign office next to a drug store.
By the time the boys left, they had stuffed dozens of envelopes for Abner Mikva, a former member of the U.S. House, federal appellate judge, and White House counsel.
While attending Niles East High School, Tuchman worked all four years as a busboy at Chances R, the type of restaurant where patrons are allowed to throw peanut shells on the floor.
Depending on the day, his shift sometimes ended as late as 11 p.m. with a broom in his hand and peanut shells headed for the trashcan.
Tuchman saved almost all of the money he earned from the job, except for the dollars he spent on a radio and a bicycle. The money he kept in the bank lasted him through college and law school, and he never needed a loan.
During a summer between college years, he returned to Mikva's office, serving as an intern on the Congressional campaign. He also spent another summer working in the downtown Chicago office of former Illinois Gov. Adlai Stevenson.
In 1980, Tuchman became the first in his family to graduate from college, leaving Northern Illinois University with a political science degree and a minor in accounting.
After earning a bachelor's degree, Tuchman spent a year in an entry-level position at Price Waterhouse in the audit group before deciding to go to the University of Illinois College of Law.
"The decision to go to law school was sort of by happenstance as a political science major. There were different concentrations you could elect from, and one was pre-law. I wish I could say I always wanted to be a lawyer or I really gave it a lot of thought at the time," Tuchman said.
In the summer between his second and third year in law school, he worked at the firm now known as Levenfeld Pearlstein, when it was a tax boutique with about a dozen lawyers.
He graduated in 1984, and the firm offered him full-time work representing individuals and businesses in a domestic and international income tax practice.
By 1986, Levenfeld moved toward becoming more of a full-service firm.
Milton Levenfeld, who mentored Tuchman, decided it was time to broaden the relationships with clients to handle transactions. In the late 1990s and early part of this decade, Levenfeld passed his clients along to Tuchman, whom he calls one of the hardest working and most admired in the firm.
"It was a very easy thing for me to do because I knew they were in good hands," Levenfeld said about the transition for his clients. "He's always been such a valuable attorney."
"He is an easy person to get along with, and he is collegial rather than trying to put his own interest first. You can cooperate and talk and not worry about him doing something behind your back. It's a matter of comfort," Levenfeld said.
Beyond Real Estate
Much of the firm's client base is entrepreneurial, and a sampling of Tuchman's real estate client list includes the Syndicated Equities Group, Sterling Bay Companies and Mid-America Development. On the institutional side, Tuchman's clients include British Telecom Pension Fund, Inland Real Estate and Simon Property Group.
When it comes to real estate clients, Tuchman said that his expertise is handling matters "that a good real estate lawyer shouldn't be allowed to do."
In other words, in addition to advising clients on purchases and sales, Tuchman also helps them do things such as form complex joint ventures in which a company may borrow money against its assets to help pay for a new project.
Representing entrepreneurial clients presents a source of opportunity and challenge, mainly because they're already on the next deal before the pending deal is done.
"Part of the value I bring is I can help clients think about their transactions in a more methodical way than they would typically do themselves. So clients think they completed the basic contours of a deal when they negotiated price and a few other important elements of a transaction. Too often in transactions, the lawyers are just tasked with drafting something and they just jump right in to pulling forms and starting to draft without really having interviewed their clients sufficiently to understand what the hot buttons are, what things the client is truly concerned about," Tuchman said.
The challenge for transactional lawyers, Tuchman said, is to get their clients to methodically think through the deal. Attorneys can help that process by peeling away the legal jargon and letting the client see business issues that are really at hand, he said.
Changes in the Profession
In the time since Tuchman started his law career two-dozen years ago, the most obvious change has been how technology has greatly increased the pace of transactions.
"I can remember as a younger attorney, getting a call saying 'I have a contract for you to look at.' And the contract may get there by mail. And when Federal Express became more prevalent, the contract would get there the next day," Tuchman said. "Today, the contract is there five minutes after the conversation.
"Everything is emailed. The client expectation is for a response as quickly as they've gotten the document to you," Tuchman said.
Another change Tuchman has noticed would please the judges and other speakers who give advice to new attorneys at the swearing-in ceremonies every year.
"There's a greater degree of civility among lawyers," Tuchman said. "There are fewer lawyers out there today who think they get anywhere with bluster. In my younger days, there were more lawyers who thought they had to shout and scream, as if that would advance their client's clause."
Furthermore, practitioners today are more likely to understand what the market terms for a deal are, and they can identify the customary expectations depending on the marketplace.
"If lawyers share a common understanding of market expectations, that makes for a much more efficient process. The reality, unfortunately, is just because lawyers across the board have always had too much on their plate, transactions that should get done in short order can drag out," Tuchman said.
"What you're trying to achieve is fairness and efficiency in getting the transaction closed and clarity on how these parties are going to deal with one another on a going-forward basis. So I'm very much an advocate of negotiating to a point of a shared understanding rather than to the point of getting somebody else to submit to a particular paragraph that they're uncomfortable with because they don't know quite what it means.
"Future disputes are averted if everybody has a common understanding of what it is a particular clause is supposed to achieve," Tuchman said.
Nevertheless, some lawyers occasionally try to tilt language in favor of their clients.
"That's OK every now and again, but more often than not, that just results in a lack of clarity and a dispute, rather than the advantage that the lawyer thinks he's getting," Tuchman said.
In these situations, Tuchman said he usually finds that the lawyers on the other side are substituting their judgment for their clients' judgment. To handle that, Tuchman takes a straight-forward approach and simply asks the other attorneys if their position is something that their clients know about.
"And the usual response, whether he's spoken to his client of not, is to say, 'Yes it is.' I press it further and say very clearly 'I've spoken to my client about this specific point. My client says this is a critical business issue for him. If you're telling me that your client is saying 'no,' I'll tell my client that you said your client has considered the issue, there's a disagreement and we need to get them together. But if you have not spoken to your client on this specific business point, I will let my client know that you are still insisting upon this and do not want to talk to your client about it again,'" Tuchman said.
That approach can reveal whether attorneys on the other side is posturing for-instead of communicating with-their clients. The key, Tuchman said, is to avoid verbal attacks and get the clients to weigh in on unsettled business points.
"It's fine for me to draft a contract with standard representations and warranties and indemnities on behalf of the buyer, but if I get pushback from the lawyer on the other side, I don't go attacking him or arguing with him. I take that back to my client and make sure my client understands the issues so the client has the opportunity to say, 'I'm not worried about that. I've done enough due diligence on this property that I'm satisfied with this. I'm willing to take a risk of going without an indemnity on this particular issue because I want advantage on some other issue down the line.' And I don't think lawyers are very well-skilled at substituting their judgment for clients in the context of a transaction. It just leads to inefficiency, hard feelings, bad results," Tuchman said.
"It's lawyers believing that they know best for a client. I think that's just a dangerous thing to do. Clients are not well-served with lawyers who are advocating beyond what the client wants the lawyer to advocate. We provide service to our client, and presuming we can do that without proper communication is absurd. But it's very common," Tuchman said.
If Tuchman sounds a bit like a teacher, it's because he is. He's been an adjunct professor at The John Marshall Law School for 15 years, teaching partnership tax law to students in a masters program. He also tries to ensure that young associates at Levenfeld realize that they should try to understand the positions of the attorneys that they're negotiating with, instead of engaging them in an argument.
The idea, Tuchman said, is that the younger attorneys at his firm will negotiate with a lot more strength.
Advising the Advisors
Michael Firsel, president of the real estate development company Mid-America Development Partners, said Tuchman is a "lawyer's lawyer."
"If there was something that a lawyer couldn't figure out, or needed someone to give an answer that they knew was the right answer-the most economically beneficial answer-and simplify things into a structure that would work the best, one would call on Michael to do it," Firsel said.
"He's just so reliable. He really listens and he tries to craft things that meet the client's need. He usually hits the nail right on the head," Firsel said.
Silver, the aforementioned former chairman of Equis Corp., echoed that characterization.
"He has a great technical grasp of the law but also understands the practical aspects, and he combines that to really create the kind of advantage for his clients that I have yet to experience before," said Silver, who has worked with Tuchman for about 20 years.
"Not only did he do an outstanding job in handling the sale of my business, but he's also, over the years, created situations that have really gained an advantage for me…whether we're talking about employee issues, or positioning my company with my competitors.
"His advice has never really failed. And he's a great sounding board," Silver said.
Tuchman's relationship representing companies such as Equis over the past several years demonstrates his attitude toward working with start-up companies that substantially grow.
"It is important to my firm to keep the doors open to start-up clients. They are tomorrow's great clients for the next generation of lawyers at the firm, who I look forward to being my partners," Tuchman said.
In a deal earlier this year, Tuchman was part of Levenfeld's team that served as legal counsel to a party in one of the largest single-property real estate transactions in Chicago history. In that deal, Chicago's Pritzker family sold the Presidential Towers apartment complex in the West Loop to Waterton Associates LLC.
The deal, which was finalized last March, was valued at roughly $470 million, according to a report in Crain's Chicago Business.
In addition, Tuchman has helped create a joint venture between a national real estate developer and a Middle East investment authority that involved an Islamic lease structure layered over a securitized loan. In an Islamic lease, the cooperating titleholder of the property borrows the money to buy the property, then the investor pays rent under a lease to pay back the loan, satisfying restrictions against charging interest under Islamic law.
"I like very complicated transactions because they really allow you to test your skill set," Tuchman said. But at the end of the day, "you're too exhausted to really take stock.
Generally, it's late at night, but its not New York City hours.
"The firm's culture supports the exhaustive efforts necessary to get big deals done. You are never plugging away alone. The willingness of colleagues to step up and pull a deal over the top is extraordinary.
"Transactions like that can be incredibly intensive. We're usually working with large firms in New York on the other side of those deals. And it's a bit of a challenge to keep up the adrenaline to keep going," Tuchman said. "Then you just collapse from exhaustion."
But in Tuchman's practice, you can't stay down for long.
"Before you can really savor what you accomplished on the last deal, it's off to the next one."
A typical workweek for Tuchman runs from 7 a.m. to 7 p.m. Monday through Friday, and there's a half-day on either Saturday or Sunday.
"It's a busy schedule and it's all a matter of what you get used to. If I ever found it trying, I don't know that I'd have the tenacity to keep up with it," Tuchman said. "It's really quite enjoyable, the interaction with clients. Most of my clients are friends. Even though I have a high degree of accountability in the work that I do, those relationships over the years have developed to the point where there's a high degree of satisfaction.
"Working is fun, and I wouldn't be doing it if it wasn't both fun and challenging. Clients are an incredible source of learning. The best part of my strength-and the strength of a lot of experienced attorneys-is the ability to draw upon experiences and what you learn from
clients; being able to put it all together and create solutions," Tuchman said.
In his spare time, Tuchman enjoys skiing and traveling with his two nephews through Europe, most recently taking them to Amsterdam, Prague and parts of Germany where Tuchman's grandparents were born. He also does pro bono work for the indigent deaf and hearing-impaired.
As for the reason why he's been with the same firm for his whole career, Tuchman said he knew he was in the right place a long time ago.
"I realized that it was my firm. I had become part of the generation that was the leadership of the firm," Tuchman said. "And why would you leave your own firm? And that's what it became for me and my contemporaries."