Sometimes it’s not winning but how one defines “win” that matters most. It’s clearly what mattered to Rick Norris, of the law firm Archer Norris, as his partnership with developer Rick Lafferty, of Lafferty Properties, took root 13 years ago. Since then, both firms have helped each other grow in the homebuilding sector despite the 2008 downturn.
“A win, for Lafferty, is walking away and feeling like you got all the money you needed and relationships that survive, and you feel like you’ve produced a product that’s going to work in the marketplace,” Norris says. “That philosophy was a perfect pairing for Archer Norris—and for me—at the time [we met] because it really did expand our practice.”
His practice had recently completed a merger to grow from a “small, really isolated part” of Contra Costa County in the San Francisco Bay Area, so Norris was indeed looking for new clientele when he and Lafferty were introduced in the early 2000s. Norris found Lafferty’s do-good, be-good approach to success quite rare—especially in the housing industry. “There’s a lot of ways to make a lot of money in that business,” Norris says. “Some think the best way is to take every advantage possible and be only as honest and forthcoming as you have to be to get to the end. So, Rick’s take on this was really extraordinary, and you’ve got to know, as a lawyer, working with someone with that approach is just a lot more fun.”
The philosophy had worked remarkably well for Lafferty Communities, and it was fast approaching its pinnacle of 100 employees and 450 homes built annually throughout California when Lafferty befriended Norris and began retaining his services. “I believe in mutual respect and compromise and mutually beneficial outcomes to certain issues,” Lafferty says. “And Rick [Norris] is certainly a big part of that. He holds himself to a very high standard of fiduciary responsibility.”
Together, their respective businesses became stronger. Archer Norris took on more real estate developers as clients thanks to the doors opened by Lafferty Communities, and Lafferty found himself with corporate support, transactional support, and “even mediation/arbitration/litigation support” under Norris’s watch.
Then came the economic crash—first in small but noticeable ways in 2005 and especially 2006, then in stunning, off-the-cliff fashion in 2007. The unusual number of building cancellations from homebuyers turned into long-term inventory holds, the holds turned into highly discounted sales, and finally those sales became “just highly compromised assets,” Lafferty says. His 100-person staff was forced down to just six key managers. Lafferty himself, who was retirement-ready in 2005 as far as his finances were concerned, watched his resources dwindle to a small fraction of what they once were over the course of just three years.
“It was jarring—and very humbling,” Lafferty says. “A horrific thing to watch,” Norris adds.
Lafferty specifically remembers delivering a lengthy presentation about his portfolio of assets—as well as his perspective of the market corrections going on at the time—to a lender who just wasn’t getting it. “They told me [at the end of my presentation that] they really thought that household formation would continue and that they would be just fine,” he says.
Just 90 days later, that lender went out of business. “What they realized soon thereafter,” Lafferty says, “was the magnitude [to which] my assets were compromised when I made my presentation [and how that] was pervasive through all their followers. And it hit them like a ton of bricks.”
Archer Norris, of course, became enmeshed in the freefall, too, as it went about trying to help clients such as Lafferty. Norris recalls Lafferty’s directions at the time: give to those whom he was in debt all the information they want, for he would ultimately give them everything he had to give them without compromising what he had to give to somebody else. “We treated everybody with dignity and fairness, and we emerged without a single creditor going after Lafferty or his business,” Norris says with pride.
The good news got better from there. “After the values had been compromised, after Lafferty Communities had been reshaped, the people with whom we did business were the very same people as we’d dealt with before,” Norris says, incredulous. “The very same people!”
Which brings Norris and Lafferty and their respective organizations to the present day, with almost 1,400 lots for Lafferty and about a dozen more active projects expected by the end of 2014. He’s also back up to more than 30 employees, but it’s his working partnership with Archer Norris that he celebrates the most. “Norris was right at my hip; we went through hell and back together,” Lafferty says. “I can’t speak to it enough, how important that friendship was.
“So, here we are, homebuilding 2.0,” Lafferty adds with a laugh.
“And two of the luckiest guys on the planet,” Norris says.