Who’s Who Legal spoke to Jason Gordon, president of FNF Title International, about his views on the real estate industry and adapting to market changes. Trained as a lawyer and with experience in litigation, underwriting and compliance, Gordon took on the role of president in 2008, shifting his focus to the business needs of the department.
Name: Jason Gordon
Company: FNF Title International Holding Company
FNF Title International is a subsidiary of Fidelity National Financial and provides title and indemnity insurance for FNF’s international customers. With more than 160 years’ experience in the market, FNF has an investment portfolio and reserves for claim losses that are unrivalled in the industry.
In a market closely linked to the real estate industry, the recent sub-prime mortgage crisis has presented a challenge for the company: how to weather the crisis and continue to grow the business.
The effects of the housing market crash in 2007 are still being felt throughout the US and parts of Europe. The secondary mortgage market, which allows banks to sell mortgages, remains scarcely active and increased capital requirements and business controls on lenders have resulted in a shortfall in mortgage lending. However, FNF International took early steps to minimise the downturn’s impact. By evaluating its business activities and re-strategising to focus on regions that are more consistent performers, FNF has been able to continue to add market share.
Tell us about your role.
After working as in-house counsel for six years performing litigation defence, compliance and regulatory functions, I now manage the international division for Fidelity National Financial. (NYSE: FNF), the largest title insurance company in the world. FNF’s international division provides title insurance and legal indemnities across the globe through its wholly owned insurance companies and agents, with a principle focus on Latin America, the Caribbean and Europe. In the UK for instance, we work with the largest brokers and coverholders to provide legal indemnities to the commercial real estate market. In Central Europe, we have insured some of the largest hotel, commercial and industrial properties sold or refinanced in recent years. We provide coverage for both known title issues (such as ancient deed defects) and unknown risks (covering, inter alia, boundary line issues, fraud, forgery and mortgage priority disputes) through our title insurance policies. Among the title insurance industry, FNF enjoys the strongest balance sheet, including the highest claims reserves ($1.8 billion), largest investment portfolio ($5 billion) and highest-rated underwriters (S&P and AM Best: A-).
What led you to a career in-house?
My first job out of law school was with an in-house employee benefits company in New York which quickly led to me overseeing many corporate and litigation matters for the company and its clients. I was then recruited for a position with FNF as in-house litigation counsel and over time began to take part in other areas of practice, such as underwriting, compliance and regulatory responsibilities. A managerial opening within the international group offered an opportunity to expand within FNF and utilise all of the skills acquired during my tenure.
When do you enlist the advice of external counsel?
We use outside counsel for a variety of matters, including regulatory, compliance, and transactional due diligence. As the international division expands, the need for counsel often starts with country due diligence to verify the stability of the legal, real estate and land registry systems, which all play a critical part in allowing title insurance to foresee predictable results. FNF also utilises outside counsel for transaction due diligence when a property owner or lender requires insurance coverage. In that instance, FNF retains counsel to obtain land records and provide a legal opinion relating to the status of the land. FNF also occasionally obtains regulatory opinions, compliance advice as well as other corporate advice in different countries.
How big is the legal department?
FNF employs hundreds of attorneys in the US who are responsible for claims, regulatory, compliance and underwriting. FNF maintains in-house approximately 15 attorneys working on international matters (excluding 40 or so attorneys employed by our agents in countries around the world).
What qualities do you look for in external counsel? What is the worst trait you have encountered?
Experience and size are the primary drivers for our retention analysis. We look for larger, experienced firms with counsel that has expertise in commercial real estate transactions in jurisdictions where we are issuing a policy. If the issue relates to another area of law, we look for the experience to fit the task. As far as the worst trait goes, our experience has been generally positive with most firms, but timing is crucial in many situations. We are at the mercy of the client’s expectations and the logistics of the transaction, which may require an expedited response time. One firm seemed to emphasise, only after being retained, that it would not be “rushed” into providing its opinion, despite the client’s expectations to the contrary.
Tell us about any recent special projects you have been working on. Which law firm(s) did you hire? Do you tend to work with the same firms?
We recently opened an insurance company in Malta to provide legal indemnity coverage in the UK and title insurance in other parts of Europe. We hired the firm of Ganado & Associates in Malta to provide regulatory guidance and Mayer Brown in the UK to oversee the local regulatory requirements there. In the past we have sought advice from other firms who provided transactional due diligence, including Norton Rose in Poland, DLA Piper, and Clifford Chance, among others in Central Europe. The emphasis is always on a firm’s skill set, but we also prefer to do business with firms that utilise our products and our company.
How can law firms distinguish themselves? Do you hire the individual or the firm?
We focus on the firm initially to determine size, experience and expertise, but prudence dictates that individual attorneys work on matters, not firms. The ability and conscientiousness of those lawyers who protect the interests of our company and promote the relationship with our clients is a key factor in our determination.
Is the role of the in-house lawyer changing?
In my case, most certainly. I started in our litigation department and even within the legal department was asked to become fluent in a variety of specialties. The company then asked me to take on a business role. More and more often, the professional roles are blending and attorneys are asked to make business decisions or opine on business processes, even if they only remotely relate to a legal issue. As companies expand globally, the legal departments also must become more attuned to the subtleties of a variety of complex regulatory and compliance issues even if the attorney is not admitted to practise in those jurisdictions.
What is the most challenging aspect of your role?
Sometimes I find it difficult to take off my legal hat when analysing a business issue. Over time, though, I have tried to learn to let others within our legal department ply their trade even if it is at the expense of my own analysis.
How has your company been affected by the economic downturn? How has the company adapted?
Since the success of our industry is pegged to the overall volume of the real estate industry, we were affected by the downturn. However, my department took the opportunity to evaluate the strategies in each region and focus on those areas that are the most consistent performers. As a result, we expanded our sales efforts in Europe and certain parts of the Caribbean and have seen tremendous growth as we continue to add market share and create additional brand recognition.
Which regions or jurisdictions are showing growth?
In Mexico, starting in 2010 the Mexican government legalised investment in real estate by the state pension funds. Institutional investors formed CKDs – which are Mexican investment vehicles specially designed to invest on behalf of the state pension funds. The Mexican commercial market is starting to see the effects of this $2 billion infusion and real estate prices and volume are increasing as foreign institutions start to take advantage of the commercial uptrend. We also have seen an increase in American institutional funds investing in major European cities as the flight to safety continues in the face of a potential fiscal cliff.
What is the greatest challenge in the real estate sector at present?
The mortgage market continues to lag behind all other economic indicators. Mortgage lending standards are still strenuously tight and the secondary mortgage market, which drove the real estate boom from 2003 to 2008, continues to see a dearth of activity. CMBS and RMBS markets need to be resurrected to fill the gap governments around the world are trying to artificially support. That being said, a major German lender has made what it says is the first continental European CMBS transaction since the global financial crisis began. It has refinanced all existing senior debt via a €754 million CMBS securitisation. If these transactions start to resurface, it may push real estate industry into investment prominence once again.