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GC Magazine




Ron Sanders is chief legal officer at Colony Capital, a global real estate and investment
management firm, a role he has held since 2004. During his tenure he has steered Colony
through the choppy waters of the global financial crisis and the concurrent landscape of
increased global regulation for fund managers as well as the combination of its private
investment management platform with its publicly traded REIT to create a public company.
Nevertheless, remains at heart a deal lawyer who likes being hands on with his work.
Ron recently won Private Equity Individual at The Legal 500 US Awards.

L E G A L     P E R S P E C T I V E



In comparison with other private investment firms, we’re tiny and we’re probably more on the ‘get it done’ side than the theoretical side. Our legal department is associate GC David Palaḿ and me in New York and a three person paralegal team in LA. That’s it. We’re in the process of trying to hire someone else because we’ve got so many things going on these days, but it is lean. We also partner with outside counsel to help us achieve our needs.

Historically, Colony had been a privately owned fund manager. About five and a half years ago we created a public REIT, which is listed on the NYSE. A few months ago, we completed a transaction in which the business that was the private fund manager was contributed into the public REIT, so we’re all under one house now. It’s not that big of a difference because the same people were managing both sides of the business before, but we are all consolidated under the public company at this point.

The big benefit of this is that now we’ve got a multi-billion dollar balance sheet that can support a number of the initiatives that we as a company, or the fund manager, want to undertake. So, for example, in the past when we formed a fund, the GP commitment would be relatively modest and it would be our own personal cheques. Now that we have a balance sheet, if we’re out there raising a fund we can put a more substantial General Partner commitment into the fund.

Also, if we want to bring a new management team on board to try and mine some deals that we just weren’t able to do before, it’s going to be much easier than when we had to grow organically. So it creates additional opportunities.

Getting to the question of how we try to manage the workload, when it comes to transactions that relate to capital formation, whether it’s a private or public fundraise, we still use outside counsel but we take a much more ‘hands on’ approach for those activities. We also take a very hands-on role for the public company management, whether it’s REIT compliance, ‘40 Act compliance, or similar matters. With respect to investments, while we are still actively involved, the deal teams and the outside counsel take the initiative in execution. While outside counsel works very closely with and reports to the deal team, they understand that any concerns need to be raised with us in legal so that we can get involved if necessary.

I started at Rogers & Wells, which then merged with Clifford Chance. I had been working closely with Colony going back to about 1994 and I came on board in 2004 – so I had 10 years of experience with them. Colony had a need and I knew them well. There’s always some new things you learn from the inside that you don’t see from the outside, but generally speaking it was an easy transition and comfortable fit. I loved my clients, I loved my practice, but it felt like this would be a new challenge and a new opportunity. It was working with a company and lot of people I knew well. I liked doing deals. And we actually have done – and continue to do – some pretty interesting transactions where I have the opportunity to be a lawyer managing the deal... I enjoy doing that and get to continue doing it here.

I’ve also had exposure to transactions at Colony that, if I’d stayed at the law firm, I never would have seen. For example, in 2009 when we created a public REIT, I never would have been in the middle of a deal like that, because at a law firm, you’ve got your speciality – with an IPO of a REIT, I would have just handed this off to my partners who specialised in that. We worked very closely with outside counsel – but I was heavily involved. We don’t have a lot of litigation here, but we do have some, and working with our outside counsel and seeing how the process and strategy plays out is interesting.

In terms of changes in the role of in-house counsel generally, I’ve not seen a whole lot. My style is I like to take on issues and challenges, and if I don’t know all the answers – hopefully I have access to people who do. I like to pick up the phone and brainstorm with law firm partners. Hopefully they appreciate that! Email and other technology is really good but when it comes to some nuanced issues you can’t replace personal conversation and interaction. In terms of keeping my partners here informed, I think a lot of that is communication.

What I enjoy the most working for Colony is that we’ve created, and will continue to create, a number of new platforms, such as our ‘homes for rent’ platform. When we make a decision as a company saying this is the direction we’re headed in, particularly if it’s something we haven’t done before, then I roll up my sleeves and figure out how we put it together. I like the challenge of creating something new, and putting on the ‘creativity’ hat. Find the right outside advice and blending that with what I know. It’s like putting a puzzle together, especially if, at the end of the day, you’ve created something that works.

I don’t know that there’s one particular thing in my career I’m most proud of. I can point to taking the REIT public, I can point to all the different funds we have raised here. But where I think I get the most satisfaction is taking a project from square one to completion and providing a product and a service that meets the client’s needs.

In terms of the biggest challenges I’ve faced in general I’d say, is how to make people feel that the way you want to go really works for them, to make them embrace it. I’m not into pounding the desk and screaming. That’s not me. With fund formation, you are working with people you want to be partners for years to come so you can’t use scorched earth tactics. I’ve had to tell that to some law firms who work with us to tone it down!

I think how in-house counsel and their teams best add value to their organisation is in the very broad sense, we help the decision-makers make good decisions. That means, we are told ‘here’s where we want to go’ and it’s up to us to help analyse – mainly from a legal perspective but often we go beyond that. What are the pros and cons? – how can we do this better to take away some of the risks? It’s framing it in right way for the people who are making the decisions. Part of what we bring to the table is making sure we have the right advisers who can help us think through the issues and find the right answers, the best way to frame it. To some extent, it’s helping the business people do their job better.

Number two is just getting things done. My associate GC, David, and I often have this conversation. There are a lot of people in mid-levels of organisations who don’t like making decisions – not big decisions, just day-to-day practical courses of action. We help them make those decisions and accomplish what they need to. We help keep the organisation moving forward.