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6 ways your commercial property agency may be sharing your information


In any area of negotiation, you would never knowingly disclose your bargaining position to the other side. And if you’re looking for the best possible deal on a new office, you certainly wouldn’t expect your advisors to allow commercially sensitive information to fall into the lap of prospective landlords.

On paper at least, dual agencies (those that act for both landlords and tenants) typically have systems in place to manage conflicts of interest and prevent client information getting into the wrong hands. But how do these measures – usually taking the form of ‘Chinese walls’ – actually stack up in real life?

Lawyers, judges, and even some commercial property industry insiders, have previously expressed scepticism about information walls and their ability to ensure a fair deal for clients. Recently, academics from the University of Leeds have added to those voices; highlighting the need for the industry to take a closer look at this issue. The in-depth study, Commercial Property Agents and Conflicts of Interest, is available to download for free, here.

To illustrate how the current way of doing things could adversely affect your business, here are six examples of how a damaging information breach could occur – even with a supposed wall in place.

The firm that’s too small for barriers to work properly

The idea of a ‘Chinese wall’ or ‘information barrier’ is simple in theory: it stems from a firm recognising that by acting for parties sitting on opposite sides of the fence on a deal, there’s the real potential of one side’s best interests taking priority in the negotiations – i.e. a conflict of interests. A barrier is constructed to address this. Typically, it might consist of one department (or a single staff member) assigned to act for the landlord, with a separate team to advise the tenant. This is backed up by internal policies preventing the landlord’s team from accessing the tenant’s confidential information and vice versa.

As the University of Leeds researchers highlighted, this set-up could be especially difficult to maintain for smaller dual agencies. Departments might be separate in theory, but are they separate in reality if they have to share the same building – or even the same floor?

Where the landlord’s representative overhears your advisor mention your best offer across the room, that snippet cannot be ‘unheard’.

The manager failing to enforce the rules

The effectiveness of an information barrier depends on how seriously a firm takes it. One interviewee in the study said that firms are ‘fairly good’ at rooting out malpractice, although others were more sceptical. No matter how tough the safeguards appear on paper, clients are reliant on the attitude of management within the firm when it comes to protecting their interests in reality.

The casual watercooler conversation

Even for an organisation the size of CitiGroup, information barriers can be problematic. For instance, the researchers flagged up a high profile court case where sensitive information had been passed from one CitiGroup employee to another during a cigarette break.

The point is that colleagues talk – regardless of what team they happen to be in: at lunch, at break time and socially after work. And when they talk, they tend to talk shop.

The supervisor sitting astride the wall

This is most likely to occur where there’s a senior manager who has responsibility for supervising ‘opposing’ departments. One academic asked “Who supervises the supervisor?”. In other words, it’s possible for commercially sensitive information to be passed – perhaps inadvertently – between two sides of the wall, as part of the firm’s internal management and supervision process.

The rogue agent

All industries have their bad apples. Once your file notes are on the agency’s network, it’s always possible for a rogue agent to ignore the firm’s internal policies, guess a colleague’s password and get the lowdown on your position. He’s then in primed to deliver the best deal for his particular client – at your expense.

The ‘under the radar’ information breach

Your name crops up in a conversation between your advisor and his colleague acting for the other party. That colleague could infer something valuable about your bargaining position simply through your advisor’s body language. Alternatively, there could have been an isolated leak of sensitive information that results in an agreed rent two or three percent higher than what would have been the case if the leak had not occurred.

There are numerous ways in which an information wall could potentially be breached. If a breach distorts your position in a subtle way, it may never come to light – yet could still have a significant impact on your bottom line.

To find out more about the issue of conflicts of interest within the commercial property industry, download the full report or summary report for an overview. For impartial advice from an agency that only represents occupiers, search the market with DeVono Cresa.