Arthur Loo on Wills, Trusts & 30 Years of Kiwi Property Law

Building Loo & Koo Solicitors

Daniel: Welcome back, everyone, to our next episode of the Blueprint Podcast. I'm back here with Rory again, and we're really grateful to be joined by Arthur Loo from the prestigious law firm, Loo & Koo Solicitors. He's a titan of the legal industry, been around for 30 years, and we're lucky enough to have him as our neighbour, so we see him all the time, up and down the hallway, and talk shop a bit. Arthur, thanks so much for coming on.

Arthur: Oh, you're very welcome. Thanks for the invitation.

Daniel: Absolutely. We know you're a very busy man, so we appreciate you taking some time. Like I mentioned before, this podcast is mainly for our existing clients, potential clients, and our referral partners. You've got a really good base of knowledge on all things legal, especially property, which aligns with what we do. But just as a business owner as well, we really want to get the best out of you within the 40 minutes we've got and really understand where you've come from to build such a formidable business. I'll just kick off with: how did you actually end up starting Loo & Koo 30 years ago?

Arthur: Right, I'd been practising law in a Queen Street law firm. At the time, there was a lot of Chinese immigration, or immigration generally, from Hong Kong, Taiwan, a little bit from China, Southeast Asia. Being able to deal with clients appropriately, culturally, was starting to be a bit of an issue. I was in a regular New Zealand firm. The receptionist was Caucasian, everyone else, with the exception of my secretary, was not Chinese. People ringing up would find it difficult to get past the receptionist, or even leave a message, and they would ring me at all hours of the day and night at home. One night my wife took 13 calls while she was trying to cook dinner, and I got a really warm reception when I got home! This was before mobile phones, so people would ring up, "Where's Arthur? He's at the office. No, I called the office, he's not there. Is it possible he might be driving home?" That was the sort of thing.

But really, I recognised that there was going to be a need for people to be able to communicate with clients in their language, in a culturally appropriate way. Ken Koo was someone who had worked for me, but at that time, he was at another law firm. Christmas 1995, he rings up and says, "Arthur, I'm coming over for a cup of coffee," and I knew what he wanted to talk about. We had a chat and said it was really about time we started a law firm where we could communicate with our clients in their own language and deal with them in a culturally appropriate way. So I resigned from my partnership—I'd been there 15 years. I've been practising law 48 years now. Ken left his firm and we set up Loo & Koo here at 8 Manukau Road. The location is great. One Sunday afternoon we were driving around looking for office space and I saw the 'for lease' sign outside here. It was the whole floor, 4,000 square feet. I rang up and said, "Look, the space is perfect, the location is perfect, but we're looking for about two and a half thousand square feet. This is a big space, a big commitment." But we said, "Let's go for it." We took the whole space, sublet some, and then over the years we've expanded into the whole floor and then taken a portion of the floor next door. So we're now probably about 5,300 square feet and it's been a great journey. We started with about eight or nine people in the office. We've now got 30. From two partners to four partners and a great staff—very capable and loyal. It's been very rewarding and gratifying.

Rory: That's brilliant. So you act for a lot of people, obviously New Zealanders and English speakers as well.

Daniel: You obviously saw that opportunity with the influx of migration happening. How big was the opportunity at that time and how has it grown in three decades of business?

Arthur: Pretty good. I can speak Cantonese and passable English, and my partner Ken spoke Mandarin as well. Then we had people in the office who could speak Cantonese and Mandarin, so that attracted a lot of clients. Obviously, if you don't speak English perfectly, having someone who could deal with you in Chinese was a great boon for business. And to be able to deal with them, as I say, in a culturally appropriate way. For example, Chinese, or Cantonese especially, are a bit superstitious about numbers. So we decided to code our files. The coding system was the first three letters of the surname and then five or six numerals. For English speakers, starting with one. Eight—you know how Cantonese people like the number eight—so, for example, Mr Chan would be CHA8xx, and so they all got eight in their client number. For the Taiwanese, I think it was six. For the mainland Chinese, it was three, and so on. Tahitians got nine, Koreans got five. That also let us know immediately what their preferred language was. So if we picked up a file that had an eight in it, we knew they spoke Cantonese; a six, we knew they spoke Mandarin.

Rory: It's amazing. And I mean, 30 years in business is no mean feat. Dan and I were talking before we started this episode about you coming in—he turned 30 in February this year. So while you guys were launching Loo & Koo, he was running around in nappies.

Arthur: Yeah, yeah, yeah. Excuse my language once again.

Rory: And further to that, Blueprint is in our second year of business, so it's something to aspire to. As a bit of a journeyman of the law, you must have seen some changes over 30 years—the good, the bad, and the ugly.

Arthur: Oh, lots. The way we go about practising, the practical side of things. I was telling some of the young people, one time I said to a young secretary, "We used to stick carbon paper between several sheets of paper and an impact typewriter. Copies came because of that." Fax machines have come and gone in one generation—almost less than that. Emails now—who posts a letter anymore? When I was young and we practised, we used to actually pick up a file and go and see the other lawyer when we settled on a property. We'd pick up a bank cheque and actually go to where the title deed was.

Rory: Is that true?

Arthur: Yes. Typically, say on a Friday, to go and update the title—not to update the title, but if I was buying a property from you, you had the title there, or your discharge of mortgage. I was buying from you, so I would have to get a bank cheque to pay you. The only way to do that was to get a bank cheque from the bank, walk down to your office, and hand it to you. You handed me the transfer and the title. Then I would take it back to the office and give it to the registration clerk to take it to the land titles office to register it. What was good about that was that I got to meet you, talk to you, see the cut of your cloth, and there was some rapport. The next time we had a dealing, we used to exchange undertakings—"I'll do this if you do that," like, "I undertake that the water rates are paid," or "the land rates are paid," and things like that. Or sometimes if we had an issue, I'd ring you up and say, "Look, Dan, let's sort this out. You tell your client A and I'll tell my client B, and we'll get it sorted." Which is good for the clients, good for the profession. Now, we don't get to meet the person face to face. You tend to stand back and write turgid letters to each other. It becomes a little bit harder, I think, to resolve issues. There are so many more lawyers now and we are a bit more—not suspicious, but we don't have that camaraderie. I trust you, you trust me, and let's get it sorted for the benefit of the client.

Daniel: Absolutely. Once you've got that face-to-face relationship, there's that mutual respect, that acknowledgement of each other's efforts and understanding. If I had not met you, it becomes a bit harder, even if I pick up the phone and call you. It's a bit harder to do because, you know, face to face is good. I hate acting for clients who I've never met before. Quite often people email me and we do it over the telephone, but sometimes if issues arise, it becomes harder to resolve.

Arthur: Absolutely. Especially if you're mostly limited to emails. Emails can be quite cold, regardless of if you put "warm regards"—they'll still be a bit cold, a bit impersonal. Sometimes it's hard to strike the tone, and if you're conversing, it's easier to elaborate or explain.

Growing a Professional Services Business

Daniel: I just want to take a quick step back to where we started about your business journey. We have a lot of viewers, Arthur, who are business owners and also our referral partners who are running their own consultancy businesses and trying to grow them. Obviously, you guys started with just yourself and Ken Koo, and then you've built to the point where you've got more than 20 staff now. What advice do you have for someone who's trying to grow a business, take the risk to hire people? In the current market, what should you be thinking about? What numbers are important before you consider hiring someone to have confidence in what you're doing?

Arthur: You've got to back yourself. You've got to be genuine, I think. You've got to be nice, treat people right, and that will attract work. In professional services, you've got to like the other person, have some warmth or trust in them. If you come across as being genuine, being sincere, people gravitate towards you. Having a bit of a sense of humour helps, because why would you go to somebody who was a cold fish? You expect most professionals to be able to do the job, so then it comes down to the client-advisor interface. It's got to be pleasant and warm, and obviously you've got to do the job. But if you go to somebody who's an absolute cold fish and there's no warmth to the relationship, what's the point? Generally, we want to be happy. We want all our relationships to be pleasant. If you're in professional services, where it's so important, it's a privilege to be in a position where three minutes or less after meeting somebody, they're telling you their most intimate details about their lives and reposing their faith in you to do the right thing by them.

Rory: Yeah, it's an absolute privilege to have that. We experience the same thing with our clients—straight away we're talking about their financial position, which is extremely delicate. So you're grateful for that, and a lot of it comes with just being a good service person and being warm, right?

Arthur: Yeah, and then working hard. The old truism: the harder you work, the luckier you get.

Trusts, Wills and Estate Planning

Daniel: Absolutely. With things having changed so much over your tenure, something that we talk about often with our clients, and we have dealings with your team when we refer clients as well, is ownership structures. You've got trusts, super trusts, hidden trusts, all these different ways that you can own your assets. Do you think, as time's gone on, the requirement or need for trusts and all those sorts of different, unique structures is higher than ever? Or do you think, as things have developed, some of those structures have become a bit outdated?

Arthur: I don't think they've become outdated. There's always a need for them. It's really about appropriateness. At one time, trusts went completely retail and everybody wanted to have one because they were fashionable. At your dinner party, you're talking about your trust, so maybe I should have one too. A lot of people set up a trust when there wasn't the need for it—they weren't in a risky business, they weren't in an occupation that was risky. But a trust is largely about asset management and asset protection. There may be many reasons why one would have a trust, like if you had a handicapped family member that you wanted to provide for, that sort of thing. But quite often, I think you can do other things to manage your asset planning, or through a well-prepared will for a lot of people. I always say, don't set up structures that are overly complicated or structures that the person doesn't understand. A lot of people don't really understand the structure of a trust. But if it's appropriate, by all means. But I wouldn't set up one for the sake of it, just because your best friend's got one. There are administration costs and all that sort of thing. If it's just mum and dad with a house and they're both salary earners and the children are fine, I have set up trusts for people where there's a handicapped child or something, which is entirely appropriate. But just to set up one because your best friend's got one, I wouldn't necessarily advocate that.

Rory: You mentioned wills as well, and obviously here we write insurance policies and life insurance policies, and sometimes that estate question gets brought to the fore. In your experience, what are the pitfalls of people not having those estate plans in place, and have you got any examples of where things have gone awry when it's left to the default system versus people with structured plans?

Arthur: I think everybody should have a will because then you can provide exactly how you want your property to be dealt with. Otherwise, the provisions of the Administration Act take over, and that may not be what you want. A well-drafted will, even a simple one for a mum and dad situation, doesn't have to be elaborate. But if you don't have one, you've got to do a search to make sure that person didn't have any more children under the Status of Children Act. Then you've got to maybe advertise for wills so that the person who applies for letters of administration can say that they've made a diligent search to see whether the person left a will or not. That leads to delay and adds more cost, and at a time when a person is invariably grieving, the delay and extra costs are unnecessary compared with the relative cost of doing a simple will. Sometimes, if there's more than one person who could apply for letters of administration—like, say, the second parent goes and there are four children—one of those children has to apply, and the other three have to sign consents in favour of their sibling. That all takes time.

Daniel: One thing that interests me and confuses me a little bit is that a person can write a will, and then there are protections for certain people to challenge wills. I find that particularly confusing. In some situations I get it, in others I don't. I don't understand the somewhat lack of freedom to designate a will.

Arthur: Spouses, children, and grandchildren have a right to challenge a will through the Family Protection Act. There's that tension between testamentary freedom and making sure that beneficiaries—next of kin who have an expectation, where the deceased might owe them a moral obligation—are provided for. You get instances where a parent disinherits a child because of various family dynamics. It's really trying to strike that right balance between testamentary freedom and making sure that a person who should be looked after, who the will-maker owed a moral obligation to, is provided for. If they don't do it in their will, it's done through the courts. Quite often, the settlement is usually negotiated before you get to a full-fledged court hearing, but that's another matter. Sometimes parents may be mean and disinherit a child for reasons that are not entirely fair, so there should be that ability to redress. Then there's also the Testamentary Promises Act, where a will-maker might say, "Did you come and look after me, live in my house and all that? I can't pay you at the moment, but I'll make sure you're looked after in my will." And then they don't discharge that obligation, so that person to whom the promise is made should have the ability to make a claim.

Daniel: And I suppose blended family scenarios could get quite complex as well, where you've got either spouse having children from previous relationships and whatnot.

Arthur: That's where I think people should make a will, because you've got my children, your children, our children.

Property Market and Investment Outlook

Daniel: Brilliant. Moving around to something slightly different, or back towards the finance side of things. We deal a lot with property developers. I'm sure that yourself and the team do as well. It's been a pretty chaotic last five years with changes in interest rates and the market and prices. We've had a lot of clients over the last couple of years who have been affected by the changes in values with off-the-plan purchases. I'm sure that's something you've seen quite a bit of. Are you still having clients who have issues with their settlements with off-the-plan purchases, or are you recommending people avoid them at this point in time? What's your view on that?

Arthur: With settlements, we've just found that in the last wee while, most of our sales are settling, whereas last year, with some developments, quite a number were not settling. So that is pleasing, that people are able to go through and complete the purchase. Buying off the plan—yes and no. I think you need to look at who the developer is, look at their product, and have some confidence that the finished product is good. Check out the track record. You should be able to look at plans, interpret plans and specifications, and be able to look at storyboards of the fit-out and all that sort of thing. Some people, not everybody, can visualise what the finished product might look like. At the moment, I think some developers are probably hurting—they're sitting on a lot of unsold stock. You see, every now and again, ads for someone who wants to sell the whole development lock, stock, and barrel. If someone is well capitalised, maybe they want to take a punt and buy the whole lot and sit on it and wait for better times. But then you've got the cost of holding. What do you do? Do you rent it out? When you rent it out, all of a sudden the property becomes second-hand.

Rory: In some of your circles, do you have a general view of the future of the property market? It's been a winning horse forever. Do you think it continues on that same trajectory, or has the future got something different?

Arthur: Property, like any other commodity, goes up and it goes down. But the good thing about earth is that they're not making any more of it. The market will always be there. At times it'll become more buoyant, and at other times, less so. Right at the moment, things are globally a little bit uncertain. But in New Zealand, in a way, we're reasonably well insulated, and I think the price fluctuations are not that huge compared to overseas. During the Asian financial crisis, the global financial crisis, prices had big fluctuations. I saw, as a notary public, I notarised quite a lot of documents where people were buying properties in the United States for under $30,000 USD.

Rory: Wow. Whereabouts?

Arthur: Atlanta, Florida, Las Vegas, I seem to remember. Some of them were buying properties sight unseen, where people were just walking away from properties.

Daniel: You have to go down to Mataura in the South Island for anything close to that in New Zealand. I still don't think you get that chance for a house. Auckland probably has one of the most unique property markets in the world. Having just looked around a bit and followed, obviously for my tenure in the business and just for the last couple of years, watching some areas dipping, some not, some property still going for crazy prices at auction even though it's a slightly depressed market. That's been really interesting to watch.

Arthur: There's that constant pressure on supply that's always going to flow through. A lot of what drives the property market is the cost of money. If interest rates go down, the cost of borrowing goes down, properties appreciate. When we saw a couple of years ago, three years ago, when interest rates were low, that was the greatest buoyancy in the market. Prices went up 40 or 60% or something in a year. So it's the cost of funds, and that affects and flows through to other areas like building costs and all that sort of thing. If the cost of borrowing is low, it puts a lot of confidence in the market.

Rory: I remember the lowest it got—I was sitting with my colleague in mid-2020, and he wrote a loan for a million bucks, interest only, and it was $500 a week for the repayments to borrow a million dollars. It was just crazy looking back. You're surprised you didn't marvel at the situation more, compared to what a normal market looks like.

Daniel: Arthur, it's been really good to have you on. Before we wrap up, is there anything else that's important to mention? Obviously, we've referred a lot of clients to your business. We're super happy with the great work your team's done taking care of us.

Arthur: Well, thank you very much. We appreciate that. It cuts both ways, so we hope that we'll be able to send people up as well.

Rory: Likewise.

Arthur: It's been quite an interesting journey for myself. One of the great things is dealing with people. You deal with people in all walks of life, professional and from the client's point of view, and it's always a pleasure to deal with nice people.

Daniel: That's right. So you've done 30 years—how many years have you got left?

Arthur: A few, I think. I've been in practice 48 years, so I was with my previous practice for 15 years. I'm not a danger to my clients yet.

Rory: We always ask a couple of quick-fire questions that are non-business related when we wrap up. So we wrote these last week. I haven't read them since we wrote them, but I'm just going to fire them off. After a long day of setting up trusts and dealing with probates, what's your favourite go-to cuisine and what will you wash it down with?

Arthur: Maybe Italian with a nice pinot noir.

Rory: Yum. The Mediterranean diet. Favourite music genre?

Arthur: Oh, blimey, I'm an old fossil. Just any popular song where you can at least hear half the words or make out the lyrics. No doof-doof. Somebody like Rod Stewart or something.

Daniel: Nice, classics. In terms of your journey with real estate, are you more for personal investing, property flipping, or long-term property holding?

Arthur: I tend to hold. I'm not a flipper. Not into flipping. Years gone by, I've done up the odd property with friends to sell, but that was just for fun, with a couple of mates. You go in and do up a unit, that sort of thing. Nothing big. So we buy the asset, hold it, let inflation devalue the debt.

Daniel: That's exactly what we preach to the clients usually—buy the asset, paint and wallpaper, and then sell as quickly as possible. But you prefer the holding.

Arthur: Yeah, just what we preach to our clients.

Daniel: Wind back to '95. What advice would you give yourself, knowing what you know now, starting this journey you've been on with Loo & Koo?

Arthur: I was involved with a lot of charities, a lot of community work—heading, chairing all sorts of organisations. I've derived a lot of pleasure out of that. Half of me says I should have been at the office working, but I got a lot of pleasure out of doing it. I thank my lucky stars I was born in New Zealand and I've always wanted to give back to the community. But there were times when my partners or the people at the office were missing my presence at the office, so it's a hard thing to balance. Half of you wants to say, "I should have been at the office working," but now when I look back upon my life and the things that I've done, the experiences that I've had that money can't buy—I've been on all sorts of boards, done trips to China with the Prime Minister, stuff like that—I wouldn't have had the honour of doing those trips if I wasn't involved in some of the things I was involved in. I've headed cancer charities, charities that try to educate school-aged children from abusing alcohol and drugs, I've headed sports clubs, my local community group, all that sort of thing. It's brilliant and taken a lot of time, and a long-suffering wife—a very supportive wife. I'd like to think I haven't made too many mistakes business-wise, not cocked up files, touch wood, not with any of those either.

Rory: That's cool. It sounds like you've done a lot of good, which is impressive. So not too many regrets, but the advice maybe is be a bit more mindful of your time.

Arthur: It's juggling time. Quite often it's been at the expense of family time. You somehow try to hold it all together, make it work, and it has. Having an understanding, supportive wife makes a big difference.

Rory: Our last question was actually about the OCR review and your thoughts on if we were going to get an OCR cut, but it's obviously been announced today that we got a cut.

Arthur: I think that was always on the cards. At the moment the world is topsy-turvy. The OCR only has a little bit of influence on the cost of funds. A lot of our cost of funds depends on what is happening overseas, and if treasury bills in the United States are commanding a high coupon, there'll be more money flowing that way, and invariably it will increase the cost of funds for New Zealand borrowers, for lending institutions. The banks—most of the money that they lend, a lot of it comes from overseas, because New Zealand doesn't save like Japanese housewives. The banks have to source the money that they lend from overseas, and so their cost of money is high, and it gets passed on to the borrower in New Zealand. So over the next few years, it's wait and see. Hang onto your hat and keep your fingers crossed.

Daniel: Just pray. That's where you guys come in—you structure a loan and the borrowers are careful about what they do, they're informed about what they do, and hopefully they won't get into too much trouble.

Arthur: The banks do a lot of that legwork in the background with the stress testing and making sure lending's affordable. But people's situations change all the time, so it's just making sure that you've got a good financial plan and, exactly like you're saying, sound advice from mortgage brokers. Some might want to push a client into something that is maybe a little bit unsafe, but so long as you get sound advice and sound financial planning, they should be safe.

Daniel: Arthur, any last questions? We're good?

Rory: No, I think that's a nice chat, Arthur.

Arthur: Thank you very much. You're very much a friend of Blueprint and hope to have you on soon.

Daniel: Cheers. Thank you.