Of all the things a broker does to limit her firm's professional liability, perhaps the most important is also one of the most difficult and uncertain: hiring newly minted agents.

Experience shows that a team of savvy agents can make an agency nearly claim-proof. Experience also shows that identifying and attracting such agents is difficult. The same agents who are sophisticated enough to do all the things necessary to deflect claims are often (though not always) the agents who are in demand because they can generate business and help an office run smoothly. Often, the savvy agent ends up serving as a coach or as an adviser to other agents who have unrealized potential.

Unfortunately, less desirable agents are generally the most available and easiest to hire. No doubt, this is because few agencies want to hire them. The reasons for avoiding the agent who fails to appreciate professional liability risks (a.k.a. "the loose cannon") hardly need mentioning.

As one smiling broker told me not long ago: "A bad agent is a gift that keeps on giving." The broker knows from experience that claims can arrive years after a loose cannon has left for another firm – at a time when the agent has little incentive to assist with your defense of a claim.

When a broker hires an experienced agent, an accurate assessment of the agent's abilities is often relatively easy. The agent will have a track record. Often, the broker can consult with other agents and brokers personally familiar with the candidate's performance and personality. But when hiring a person brand new to the field, a broker operates in a bit of a vacuum. How can a broker tell which persons will become true professionals, appreciating and respecting the ethical canons governing agents? And how to tell which agents will consistently document important conversations in writing and which know how to spot bad clients early?

Sorting between the good and the not-so-good is part art and part science. Fortunately, there are some general rules (each of which has exceptions) to guide brokers as they negotiate the hiring minefield.

The most important characteristic of an agent who knows how to avoid claims is professional experience. The best of the bunch almost always seem to have professional experience (and possibly a license) in some field other than real estate that demands professionalism, that stresses ethics and that holds members of the profession directly accountable for their deeds and misdeeds. Among the professions that often seem to produce the best and brightest are engineering and teaching. I mention these specifically because I have personally seen these professions produce agents who are sensitive to their broker's need for protection from liability. There are certainly many other such professions.

One can speculate about why these professions tend to produce good agents. My own belief is that these professions, historically, do not pay as well as others that demand the same level of commitment. This creates an economic incentive for intelligent and motivated persons to seek out other opportunities. Moreover, these professions (and those like them) tend to encourage their members to value professionalism for its own sake. These are all factors that provide a healthy and positive rationale for a person to seek out a career in real estate and that help a person develop good habits.

On the other hand, these professions will eventually drum out persons who lack motivation or commitment. I mention this because I know that not all persons with a background in teaching or engineering (or in similar professions) are well suited to a career in selling real estate. Most brokers would prefer not to hire a person who has been fired from their last three jobs – even if those jobs are in an area known as a good breeding ground for real estate agents.

A second important characteristic of a savvy agent is maturity. This often shows itself in how a prospective agent speaks about their past experiences. A mature agent will typically speak very positively about past bosses, past jobs, and past experiences. A mature person will more likely have specific successes and accomplishments they can brag about. And they will more likely speak directly about what they learned from experiences that didn't go as well as they might have hoped.

The opposite side of this coin is the cynic. The cynic is quick to blame others for their perceived failures and is much more likely to be openly critical of past bosses, jobs and experiences. The cynic is unlikely to perform the self-examination needed for personal improvement and is often slow to appreciate the need for professionalism and ethics. The cynic is often too hungry for a commission – regardless of what the commission might cost.

A third positive characteristic is realism. A realistic prospective agent will expect that they will spend at least their first few months as an agent learning the ropes and earning little or virtually nothing. A realist will be happy to trade their sweat and effort for training and experience, because they know such a trade could lead to long-term success.

Fourth, and finally, a common characteristic of the savvy agent is temperance and patience. Does the candidate present as someone who is evaluating you and your agency? Are they prepared to wait for the right opportunity? If so, they will likely apply those same characteristics when a prospective new client appears, eager for representation or when an existing client asks your new agent to bend the rules for their benefit.

The rules above have exceptions, as do virtually all rules. I suspect, for example, that nearly every broker knows of at least one agent who keeps it all together, despite an appearance that suggests disorganization. But as with most rules, following these consistently will typically generate lots more hits than misses.

Published: December 23, 2003

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Spencer K. Stephens is a successful litigation and business attorney in private practice who represents real estate agents and other licensed professionals, such as engineers, architects and surveyors. Spencer has represented agents in litigation, arbitration, in licensing disputes and in mediation. He is a frequent speaker to professional organizations on professional liability, contract law, the Fair Housing Act, and other topics. Spencer also provides corporate, licensing and contract services to brokers. Spencer is currently based in Rockville, Maryland. Contact him at spencer@stephensassociates.net.