The Isle of No Solution

Whenever I traveled to Europe in those days it always seemed to me that I was moving not just through space, but also through time. The Europeans always seemed to be two or three decades behind America, sometimes for the better and sometimes for the worse.

Traveling to the Isle of Arran, however, was a whole other experience. I had traveled 4,200 miles in space, but 150 years in time. From almost any vantage point on Arran, if you ignored the macadam road and the occasional automobile, you could scan the horizon in all directions and see nothing that hadn’t been there in 1835.

And the culture and mindset of the Arran Islanders was even more antiquated than the terrain—it was positively feudal.

Lady Jean “owned” the land on Arran in only the most peculiar sense. The land wasn’t held in what Americans would think of as fee simple ownership. Instead, the land was leased from Lady Jean and held by her tenants in hereditary leaseholds.

In other words, when one of her tenants died, the land was inherited by the tenant’s heirs. The only way Lady Jean could get her land back was if a tenant died intestate and without a single heir anywhere in the world.

Worse, Lady Jean couldn’t charge whatever she wanted for the lease of her land, not even whatever the market would bear. Instead, lease payments were based on the gross revenue produced by the land and the percentage payment was established by law. Those payments were extremely low, and hence there was virtually no incentive for lessees to improve the land—if they did, their lease payments would go up.

Suppose, for example, that the highest and best use of a plot of leased land on Arran was to graze beef cattle, and that that activity could be expected, in a normal year, to produce about £100,000 of gross revenue. Suppose, further, that the gross margin on that revenue was about 15%. The lease council had set lease payments at 5% of gross revenue, or £5,000 in this case. But the gross margin was only £15,000, or, net of the lease payment, £10,000. If feed grain costs had skyrocketed that year, or if the summer was short and the grazing poor, the lessee could easily be in the red on a net basis and still owe Lady Jean £5,000. Why bother?

It’s true that, for the lease to be renewed, the land had to be put to “productive use.” But all that meant, in the local council’s view, was that it not be abandoned. Instead of grazing 100 head of beef cattle, for example, a tenant might graze two sheep and a goat. Gross annual revenue, £18, lease payment to Lady Jean, 90 pence.

As though all this weren’t bad enough, many of Lady Jean’s tenants didn’t live on Arran and had never even set foot on the island. Probably, most of them weren’t even sure where it was.

There weren’t many opportunities for young people on Arran, so young people tended to leave. Eventually, they would inherit their parents’ leasehold interest and then their children would inherit it and so on. The current lessee might live in Buenos Aires.

Finally, Lady Jean was herself a problem. She loved the people of Arran as much as she loved the island itself. The idea of her getting tough with anyone on the island, even the ones who were taking disgraceful advantage of her, was a non-starter.

The situation, in other words, seemed to me to be completely hopeless. That is, it seemed to be completely hopeless until I returned to Pittsburgh and told my boss it was completely hopeless. After which discussion we both agreed that I just wasn’t working hard enough on it.

Back I went to Arran, this time via Edinburgh, where Lady Jean’s accountants were located (at what was then Price Waterhouse). After a terrifying haggis dinner I went over Lady Jean’s affairs with the accountants, identifying especially abusive situations, of which there were, alas, many.

I also met with Lady Jean’s estate managers, whose offices were just outside Edinburgh, and who moaned on endlessly about how unproductive and inefficient everything on Arran was. They did have some useful ideas about how both Lady Jean and the lessees could make small changes in what they were doing that might lead to large improvements in outcomes, but they had no confidence that any of their ideas would ever be implemented.

Finally, I went to London to meet with Lady Jean’s newly engaged solicitors, a firm with the oddball name of “Freshfields.” Actually, many law firms have oddball names, as you probably know. I think there’s something in the Code of Professional Responsibility that requires it. I especially like the Pittsburgh firm of Meyer Darragh Buckler Bebenek & Eck. It’s almost as good as Car Talk’s fictitious legal counsel, Dewey, Cheatham & Howe.

Freshfields pointed out many problematic behaviors on the part of the local council on Arran, the body that oversaw the landlord-tenant relationship. For one thing, the council’s actions didn’t seem to be consistent with Scottish law. For another, since Lady Jean had always been such a pushover, the council had become extremely lax over the years in following required procedures.

Freshfields felt that many of the council’s regulations were probably unenforceable or possibly flat-out illegal—the council members might even be liable for civil fines. More than a few lessees, said Freshfields, were “trespassers ab initio,” whatever that meant.

Armed with all this information, I finally began to see possible light at the end of the very long and dark Arran tunnel. Clearly, there was no magic bullet solution here, but as Kafka liked to say, when there’s no magic bullet, “one must try to wriggle through by subtle maneuvers.”

Next week we’ll take a look at some of the subtle maneuvers we decided to wriggle through on Lady Jean’s behalf.