Landman, Lawyer, or Trustee?

Eeenie, Meenie, Miney, Mo….

In the U.S. it is very common to inherit minerals and royalties from one generation to the next, although they can be transacted, or bought and sold, like any other form of real estate.

Those who have become mineral and royalty owners upon inheritance, or as investors new to the business, are oftentimes not necessarily trained or educated in the oil and gas industry to know exactly how to handle this great responsibility and make sound investment decisions.

Make no mistake; these decisions absolutely require some expertise to allow you protection and to maximize your investment of your family’s precious mineral and royalty assets. No matter which of these two categories you fit into, you will either need to get educated as one of these three roles described below, or more easily done, hire one of them to help you.

To help decide which path is right for you, or which of the three professionals you will need to hire, I describe the value each profession brings to the table from the most conservative and least flexible to most cost-effective and most flexible.


PRO’s: Middle-of-the-road, will work to keep your assets from diminishing

CON’s: Least flexible, passive – won’t work to maximize your assets, high fees $$$

When a former generation passes on and leaves the next generation their inheritance it is oftentimes passed along via a Trust; this Trust is and has to be managed by a bank trust officer or Trustee.

Trustee’s or Trust Officers provide various services; they are asset managers with strict fiduciary duties to be impartial, transparent, loyal and accountable to you.

Due to their highly conservative nature, their hands are tied in a number of ways, the services they provide are limited and quite expensive for what you get.

Impartial and Conservative

Trustees are prohibited by law from earning any fees or profit from marketing or developing your mineral and royalty assets and estate which could be a plus for you, yet it could also negatively affect the bottom line of your mineral portfolio, just depends on how you look at it.

Although some mineral and royalty owner’s value their peace of mind more with a licensed fiduciary managing their assets whether their portfolio makes money or not.

They are not paid to “grow” or “maximize” the value of your mineral and royalty portfolio so much as they are obligated to ensure they don’t diminish the value of your assets instead.

In most cases, they feel “successful” and quite proud of themselves if they earn you even 1% annual gross returns. (Although depending on the size of your portfolio, that 1% may be eaten up in fees.)

Another thing Trustees are known for NOT doing, unlike Lawyer’s and Landmen, is they will seldom generate or conduct a formal bidding process and invite as many companies as possible to bid for your lease to ensure you receive the highest bonus payments and most favorable lease terms and royalty rates the market will bear.

Strict Fiduciary Duty

Trustees are also held to such a high standard by law and are subject to severe consequences for a breach of trust or fiduciary responsibility that oftentimes Trustee’s will limit themselves to basically managing your assets or estate only.

They do not provide you with other services quite necessary to properly and holistically manage one’s mineral assets or estate.

How They Charge

Trustee’s or Trust Bank Officers can charge for their services in various ways. Here are a few ways they manage your assets and their potential fees:

1. By the hour

    • They can research oil and gas production history within a various region which could range anywhere from ~$250-$450/hr. They can charge the same kind of rates for negotiating oil and gas leases.
    • Clerical duties range from ~$25-$75/hr.
    • Copy and filing fees, answering emails and taking your phone calls have specific fees, but may still be charged by the hour. (I don’t know about you, but $250-$450/hr. for a conference call sounds a bit steep!)

2. Charge a percentage of the annual income generated by one’s assets

3. Charge an annual percentage of the total value of one’s assets

These last two percentage charges can be very costly to mineral and royalty owners and one might feel a bit “taken” for what little Trustees are actually capable of doing.

Trustees are Best Suited for:

In most cases, it is not practical for most individuals to have a Trustee as the cost/benefit ratio isn’t all that favorable. Having a Trustee is geared more for bigger budgeted companies and high net worth individuals or groups due to their conservative and risk-averse business methods.


PRO’s: Protect you from liabilities; educated experts in oil and gas law

CON’s: Protect you from liabilities with risky consequences, highest fees $$$$

Lawyers have more flexibility and tend to be much less conservative than Trustees.

Much like having a Trustee look after your estate or portfolio, oftentimes when the previous generation passes on and leaves everything to the next, the family attorney goes along as well.

The family attorney has a good amount of knowledge of the events that took place during the time of the former generation so the next generation tends to leave matters up to them to handle because of the trust factor and because they will more than likely want to grow their new asset, of which the Lawyer has the flexibility and ability to do, regardless of what the family lawyer charges.

Bulldog Mentality

Due to their sometimes adversarial, culturally-combative nature, Lawyers also tend to run off more business than they close costing you more money for their time because as sure as death and taxes, you’re going to be paying for their time!

Lawyers are all about protecting you from liability and worst-case scenarios by minimizing, or possibly eliminating, your risks with lengthy and burdensome contracts. They tend to operate from fear thereby rubbing people the wrong way and pushing away perfectly good business from others willing to work together for the betterment of both parties.

In fact, this might seem somewhat contradictory, Lawyers oftentimes hire Landmen to develop and negotiate their client’s leases on their behalf while they focus on the management and legal side of the business.

The best scenario would be to work with a Lawyer who has extensive experience as a Landman.

How They Charge

Similar to Trustees and Landmen, Lawyers also charge by the hour and have fees for certain activities performed on your behalf. They are also 9 times out of 10, the most expensive of the three.

While Trustees are generally discouraged from developing one’s assets for the highest possible returns and best possible outcome, Lawyers are not.

Lawyers love having clients that want them to develop their assets due to the exuberant amount of time it might take to finally get a lease, or to sell one’s mineral and royalty portfolio to the best group possible and for the best price and terms possible.

This process can sometimes take months or even years, depending on the area in which your assets are located and all the while billing you for every aspect of the process along the way. Because Lawyers are able to provide management and development services for their clients, their legal fees can range from ~$350-$600/hr., which can be dragged out for long periods of time.

Lawyers are Best Suited for:

Deep-pocketed, budgeted public companies and high net worth individuals who own thousands or tens of thousands of mineral acres. Most of these types of high net worth individuals, groups or publicly traded companies are oftentimes being surveyed with high public scrutiny.

With this, and constant shareholder oversight, these groups are better off having retained representation from a large well-known law firm with possibly a team of lawyers managing different aspects of their larger asset holdings for the sole purpose of increasing the value of their mineral and royalty interests.


PRO’s: Most flexible, experienced from the ground-up, zero to low upfront fees $

CON’s: Can receive premium payments for their risk and payout to other brokers

That’s me!

Landmen, In-House and Independent, are generally far more experienced than Trustees or Lawyers.

Most Landmen are typically career and company men and women that have been employed by a major oil company within their land department working with Geologists, Reservoir Engineers, Lawyers, various contractors, regulatory, etc. gaining real world, practical experience for years at a time.

With their big company training and negotiating skills, they have unique skill sets and value-add qualities for clients ranging both big and small.

Landmen are trained to run title, negotiate oil and gas leases, negotiate surface use agreements, manage ratifications, pooling agreements, joint operating agreements, handle division orders and manage day to day operations for their clients, all while not having to get caught up in the minutia of being a fiduciary officer and the legalities of a lawyer.

In-House Landman vs. Independent Landman

In-House Landmen and women are employed by an oil and gas firm or corporation. They are not allowed to, and do not receive bonus payments or royalty dividends since their duty is to represent the company they work for. They do all the necessary legwork under the direction and management of the company they represent.

Independent Landmen and women tend to have larger networks of company Executives or company Landmen and/or independent Landmen they do business with. The Landman’s job is to get the best possible outcome for their clients because if they do, then the monetary rewards can be substantial for them as well.

One way to make this happen is with the support and/or the relationships Independent Landmen have with oil and gas firms and corporations. If your Landman decides to bring in a partner then that means he has to pay them a portion out of his payout, which could mean a higher premium payout for the Landman to make up for this disbursement.

Why would your Landman bring in a partner?

Your Landman may decide to bring in a partner for a number of reasons, none of which are not out of the ordinary:

1. To share in expenses

2. To bring in additional expertise

3. To utilize his/her network

Is it better to do business with an In-House Landman or Independent one?

This is a question we get a lot and the answer is, potentially yes and no, for both. Check out this article for the complete answer. In-House Landman vs. Independent: Which One is Best?

How They Charge

Landmen, 8 out of 10 times are probably the best option to go with. And I’m not just saying that because I’m a Landman! They are usually the most flexible and least expensive of the three with a wide range of expertise and skill set. They charge far less than Trustees and Lawyers, usually $50-$175/hr., or by the day, and operate from their home or small office with very little operating expenses.

Because Landmen generally have smaller budgets and operating expenses, they can customize their fees to be very manageable for their client.

In many cases, unlike Trustees and Lawyers, Landmen have the ability to assume more risk with the capacity and flexibility to perform their management and development duties or services for little or no upfront charge.

Landmen are Best Suited for

Culturally, Landmen are more entrepreneurial so they make excellent managers and developers of mineral portfolios or estates. They also tend to be excellent communicators with folks from all walks of life – from high-level executives to Mr. and Mrs. Rancher/Farmer.

Working with a Landman is also ideal for the client who has little budget since typically there is zero to low out-of-pocket costs.

Good Landmen can be a great resource to discuss your mineral and royalty assets and potential land management needs.

Great Landmen are experts in minerals and royalties and land management and have solid relationships with reputable companies in the industry.

Make sure you do your research, ask people you trust for a recommendation and if anyone ever tries to lock you into a contract without giving you time to review it, don’t sign it, get out quick and find another professional to discuss your scenario.

An excellent Landman that values their work and relationships will discuss a plan of action and show you their value prior to putting a contract for specific services in place.

Don’t sign any contracts unless your lawyer takes a first look. If you don’t have a lawyer or can’t afford one to review any contracts for you, you should feel 100% comfortable with the Landman you’re signing a contract with.

I hope this helps in your decision-making process! Be sure to check out our FAQ page where you can find tons of information to further help guide you.

If you want to have conversation about what’s going on in the industry, schedule a time to talk with me or fill out the form below letting us know how we can help and I’ll get in touch with you.

Kyle D. Venema

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