Amid the sea of litigation that has transpired within the real estate industry, one case marred with controversy has come to an end.
Compass and Anywhere, the real estate holding company formerly known as Realogy, decided to end their three-year legal feud after the two companies submitted a joint filing to the New York Supreme Court announcing that they’d settled their dispute.
According to the October 4 filing, the two brands agreed to the “voluntary discontinuance, with prejudice” of all claims Anywhere—Realogy at the time—made during the legal dispute along with the counterclaims and third-party claims Compass made in response.
The filing also indicates that both sides will cover their legal costs and expenses of the lawsuit.
Much like the filing, Compass and Anywhere also issued identical statements regarding the settlement, stating that both sides “amicably resolved the litigation between our two companies and related parties.”
“The Settlement Agreement is confidential, so we are unable to comment further,” both parties said in the statement.
The aforementioned amicable settlement seemingly contradicts the legal duel the real estate brands have engaged in over the past three years.
Anywhere initially filed the lawsuit in July 2019, making several accusations of “unfair business practices and illegal schemes” it claimed Compass implemented to “poach” top talent and “gain market share at all costs.”
“Compass has engaged in a deliberate and systematic scheme to take from its competitors, including from Plaintiffs,” Realogy claimed in its complaint.
The company alleged that Compass “grossly” inflated its compensation for recruits while leveraging $1 billion in funding from outside investors to cover losses from reeling in competitors’ employees.
The complaint also claimed that the New York-based firm lured recruits to break non-compete contracts by divulging intel while promising they would protect them legally if they were sued.
Additionally, the complaint accused Compass CEO and Co-Founder Robert Reffkin of “personally” seeking a “price-fixing” deal with Realogy, “where the two companies would agree to limit agent compensation and compete on brand,” which Anywhere refused.
Compass wasted little time disputing the allegations, rebuking Anywhere’s claims and claiming they were seeking to use “the court system to stifle competition.”
The New York-based firm took it a step further by filing a counterclaim in 2021 that alleged—among other things—that Realogy spread misinformation about Compass to suppress its growth.
Compass also alleged that Realogy’s initial lawsuit was part of a smear campaign against it.
Despite the digs made against each other, Compass and Anywhere managed to find a way to quash the legal battle they’ve waged throughout the pandemic.
The decision comes as both companies continue to weather the shifting housing market.
Admittedly, both companies haven’t gone unscathed, as things have cooled down from the hot market of the past two years.
On the one hand, Anywhere posted a second quarter net income of $88 million, a decrease of $61 million. Company executives partially attributed the decline to the unfavorable shift in economic conditions that have plagued businesses nationwide.
“Record increases in mortgage rates, to nearly double what they were a few months ago, combined with rising inflation and broader macroeconomic concerns, has substantially changed buyer affordability, buyer demand and seller expectations. And we saw that mostly later in the quarter, especially in June,” said Anywhere CEO and President Ryan Schneider in a July earnings call.
Like many companies this year, Anywhere implemented a round of layoffs, though the company didn’t disclose much about how many positions were eliminated and in what areas.
While the possibility of layoffs wasn’t mentioned during the earnings call, Charlotte Simonelli, Anywhere’s executive vice president, chief financial officer, and treasurer, emphasized that the company had taken several steps to bolster itself against current and future economic headwinds.
That included cutting costs across the board, reducing their retail office footprint and streamlining their administrative support structure by implementing greater automation.
For Compass, the transitioning market has forced the New York firm to reevaluate its plans for the rest of the year as the company seeks profitability by next year. During its second quarter earnings report, Compass announced that it would tighten up its expenses and implement a “significant cost reduction program.”
That has ultimately ended at Compass, as company executives indicated during an August earnings call with investors that it would cut back on investing in technology and would be sunsetting its use of equity or cash incentives to recruit new agents in the future.
Historically, Compass has been known to offer a mix of financial incentives, including stock options, as part of its compensation package to recruit agents. Over the years, the company had also been criticized—and sued—for its approach to recruiting agents, which has also included providing higher commission splits to top performers.
Compass recently implemented another round of layoffs as part of its cost reduction efforts, with the most significant reduction coming from the technology team. The workforce reduction is in addition to its June 14 layoffs when Compass let go of 10% of its staff.
“We are fortunate to be in a position where we can reduce our costs while still being able to invest and create more for you than any other company in the industry,” said Reffkin in a memo to agents.
“The Company believes it is in a position to reduce its go-forward investment in technology given the maturity of the Company’s technology platform,” Compass said in an SEC filing announcing the layoffs.