I keep reading advice to talk to a lawyer or have a lawyer do certain things for you to make sure everything is good (ie for forming your LLC, and other real estate transactions).
However, I have this notion that lawyers are prohibitively expensive for normal people. I have no experience with lawyers.
Can someone give me a brief rundown of how lawyers work? Do they charge by the hour? What are some typical prices?
Many lawyers will give you 30 min to an hour consultation for free because they want a new client. Of course if you come across as total newbie with no money or resources they may not think of you as a very good potential client. Take some time to learn a little before you meet and prepare with good questions. Have a reason for your visit not just to chat.
I remember the first attorney I worked with and he said "I am expensive" He said he was $250 an hour which I did not think was as bad as i expected. he spent an hour with me and my partner and did not charge us.
Today I get unless I had very specific need in an expensive area I would not expect to pay over $250 hr. I bet a lot of stuff I get done is closer to $100 hr. I get a lot of things done, like documents drafted, for $75 to $200 total, that I thought would cost me more.
Nolo Press has a lot of legal self help books and I recommend them highly. I do not recommend you do your own legal work but knowing more about the law will cut your legal costs. You will also get better service when you can talk to your attorney more intelligently.
We are spoiled. Our attorney & his para-legal are on call anytime & we have often dropped by his office unannounced to get a quick decision. Over the years he has saved us a lot of money & grief.
However, we have never been charged for anything other than a final proceeding per se. BUT we have done a lot of business with him & referred many, many clients.
I was amused when we were reviewing the final papers on my son's new build. My wife crossed out the legal fee & halved it, then told him to apply it to another deal we brought him.
Establishing a personal rapport with an excellent attorney is beyond valuable.
@Jeff L. I am in South Florida and my business associate @Chris Kennedy and I have been lately shopping For different attorneys who specialize in Probate Law since we have been dealing with the sale of a property where the seller needs some representation. Based on our research we found attorneys in Ranging from $350 -$500 I'm sure of course you will find more expensive than that range but that is kind of the average. In regards to an attorney who dies closings which is not a must in FL since you can use a title company the price range from $500 - $750 for the closing docs... Wish u the best
As our business model has been largely built around relationships with attorneys for decades, we probably have more experience than most any others on BP.
Unfortunately, there is no simple answer that fits all cases. Many routine legal services are charged on a flat base fee basis (eg. Evictions).
In CA, Probate of decedents estate cases are charged statutory fees based on value of gross assets.
In So Cal, litigation attorneys charges start at around $400/hour on up. I pay one $600/hr.
If want good answers, you'll need to ask better questions. The OP's question is fine however unless specific as to a particular legal situation, it's only conversation.
So, already you can see a wide spread in fee structures. @John Chapman might chime in.
I suppose I'm the few Rick mentioned. I think what the OP is after is how to get advice and what it might cost in real estate and "light" business matters. When I was a young landlord I was in the Army and lived across the street from an attorney, a judge. Neighbors with kids playing together, we had a personal relationship, so that doesn't count for most I know. He assisted me, a few minutes at a time, pointing me in the right direction. Later I went into insurance and later estate planning, so naturally I took others to him at his office. We worked together, I gave seminars and his participation along with that of a local stock broker made a pretty good team for estate planning.
That story tells you that if you are in a position of meeting and knowing an attorney on a personal basis, they may not represent you, but may well point you in the right direction and you may get very good advice without any charge at all.
Free is good and it can be had. You certainly don't want to try to make or appear to make friends for assistance, very bad approach, be professional.
Understand that trust is a two way street too! When your attorney sees that you are trying to do the right thing, that you don't pose some matter where you could become a "liability" or PITA, that professional relation can develop.
New investor/operators post here how their attorney won't help them or tell them no or won't work with them. You probably have an ethical and experienced attorney and you're the one that has been mislead in your strategy or tactics, "investor friendly" attorneys are often asked about. All real estate attorneys are investor friendly, they may not be sham friendly or deal in some predatory manner, that's the problem. So, as Ned mentioned, doing some work yourself to ensure what you present isn't off the deep end, will get you past being turned down and save you money.
Next, what can you do for them? As a newbie, probably not much, other than speak highly of them, provide word of mouth advertising for them and point others to them. Scratch my back and I'll scratch yours is almost an unspoken discount. But, I suggest you not just tell an attorney that you can or will "advertise" for them, instead ask them!
I nor any professional wants or needs a "third party influence" that might be seen as uninformed, advocates poor practice or with a wrong attitude, please don't tell others I help you! So, they need to trust you before you try to build a reciprocal business relationship.
Their immediate perception of you counts too. Dress business like, you don't need a suit, but don't go in covered in sawdust and paint on your tennis shoes.
I think that age matters too. I believe, from my experience, that other professionals will cut some slack if they can for younger people starting out. They know you aren't loaded. Those that I met seemed to be a bit more helpful when I was in my twenties, so if you're a young one starting out, you'll have an advantage, just don't be pitiful and needy and be as professional and honest as you can be.
Again, Ned and others implied, don't bug them. Have your questions well thought out, do your homework, have a draft of what you want, do not try to use legal jargon, just use plain English. Don't look like an idiot trying to be a lawyer. If you get a contract from some guru, tell them you had nothing to do with drafting that document, chances are it's full of crap and won't be customary in your area, don't be implicated to documents made by others!
While many attorneys in some areas will offer a free visit, it's usually for bankruptcy, social security claims, accidents, divorce matters and often that visit is a sales pitch as to why you need them. However, initially, you are interviewing an attorney to hire them. You can certainly ask for fifteen minutes, in that time, expect them to talk about themselves, experience and litigation work. You need to know that, but half that time should be yours to inquire about topics of concern to you.
That doesn't mean ask for specific advice on a particular transaction but rather an overview of how they approach something. Phrase your questions so that you're not forcing them to advise you as a client but to educate you. I have known a few who loved talking about what they do and how they do it, you might be there for an hour an not get a bill!
So far, we have free advise!
New attorneys will usually be much cheaper than those with experience and a large client list of well paying clients. They are in business just like any other service provider.
I've had different rate structures from hourly, a contingency meaning they get work based on an outcome, on a retainer basis, paying so much over time even if you don't use them, per function, like X dollars for a closing and a salary, but I don't think newbies will be having a staff in-house attorney.
Even a brand new attorney out of law school and who just passed the Bar exam can probably do any contract in residential settings. They can not command the fee as the old salts in the area, just like most of you starting out. Prices per hour here can range from a hundred buck hourly to a couple grand an hour, you don't need the big guys and if you ever do, you really screwed up.
I'd say a contract review, touching up poor wording from an existing document could well be free if you close with them, if you don't expect a hundred bucks for a residential deal. You might get a boilerplate contract for free to $50, if they just had it to you. Boilerplate may be customary in your area, that means they just went to a law library on line and printed it out, a para-legal may have typed in the names and address, it's not really "legal work" as much as being a form store.
All fees are negotiable, just like your fees. Set fees for title exam, settlements, evictions, giving notices or writing a letter are often standard, it may not be taken well if they say a letter is $100 and you offer $50 or $75, pick your battles in negotiating fees. Consider the scope of work to be done, if most everything is already done and they spend 30 minutes giving an opinion, that might have more flexibility.
I don't pay an attorney's hourly rate for para-legal work, coping fees, actual mailings at a post office, travel time ot other such administrative support matters, IMO, that is not legal counsel but clerical or messenger work. Don't be afraid to negotiate fees.
Do recognize the overhead they have, rent, utilities, insurance, professional fees, employee costs, etc., you're not just paying for one person's opinion. Those working in larger offices with partners, you'll find they may have less leeway with charges as the office and partners are cut in. Not saying a larger firm will be more expensive but junior attorneys may have less leeway to negotiate.
Realize too, getting an attorney on board is a commitment that you make in your business, are you serious or too scared to really get into real estate? Those legal fees are not just a one time fling, a contract can be used for years and your ultimate cost per deal might be a dollar or three dollars! You are also learning! While newbies consider paying gurus and mentors thousands, your attorney will be a much better value than any junk you'll buy from non-attorneys. They also know the courts, how things are settled, what is considered predatory, might be seen as trouble based on past actions as well as what the local judge might say! No guru or anyone else you might be paying can tell you what local views will be, if they say they can they are misinformed or just lying to you. It takes an attorney to do that, so get one and use them! Good luck :)
Thank you all for the helpful information you have provided regarding attorney fees and what to expect. I am new and I have formed an LLC already. However, I just spoke to an attorney over the phone trying to see if he can help me with self directed LLC and he quoted an hourly fee of $435 and a retainer of $500. I think that is too much for Minnesota? Is there anyone from Minnesota here who can voice in?
Also, the attorney stated that I will have to form a new LLC despite me having an existing pass through LLC. That makes me feel he wants to charge me fees just to justify his services and I told him as much. I just want someone to work with me with what I already have instead of disqualifying what I have before he even looks at it. So he stated that it will take him just 5 mins to decide after looking at the formation of my LLC to tell me if it will work or not for a self directed IRA.
I do know it is vital to have a lawyer, but is it necessary to have a lawyer on retainer if you do not have a deal yet? And does anyone from Minnesota have attorneys that they recommend?
Pauline. I am the number one expert on self-directed IRA's in MN. Happy to help you with this issue and you can come to my free IRA education session this Thursday at 4:00
I have not dealt with a real estate yet but my child custody lawyer want a retainer fee (prepaid) with hourly rate of $250 taken from the retainer fee. He did provide a hr consultation meeting $100 to help educate me prior to signing on with him. I think location will play a part in fee pricing as well.
It also helps to understand how the hourly rate is so high. Within the client hourly rate profit, overhead expense etc in addition to their personal hourly rate are built into this. There client billing rate has to cover all the people (like admin) that are overhead expense people or don't provide a service to sell to the clients. As an architect, I have a client billing rate (that varies per type of project) of anywhere $125 to $200 an hour. This is nowhere near what I make per hour because of an overhead and profit multiplier we use.
Hi @Todd Grill
I am glad to hear back from you so quickly.
I would be happy to get more info about your session this Thursday.
I maybe running late due to work schedule but would love to learn more.
@Jim Adrian Thanks for your feedback. Yes, pricing do vary by location but there should be a national average. That is why I posed this question on this forum. So far, it seems to be averaging around 250 for retainer.
The title attorney I use bills out at $450 an hour. However I get most of my legal advice from them for free, since most of the things Im asking them is going to facilitate me sending them business. My family lawyer bills out at $375 an hour.
Depends on your connections. For me, I've been getting free legal advice & work from my business partner, who is also a friend of mine (inside & outside of RE). I'd say building rapport with local attorneys would help decrease costs.
I hired an office assistant to do all my dirty work, 40/hr, then refer it back to her boss which charges 150/hr. The office assistant was an acquaintance from an RE meetup. Some lawyers have different types of fees, I saw one law firm that charges in 3 tiers, one for grunt work, one for mid class which they'll assign a new lawyer and last was for critical cases done by one of the partners. They charged from 100-200-350. Im picky, so I measure their capability by the number of steel cabinets they have. I know a lot are using online, but it is my best guess. Just like when an employee is interviewed, I ask to bring all their tools, that will give me an idea on what they normally do and how often they do it. National average varies, I would say an average within your county is more accurate.
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