Attorney, Sue Caskey, originally posted this article on our Main Real Estate Forum.
I posted this in response to someone asking how to find a good real estate lawyer. It can be hard to know whether a lawyer is worth the money you're being charged, and it can be a lot of money to waste!
Hopefully my ideas will help you find someone competent and willing to work with you. I've added a little bit about pre-paid legal service plans that was not in my original post. --Sue Caskey
As a corporate attorney, myself, here's what I looked for when seeking out an real estate lawyer. Find someone who:
1. Spends 60% or more of his practice doing ONLY real estate. Lots of general practitioners will tell you that yes, they can do closings, trusts, etc. But they are actually learning on your nickel.
2. Has been doing real estate law for at least five years.
3. Is recommended by other experienced real estate investors you know. Contacts through your local real estate club are valuable here.
4. Is a member of the local REIA.
5. Invests in real estate.
6. Has several, if not many, full-time, professional real estate investors as clients. Ask about their clients. You want to hear that they represent individuals with everything from Section 8 portfolios to rehabbers to strip malls and other commercial properties. You'll know they've been tried and tested!
7. Is on the real estate committee of your local bar association or is involved in running or developing the continuing legal education courses for the county. Those are classes taught by lawyers for lawyers, and the person who's running them will know his stuff. The county bar association should be able to help you find those people.
8. Works for himself or is a partner in a small firm. While you might find someone very experienced in a big major law firm, they will charge you like crazy. A big firm letterhead is absolutely NO guarantee of quality.
In my opinion, lawyers running their own shops are closer to the businessman's mind set because they run a business too. They are more flexible and willing to work with you on price and more. They don't have to answer to managing partners or hoards of other partners demanding certain profit margins.
9. Is willing to listen to you about certain creative transactions. Things like lease options, double closings, setting up a land trust, 1031 exchanges, creating paper, holding your deposits in escrow instead of having to hand it over to the listing agent, and some other things you've seen on this site are worth running by them. The response you're looking for is one of interest and willingness to work with you.
You may not get complete acceptance because some of it might not be familiar, but if they say they're at least willing to explore your ideas, that's good. You DON'T want someone who starts pontificating about why all that stuff is illegal, can't do it, etc. You don't need a parent, you need a team member.
10. Is available to you regardless of how much money you are spending with them. No matter how "good" the lawyer is--how experienced, if they ignore you they are not worth your time. You need someone who understands that you want a long-term relationship. If they treat you with disrespect, they don't deserve your money. They should return calls and email within a reasonable time frame and should be willing to answer BASIC questions off the meter.
11. Understands that one hand washes the other. If they can refer you to other investors or potential members of your real estate team (CPAs, sellers, etc), and they give you the service above, be sure to send clients their way. You'll be surprised at how a fruitful relationship will develop. This person will have connections that can benefit you.
Notice I didn't say anything about price. If you get everything I've listed above in a single lawyer, he or she will be worth their weight in gold. You will learn enough after a few times to be able to work with him or her efficiently going forward. Build the costs of legal into your analysis just as you would any other costs, just as you would a general contractor.
While many good lawyers will work with you on price, don't insult them by demanding they charge you less because you're "going to bring them a lot of work." You'll identify yourself as a client not worth working with. Remember, someone like the person I've described doesn't need you, but you will definitely benefit from using them.
Switch to someone cheaper, based on price alone, and ignore all the other benefits I've listed above, you might save money in the short term, but you'll lose quality and longer-term money in building your business.
As for pre-paid legal services: I have never used these services, myself, but I have heard more negative experiences than positive from subscribers. Because legal fees can be high, it can seem like a good deal to only pay a small monthly fee and have "unlimited" attorney access. Proceed with caution. In my opinion, whether you are using a plumber or a lawyer, you get what you pay for.
Some of the issues with pre-paid services include unresponsiveness, lack of thoroughness, and an unwillingness to work on anything other than a very basic cookie-cutter legal matter. If you don't think you'll need more than a few contracts reviewed or other minor needs, a pre-paid service may be able to help.
In any case, it's probably a good idea to avoid signing any kind of long-term commitment to pay (say, for one year) and to try to get a two or three-month trial first. Be sure you understand completely what the service covers and what it doesn't cover.
Ultimately, it's advisable to make the costs of a good real estate lawyer a non-issue by building the fees into any deal right up front. As I said, the value of a good long-term relationship with a competent and reliable attorney can be worth far more than the fees you will pay for quality service.