Five Ways to Shrink Your Building's Legal Costs
From time to time, every owner must hire an attorney to represent it in a lawsuit. With the rising costs of attorneys and experts, it is important to take steps to reduce or limit legal fees. Expensive litigation may have spillover effects on your building's value, and lengthy lawsuits may take a psychological toll on you.
Attorney's fees are not cheap. And depending on the type of case you are involved in, these fees can quickly add up. Below, we give you five key strategies for trimming legal fees, and explain each one following the list:
Avoid paying to train an attorney.
Ask the attorney about a flat fee.
Ask for estimates if the attorney charges hourly.
Limit the attorney's administrative costs.
Limit charges for telephone conversations.
Below are the strategies, with examples of typical problems you may face, and their solutions.
1. Avoid Paying to Train Attorney
Problem. “Clients save money with experienced attorneys because they don't have to do the research necessary to become familiar with the relevant law,” says attorney David Byrne, shareholder at Stark & Stark. Ironically, it might cost more to hire an inexperienced attorney with a low hourly rate than one with a higher rate who knows the area of law related to your case.
For example, a manager calls an experienced attorney with a question about the building's wheelchair accessibility and other fair housing issues, because a tenant has recently been confined to a wheelchair. An experienced attorney does not need to spend six hours researching the issues involved, and in one telephone conversation should be able to walk the owner through exactly what he needs to do.
Even if you hire an experienced attorney, he might assign the work to an inexperienced associate fresh out of law school. The inexperienced associate's billing rate may be lower, but you could end up paying more in the long run if it takes longer to get the work done.
Solution. Find out how much experience an attorney has with your particular problem. Ask the attorney how many cases he has handled on the subject. Find out whether other attorneys and professionals, such as para-legals, will be working on your case, and ask about their level of experience and their billing rates. Make sure billing rates are appropriate for the level of experience or job category.
As long as you are not paying for training time, you may want some tasks handled by an attorney who bills at a lower rate, or by a paralegal. For example, you do not want to pay a partner's high billing rate for the preparation of a simple document or letter. When you hire the attorney, ask which legal documents can be prepared by a paralegal or a less experienced attorney at a lower rate.
2. Ask About Flat Fee
Problem. Attorneys generally bill by the hour. The more time they put in, the higher the bill. The hourly rate can vary greatly, depending on the experience and position of the attorney working on your case. Less experienced associates will charge less per hour than experienced partners of a law firm.
Solution. You may be able to arrange or request that an attorney charge you a flat fee for a case or a specific service within a case. The flat fee should cover the cost of the case, or a specific task within the case, from beginning to end, except possibly for court fees. “The obvious benefit of a flat fee arrangement for an owner is cost certainty,” says Byrne.
Attorneys may be reluctant to quote a flat fee, because the party bringing the lawsuit may try to make the lawsuit expensive for you. That party may require depositions or witnesses' recorded testimonies from an unreasonable number of people. Or the party could file motions with the court every week.
However, within a case, your attorney may be willing to charge a flat fee for particular services, such as a deposition that your attorney requests and will control.
While flat fees are generally desirable, be wary of flat fees that seem too good to be true. An attorney getting paid a flat fee that is too low may be tempted to cut corners on your case.
3. Ask for Estimates if Charged Hourly
Problem. Depending on the case, an attorney may not be able to accurately predict how much time he will spend on a case, and for this reason may be reluctant to set a fee in advance. This leaves you hard pressed to budget for attorney's fees, since you will have little idea what you will wind up paying.
Solution. If you will be charged by the hour, try to get your attorney to establish a fee cap. Have the attorney notify you when the cap is reached and get your consent before adding to the bill.
Another possibility is to ask the attorney to give you an estimate or fee range. An experienced attorney can give a general range of how much a case may cost, assuming the case takes a predictable course. If the attorney is reluctant, you can ask what the cost was for similar cases the attorney handled. This should give you an idea of what your costs will be.
Asking for an estimate or about previous costs tells the attorney that you are cost conscious, which makes it more likely that he will call you first before doing extra work that runs up the bill.
4. Limit Administrative Costs
Problem. If you are paying hourly rates, you may also be billed for certain administrative costs. These small or incidental costs, for photocopies, faxes, and so on, can add substantially to your bill. You might not question these extra costs—compared to the overall bill you are facing, they may seem trivial. But they can become a sizable expense as a case moves along.
Solution. Find out beforehand what items you will be charged extra for and how much. Ask about:
Postage (including express mailings);
Transportation to and from court and meetings.
If a charge seems unreasonable, try to negotiate it down.
5. Limit Charges for Telephone Conversations
Problem. If you are being billed at an hourly rate, the attorney is probably charging you this rate for your telephone conversations with him. If you don't realize this, you may unwittingly and unnecessarily increase your bills. You may start or end telephone conversations with your attorney by making small talk having nothing to do with the case. Or you may call the attorney and ramble on.
Solution. Ask whether you will be billed for the time you spend on small talk unrelated to the case. If the answer is yes, plan to cut out the small talk unless you are willing to pay for it. Later, if you call your attorney about the case, be prepared with a list of questions and concise explanations, so that you don't waste time.