It’s not uncommon for someone to give my firm a call to “let me know” that they have a real estate purchase or lease coming up, although they don’t yet need a contract reviewed or drafted, and don’t yet have a location or due diligence items to review.  It’s also not uncommon for someone (sometimes the same person) to let me know that “they gave us everything we wanted” so they didn’t need legal assistance. Unfortunately, this is probably not true, although it may not rear its ugly head if they are lucky.

Legal counsel for a real estate transaction provides clarity regarding all the issues that aren’t necessarily on the term sheet, letter of intent, or first couple pages of the contract. When an agreement is more than a couple pages (which most real estate contracts tend to be), the legal implications of the rest of the document after the first page need to be understood and reviewed by someone that has your interests in mind. That’s why you need an attorney.

If you are the buyer, then you are generally responsible for the initial draft of any agreements.  If you are the landlord in a lease transaction, then you are generally expected to provide a lease.  I would recommend bringing in an attorney prior to the initial draft, in order to discuss your goals, the external considerations for the transaction, and to structure the initial drafts according to your desires.  Furthermore, your attorney can make sure that the document is at least even-handed, or that if it favors one side, it favors yours.  Form documents used by many commercial realtors have provisions that favor one side or the other, and you may not be on the right side!  After the initial draft, you can negotiate the various points that arise after both sides have reviewed the agreement.

Many times, deals suffer from a short-circuited timeline.  Attorneys will get a call and be asked to review and turn around a draft of a lease or purchase agreement as soon as possible, with little or no time to meaningfully negotiate.  It is important to leave time for negotiation.  The party that would suffer a worse position from a lack of adequate negotiation is typically the tenant or the buyer.  This is because usually the landlord has a prepared lease and if it’s not negotiated then he got everything he wanted, and only had to negotiate the business details (rent, tenant improvement, etc.).  For a purchase transaction, the buyer is the one who will be taking ownership of the property, so making sure you’ve investigated properly and negotiated contingencies in case something is wrong with the property are important.

Stay tuned! Next time we’ll cover the some of the periods within a commercial real estate purchase agreement.

Let’s be honest, you don’t want to pay more in legal fees than you have to pay, but you want competent legal advice and help.  Attorneys structure fees in three different ways, primarily:

1. Hourly – The law firm bills on an hourly basis for the professionals involved. This has the advantage of only paying for time spent, but the disadvantage of not knowing how much time will be spent, in advance.  Sometimes this can cause conflict as there may be expectations regarding the bill that are not met.
2. Flat Fee – The law firm sets out a particular scope of work and collects a flat fee for the work. This has the advantage of giving a hard number in terms of cost for the work.  The disadvantage is that the scope may be inflexible, and if other matters pop up that need attention, then additional fees will be incurred.
3. Contingency – This is where the attorney only collects based on value provided, generally in the form of payment from the other side. This has the advantage of requiring little to no up-front investment from the client, but the disadvantage is that only a few kinds of representation are suitable for this. Generally personal injury/property damage situations, or large estate battles are the kinds of cases that firms will accept for this kind of fee structure.

Make sure you know how your case will be billed, and don’t be afraid to ask if you don’t understand.  It is important to point note: attorneys generally are paid to be involved in the process, and NOT to provide a result (except in the case of contingency fees).

“Just talking” about a situation is seeking counsel from the attorney and is taking time away from other legal matters that they could also be billing for, so be prepared to pay in order to talk about things.  Be careful not to eat away at your own legal budget through repetitive or emotional conversations that don’t actual lead to counsel or decisions being made, if you can help it. Sometimes it is the nature of legal matters to be stressful and it is understandably emotional.

If you are paying a professional for their advice, then there are generally three inflection points for interaction.  If you keep these in mind, it can help to keep your interactions efficient, while receiving good counsel and legal help.

1. Information Gathering – The attorney will need all the information, documents, legal purposes, and externalities in order to consider, conduct research, perhaps draft documents or court papers, and then provide counsel/representation. In this stage it is critical to be honest with your attorney so that they can give you the best advice.  It is also most efficient to be diligent and responsive.  Failing to provide documents or information for a month, and then being frustrated later at the pace of the matter is a self-inflicted issue that can be somewhat resolved at this stage.
2. Research/Drafting/Representation – Whether going to court or negotiating a deal, the attorney will most likely need to conduct research, speak with other parties/individuals on your behalf, and draft or review documents. At this stage, responsiveness is critical, as the attorney may have a specific and nuanced question or set of questions that come up as they dig into the details of the situation.
3. Counsel/Follow-Up Issues – Once representation is underway, the attorney will eventually circle back with the client to provide their assessment of the situation, whether it is a strategy or list of options for proceeding with a lawsuit, or comments and red-lines on a set of contracts. At this stage it is important to make sure you understand the counsel being given.  Don’t merely say, “Whatever you think,” as there may be other decisions later on that build on decisions near the beginning of representation.  Sometimes attorneys can get bogged down in legalese, so don’t be afraid to say, “I don’t understand that word, or legal term.”  It’s up to the attorney to make sure you can understand so that you can then tell the attorney how you would like to proceed, but without feedback, that won’t happen.

As a case or negotiation proceeds you will go through the loop above multiple times.  Over time, your relationship with your attorney should develop into one of camaraderie and collaboration.  Your attorney has your best interest in mind, and if you don’t believe that they do, you should seek other counsel, as trust is the bedrock of a good attorney-client relationship.  If you end up needing an attorney on a regular basis, then having a good attorney by your side that you can proactively strategize with should save you money in the long run.

Part 2, Picking The Right Attorney

Once you have found an attorney in your practice area of need, it’s important to make sure you are comfortable with them. An initial consultation serves this purpose. You should budget at least some amount for consultations. I would recommend at least $500 so that you can meet with two or three different firms and get a feel for what makes you most comfortable. However, my firm, as well as many others, will give a complimentary consultation of half an hour to one hour to potential clients who are referred by other professionals within our network.

That said, don’t expect every attorney to hand out free consultations every single time; their time is valuable, and giving up their time for free is a complimentary favor and should be respected as such.

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Sally called both of the law firms that her accountant recommended and scheduled a consultation with each one. One of them offered the initial consultation for free, but the other charged her $300 for the initial consultation.

She wasn’t sure which was going to be the best fit, and her accountant had recommended she meet with each to see which firm made her more confident of getting what she needed.

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At the initial consultation it is important to have any documents with you to allow the attorney to briefly look them over. Write down the key points of your situation ahead of time so that you don’t forget to bring them up at the meeting. Make sure to present the result or goal you are looking for clearly, and see what the plan or options are that the attorney presents to assist you in reaching that goal. Different attorneys will approach the same situation differently, and finding one whose approach is similar to the approach you would take can be helpful.

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Sally and her partner met with both attorneys.

The free consultation only lasted half an hour, but was very informative.  However, they wanted her and her partner to each find an attorney so that they could negotiate a partnership agreement, and would not take them on as clients together.  He also talked very quickly and didn’t seem to like explaining things to them.

This meant that her partner and her would both have to spend money on attorneys separately.

The firm that charged for the consultation gave them the option to represent just one of them, or to represent their company, so long as they signed an informed consent form that allowed the firm to do so.  They also had a flat fee proposal for the agreement that Sally and her partner liked.  Finally, they also were patient and happy to explain things that Sally and her partner didn’t quite understand.

This second firm seemed like a better fit and Sally left the consultations feeling reassured that her and her partner’s business would have a strong legal framework to support it.

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Once Sally and her partner had found business attorneys that could help them, they did the right thing by meeting with multiple professionals and seeing who they were more comfortable with.  Since trust is a key component of a successful attorney-client relationship, starting a professional relationship with an attorney who doesn’t make you feel comfortable with their representation or advice is just asking for trouble later on.

Stay tuned for the next installment, where we’ll discuss managing your relationship with your attorney.

 

Legal Disclaimer:  This blog does not constitute legal advice.  Reading this blog does not form an attorney-client relationship between you and our firm.  If you have a legal issue, you should contact the firm or reach out to a licensed attorney in order to receive legal advice.  Feel free to reach out to Aron Phillips at aphillips@aphillipslawoffice.com.

Finding an attorney is a proposition that is daunting for many people.  No one wants to pay too much, but you also don’t want the cheapest one in town.  Vetting the attorney to make sure they have experience in the subject matter  can be difficult in many cases.  This multi-part series is designed to help you find the right attorney and discuss a few considerations that will be helpful along the way.

Part 1: Finding An Attorney

First you should determine what kind of attorney you need.  Many people believe attorneys practice and know many areas of law.  The truth is that the majority of attorneys have certain practices areas that they focus on and will refer potential clients to other attorneys within their firm or network if it is not the kind of case that they normally take on.

Beware the attorney that takes “all cases”.  The phrase “jack-of-all-trades, master of none” would apply to such an attorney.

If you need a business/contract attorney, using your uncle who practices family law may get you a contract, but most likely will not be as good as one what you would get from working with an actual business attorney.

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Sally was starting a business, but she had never used an attorney.  She had a partner, a business plan, and they had already started producing revenue. However they had no agreements between themselves, and she was concerned about what would happen to the business if her partner and her ever got into a dispute. She also wanted to get contracts in place with key vendors, and her employees.  She wasn’t sure where to start, other than looking online.

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Once you have determined the type of attorney you need, you can check with other professionals you already know, such as financial advisors and accountants, who often work closely with attorneys.  Asking them for a recommendation is a great place to start.

But even if you’re not acquainted with anyone working in those fields, you probably know people who need to network locally for their businesses.  Those people will know local attorneys, or at least the reputation of local law firms and what their practice areas are.

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Sally and her partner were meeting with their accountant.
When the accountant said, “You should really have an attorney draw something up for you.”  Sally asked if she knew any good, local attorneys.  The accountant gave her two referrals for local attorneys that practice the area of law she needed.

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Stay tuned for the next installment, where we’ll discuss selecting an attorney once you’ve found some attorneys that practice in the area you need help.

 

Legal Disclaimer:  This blog does not constitute legal advice.  Reading this blog does not form an attorney-client relationship between you and our firm.  If you have a legal issue, you should contact the firm or reach out to a licensed attorney in order to receive legal advice.  Feel free to reach out to Aron Phillips at aphillips@aphillipslawoffice.com.