Why Do I Need a Real Estate Attorney?
An Ounce of Prevention is Worth a Pound of Cure
I believe that a person in the real estate business in a meaningful way must have a qualified Real Estate Attorney. The time to find this person is before trouble starts, and a wise person finds use for their attorney to prevent trouble in the first place. Knowing how and when to consult with an attorney can save far more money that it costs.
I didn’t plan it this way, but the key attorneys I use happen to be independent practitioners. They started in big firms but eventually went out on their own. Their hourly rates tend to be lower since the overhead of a large firm is not part of their rate. Also, they tend to be more available when I call and there is less contact with subordinates such as paralegals and miscellaneous staff. I don’t like channeling critical information through multiple layers.
Specialization of practice
An argument can be made that any real estate attorney can handle any real estate matter, provided they are licensed in that state. Maybe so, but I don’t think this is very efficient. If I use an attorney that regularly practices the type of real estate law I need help with, I can avoid costly research efforts and tap into specialized expertise. For example, my primary real estate attorney sub-specializes in negotiations and contracts and I always use him for that purpose. For the handling of permitting and other entitlement matters like public hearings and planning department issues, I use a land use attorney. They know local code and regularly work with with the local players at the county or city.
Staying out of real estate trouble
Somewhere along the way I gained enough insight to use my attorneys in a preventative way. If I don’t clearly understand a clause in contract or feel that a misunderstanding is growing into a real problem I bring my attorney into the loop to advise me. I run a tight budget in my projects and hate to part with money in general, but I have found that the deeper I get into a problem the more expensive it is to climb out of it. To put it another way, I can pay my attorney for an hour to nip a problem early-on or pay him for 5 hours to dig me out of one. I think my legal costs are lower than they otherwise would be because of this approach.
Getting out of real estate trouble
My policy is that if I feel trouble is brewing, I bring my attorney in right away. I have been remarkably fortunate in staying out of real estate trouble, but I have unintentionally gotten into it. The kind I am referring to is the “costs me time and money” kind of trouble, not the “jail” kind. My shortcomings have revolved around missing something subtle but important in contract language and just plain stupidity. These mistakes were made earlier in in my career and I have never repeated the same one twice, but in this business stuff can happen despite everyone’s best intentions.
Things to avoid when trouble starts:
1. Digging deeper into trouble before bringing the attorney into the loop. Enough said.
2. Assuming the right attorney is involved, listening to but not acting upon the legal advice provided. A sub-symptom of this is listening to legal advice, then only acting on part of it. Having said this, no one knows my business as well as I do and there have been many times my attorneys have changed their thinking based on key factors that I bring up, so I do not blindly walk in lock-step with them. But once there is a consensus on what should be done, I do my part as agreed.
3. Failure to disclose all the key facts of the problem to the attorney up front. The facts that are usually omitted are the ones that show mistakes on the part of the person in trouble and have an annoying tendency to show up later. No one likes to look stupid, but my policy is that when engaging my attorney with a problem I tell the whole story, including any mistakes I think I have made as a part of it. It’s funny, but there have been times when I thought I might be more responsible than I legally was, when viewed and advised by counsel.
Preparation for legal meetings
Some of my attorneys have become friends over time. I have been told by more than one that the most irksome client is the one that dumps problems and documents on them without first giving forethought and direction. In other words, “here is my problem, you figure it out”. The added issue for the client is money paid out for excess billable time by simply not being organized and thinking things through in advance.
I save by being fully prepared before contact with my attorneys. All background documents are scanned and forwarded in-advance for review. I set an agenda and conduct the meeting according to it. This keeps us focused and minimizes billable time. Little things save money, like avoiding sending multiple emails with the issues outlined in bits and pieces when one email with all of it will do. When the billing timer starts I pay for every minute. Since repeated contact on an issue is common, I always end the call with specific follow up so we have mutual agreement on who is doing what going forward.
My Viewpoint
My real estate attorneys are incredibly valuable. They are there to navigate me through the law for best compliance to prevent problems in the first place. They are also there for the unexpected things that really do come up in this business no matter how good the developer is. It’s important for me to lead by knowing when to bring my lawyer in, be willing to do it, to tell the whole story, to be a prepared and an active part of the process, to hold the group accountable, to implement as agreed upon and to realize that what I pay in dollars now probably saves me many more later.
