Handling legal matters on the cheap can be a crapshoot. Sure, you may walk away a winner, but you also risk suffering big losses.
Take the seller who refused to spend several hundred dollars to have an attorney review the sales contract for his $775,000 home. He ended up in litigation with the buyer over whether there was a side oral agreement to allow him extra time after the closing to get his belongings out of the house.
The seller claimed $40,000 in losses from the damage or disappearance of property still in the home after the closing. Yet an attorney could have easily avoided the entire dispute by asking the seller a few routine questions during the contract review.
7 ways to save on legal fees
- Don't pay for more lawyer than you need.
- Offer to carry some of the load.
- Seek a set fee.
- Request a discount for repeat business.
- Hire a document preparer.
- Look for group discounts.
- Turn to software.
The lesson? You don't have to forgo legal advice to save money. Here are seven ways to get solid legal representation while watching your wallet.
1. Don't pay for more lawyer than you needLawyers' hourly rates can be brutal. The highest can top $1,000, but even midpriced rates in some markets can reach $300 to $400. Always ask your attorney's hourly rate and then shop around to see if you're paying more than necessary.
"The overhead at smaller firms or for solo practitioners -- many of whom used to work at large firms -- is usually a lot lower than at large firms," says Scott Hyder, who worked at a large firm before he opened his own firm in Phoenix.
"If I were a consumer looking for an attorney and I had limited resources, I'd look to a solo practitioner or a small law firm. They'll often have cheaper rates and the experience you need. I'm able to do things at an hourly rate that's probably 60 (percent) to 70 percent of what I'd charge if I were at a major firm."
John Dadakis, a partner at Schiff Hardin LLP in New York, one of the large firms Hyder refers to, doesn't necessarily disagree, but he says you should be realistic about the cost of legal services.
"My hourly rate is $850, and I charge $8,500 to prepare wills and other related documents for a husband and wife," he says. "People don't realize that paying a modest fee to get wills done isn't really off-base. If you have a modest estate, it may not cost $8,500, but when you're in the million-dollar bracket and you're getting the advice of an attorney who understands all the human nuances and tax law, $8,500 shouldn't knock the socks off people."
2. Offer to carry some of the loadAsk your attorney if you can take over any tasks to reduce your bill. "I represent a lot of independent inventors who need to conserve every dollar," says Stephen Roe, a patent attorney at Lathrop & Clark LLP in Madison, Wis. "They're often backyard or garage tinkerers looking to start a small business or find someone to market their new product. So they often need a patent to protect themselves, but they also need cash to build their business."
Getting a patent requires investigating whether there's already one encompassing your idea. Roe suggests his short-on-cash clients do that research themselves. "Traditionally, a searcher charges $1,000 to $1,500," he says. "With the Internet, about 90 percent of my clients say they're comfortable doing the search and don't need to pay for a professional search. We also get clients who say the search was overwhelming, so we hire someone to do it for them."