7 ways to save on legal advice

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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
  1. Don’t pay for more lawyer than you need.
  2. Offer to carry some of the load.
  3. Seek a set fee.
  4. Request a discount for repeat business.
  5. Hire a document preparer.
  6. Look for group discounts.
  7. 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 need

Lawyers’ 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 load

Ask 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.”

Some of Roe’s clients also draft their own provisional patent application. He’ll simply review the application, provide feedback and charge for the review time. Filing for bankruptcy and opening probate are other legal matters for which you could draft your own documents and then pay an attorney to review them to be sure you haven’t made costly mistakes.

3. Seek a set fee

“Flat rates are becoming more popular in areas like bankruptcy and estate planning,” says Hyder. “It’s a pretty good deal for everyone. Clients know how much they’re going to be out, and attorneys ask for the fee upfront, so they know they’ll get paid and how much.”

4. Request a discount for repeat business.

If you regularly have legal questions, ask your attorney to follow Leonard Bellavia’s lead. The senior partner at Bellavia Gentile & Associates in Mineola, N.Y., offers small-business owners unlimited access to his firm’s attorneys for a monthly fee of $250. “Any company employee gets unlimited access to our attorneys to discuss anything to do with operating the business,” he says. “For $250 a month, the business essentially gets an in-house attorney.”

Bellavia’s fee includes basic contract reviews, but once attorneys have to leave the office or get involved in litigation, he charges by the hour. “If clients have a legal matter not covered by traditional phone advice,” he says, “we charge $175 per hour, which is less than half our hourly rate.”

5. Hire a document preparer

Some states, such as Arizona and California, permit legal document preparers to draft routine legal documents without an attorney’s supervision. “I set up limited liability companies, corporations and partnerships and handle noncompete and confidentiality agreements if they’re simple,” says Christine Springer, a certified legal document preparer who operates Desert Edge Legal Services LLC in Phoenix. “But I can’t give legal advice or represent someone in court.” Depending on the document, you could cut your costs by one-third to one-half by hiring a document preparer.

6. Look for group discounts

You may not realize that a group you belong to has negotiated a reduced fee with local attorneys. “Organizations like AARP and some unions have attorney referral services,” says Hyder. “For example, I pay AARP an annual fee to be on its referral list. In return, I agree to offer a 45-minute free consultation and to charge AARP members a slight discount.”

7. Turn to software

Even Dadakis says you can sometimes use legal document preparation software. In his area of expertise, estate planning, Dadakis says a married couple without children shouldn’t have problems using software to prepare a will. An elderly couple with a moderate estate and a clear idea of how to divide it among their heirs is probably also safe with software.

However, Dadakis hesitates when it comes to other estate documents. “For example, a power of attorney disturbs me a little because it’s such a dangerous document,” he says. “Without knowing what you’re doing, you give people power over your money, and that’s where we see fraudulent activity. I’d prefer people consult a lawyer.”

In this economy, many competent attorneys are working with clients to lower their costs, but you should never be penny-wise and pound-foolish. “I’ve had to rethink the whole billable-hour practice in this recession,” says Hyder. “The problem is that if clients sacrifice competent and experienced attorneys for cheaper costs, they may pay for it down the road with sloppy mistakes.”