I was speaking to a group of novice real estate investors the other day and I was asked how to select a good real estate lawyer. I offered the following guidance.
A real estate lawyer should spend 50% or more of their practice on real estate. This could include drafting documents, closing transactions or litigation. Handling real estate litigation has taught me what can go wrong in even a simple transaction. A lot of lawyers, especially general practitioners, claim that they practice real estate law but the more focused and seasoned real estate lawyers have a lot more experience that they can put to work for you.
Check to see if the lawyer is associated with other real estate investors or real estate investor groups. Remember, the more experienced the better they are able to serve you even if the transaction is just a “simple vanilla purchase or sale.” If the real estate lawyer is also a real estate investor; that’s all the better for you. I have learned many lessons from wearing the hat of an investor. The more a lawyer has experience and solves real estate problems, the more knowledge that they have to help you. The more “dialed into the industry” the lawyer is they may also be a good source of referrals to an accountant, property manager, banker or insurance professional.
Real estate lawyers that work for themselves or are a partner is a small law firm is also ideal because they probably know business. Lawyers running their own firms are closer to the business mind set. A big firm lawyer is not the sole measure of quality but is a guarantee that you will pay more money for legal services. Big firm lawyers typically have to answer to managing partners or many of other partners demanding certain profit margins.
A good real estate lawyers should know the intricacies of creative real estate transactions like land trusts, LLCs, 1031 exchanges, and lease options just to name a few. It seems like my clients are always testing the limits of creativity. Again, the more the lawyer knows, the better they can serve you and find solutions to the many problems that can arise in real estate transactions.
The lawyer must be accessible and available to you. I am not saying that they should be on 24/7 call but they should return a telephone call or email in a timely fashion. Timely does not mean immediate but a response time relative to the need for a lawyer’s attention. I try to return my emails every day and listen to my voicemails on a regular basis so that if there is a client emergency, I can jump on it right away and solve the problem.
What about cost? While this is an important consideration, it should not be the determining factor. There is always a lawyer out there that will handle the transaction for less money but remember, you are looking for knowledge, experience and protection of your legal rights. Now is not the time to try and save money. Costs vary depending on the area and level of a lawyer’s experience. While it is typically true that the less you spend the less you get, the corollary may not be true. Ask around to see what the local legal charge is in your area and expect to pay in that range.