Real Estate Attorney's Fees
I'm a member of a transactional law e-mail group that is a part of ISBA (the Illinois State Bar Association). Every few months or so, there is a round-robin discussion of attorney's fees among the group's residential real estate attorneys. The general point tends to be that real estate attorneys feel like it's difficult to make a living doing this type of work because of the constant price pressure, which stems from two things:
-the presence of real estate attorneys who offer to handle closings at rock-bottom prices (like $200). Presumably these attorneys are using non-attorneys to do most of their work (preparing documents, clearing title, etc.); and
-the influence of realtors, who may tell their clients that they shouldn't pay more than a minimal amount for a real estate attorney.
Illinois attorney TJ Thurston offers his take on the issue here. I mostly agree with Mr. Thurston's assessment, with two exceptions:
1. Mr. Thurston states the following:
I have nothing against paralegals and secretaries performing the clerical and non-legal tasks in a transaction (such as calling the county assessor to determine if there are outstanding taxes due on the property). I DO have a problem with attorneys that allow paralegals or secretaries to perform the unauthorized practice of law (UPL), which is both illegal and an ethical violation.
The problem is that attorneys alone are in charge of deciding what constitutes UPL, and attorneys have abused this power in the past. Does a given type of work appear lucrative and challenging? It's deemed "legal work." Is a given type of work mind-numbingly boring? Sounds like something a secretary can do.
There's legal ethics (as defined by the Illinois Rules of Professional Conduct) and there's real world ethics. Having a non-attorney perform legal work may be a problem from a legal ethics perspective, but from a real world ethics perspective, the more important issues are (a) does the person I hire know how to do this job, (b) am I aware of this person's qualifications, and (c) is this person charging a fair price for this work. There are plenty of non-lawyers who have the competence to handle the legal work involved in real estate transactions, and there are plenty of lawyers who are not competent to perform this work.
2. Mr. Thurston also suggests that there is an insurance element to hiring (and compensating well) a real estate attorney:
Sure, you may be saving some money [if you hire a low-cost attorney], but you are running the risk of serious mistakes; mistakes that might cost you thousands of dollars. If the transaction goes bad, what are you going to do?
That may be the case, but where are the figures to back it up? How often does a real estate deal go bad? Is the rate 1 in 2? 1 in 50? 1 in 100? 1 in 1,000? My sense is that real estate attorney's fees are where they are because the market/public has assessed the risk of a deal gone bad, and found that it isn't significant.
On a personal note, my experience has been this: I liked doing real estate transactions, and thought I did a good job (I did all of my own work, and was constantly available to my clients by phone and e-mail). My experience is that most realtors are overpaid and most attorneys are underpaid. The market doesn't agree with my experience, and votes with its collective wallet. I therefore found it difficult to make money as a real estate attorney, and as a result have pretty much stopped practicing in this area of law.
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