The Five Sneakiest Lawyer Tricks

Lately I have been blogging about the sneaky business tricks I have seen over the years.

Here are my top five for attorneys:

1. Stealing money from escrow accounts - so sneaky it is illegal. Very rare but happens. All states have programs (funded by the attorneys in the state) which indemnify clients who lose money to law-breaking attorneys. The problem: in most states there is a cap on the amount of recovery.

2. Bulking up billable hours - this is probably the #1 complaint against attorneys. The fact is that there is no way for someone to know for sure the exact amount of time an attorney spends on a matter. Does it take 2 hours to write a brief, do a closing or review a contract? Or 4 hours? There are no absolutes. The client's best protection is to negotiate a flat fee. The problem is that any attorney who agrees to a flat fee may not do his or her best job when the upside is capped. In addition, there is a real risk to the attorney who agrees to a set amount, and then is overwhelmed with unexpected demands from the client - this is a prescription for trouble.

3. Title insurance - not well understood. In many states (including where I practice) an attorney's revenue from title insurance can be significant. Lenders require title insurance up to the amount of the money borrowed. But, a homeowner is not required to obtain title insurance for his or her equity (value over the mortgage). A real estate attorney should give his client a full explanation of title insurance and who earns what from the premiums paid.

4. Success fees - some attorneys add to their fee (on top of billable hours) a "success" fee. This can be OK when the measure of success is agreed to up front in an open discussion between lawyer and client. But, when the attorney is left to his discretion to define a "successful" conclusion, guess who sometimes gets the shaft?

5. Sloppy and lazy lawyering - to me, the #1 sneaky attorney trick is to perform below the standard of care a client should receive. The fact is that when it comes to the law, since the attorney knows so much more about the topic than most clients, the client often has no idea whether a good job was done or not. So, an attorney can confuse and manipulate a client both at the beginning of the relationship (raising unfair expectations) and at the conclusion (distorting the result).

By the way, having practiced law for twenty-five years, it is my view that the great majority of attorneys are honest, hard-working and trying their best to serve their clients.

Jim Randel is the founder of The Skinny On books series -- quick, entertaining reads on financial topics. www.theskinnyon.com.

Comments

[ALTA DC]

As CEO of the American Land Title Association, I agree with Mr. Randel’s perspective toward attorney explanation of Owners’ Policies for title insurance. Attorneys should fully explain how their premiums cover the work that is done to ensure land titles are clear of encumbrances and the curative efforts undertaken to prepare the title for closing. It’s also important homebuyers understand the protection that title insurance provides against unforeseen claims that lenders receive in a Lenders’ Policy and homebuyers may choose in an Owner’s Policy. With more transparency comes trust in the title process and stunts the “sneakiness” of a few bad apples in a respectable industry. If people want to do research on their own, www.homeclosing101.org is our consumer site.

Kurt Pfotenhauer

[Mike Cassidy]

I wonder what resources are out there for finding an honest attorney. Certainly word of mouth, but many out there are forced to open up the yellow pages and take their best guess as to who will best defend their interest. Is there any other way?

[TryToBeFlexible]

How about pre-paid legal service? You pay, then when you ask them a question they refuse to answer, saying the question is hypothetical...

For example:
Me: I am considering moving to CA. Would I be able to get my health insurance there, since I have always had coverate here in FL?

Answer: That is a hypothetical question, so we won't answer you.

Me: So, if I move there, and I cannot get coverage, then I can call you, and you will tell me why I can't get coverage?

Answer: Yes, because it would not be hypothetical anymore.

???? And how is that helpful?