Screening Lawyers: When Value and Cost Aren’t Related
Some things are worth the money. Some things aren’t. Every lawyer loses some cases and wins others — so how do some lawyers charge ten times more than others?
There are some pretty fundamental theorems of economics that almost everyone accepts as given. The principle of supply and demand, for example, tells us (among other things) that if the price of something is high, it’s because there’s a lot of demand for that thing. And the existence of a lot of demand implies that the thing is valuable, and thus the price is high because the value is high.
The Exceptions that Disprove the Rule
But there are some instances where the principle of supply and demand gets whipped with a hickory switch and forced to sleep in the bathtub. We know this happens because of the existence of Veblen goods — things that are in demand because they are expensive, rather than the other way around. The best example can be found in luxury goods: there are many other cars, for example, that have a longer lifespan, are more reliable than, and outperform a Rolls Royce in every measurable respect, but owning a Rolls Royce is a status symbol. It’s purchased because it’s expensive, and if it cost as much as a Toyota Corolla, no one would want one.
So think for a moment not about goods, but about services. There is no instance of the term “Veblen services” in any economics course, but it’s fairly obvious to anyone who does even mild research into any given services market that some companies are clearly overpaid for the services they provide. (The counterpart, of course, is that others regularly provide excellent service for less money than their competitors…we like to call those “our vendors.”)
Because the same people can provide different levels of service at different times, it’s easy to see how regular failure to perform could be overcome by occasional moments of brilliance coupled with a powerful marketing team. Those would be the service-industry equivalents of the Rolls Royce: services that are not necessarily better, but are in demand because they’re marketed cleverly to people who are willing to believe that the high price tag means a superior product.
How Do Lawyers Fit in to All of This?
The legal profession is even more prone to this effect than others, because it’s quite easy for a lawyer to blame a failure on external factors (but take 100% of the credit for a seemingly-unlikely victory). Perhaps even more damningly, it’s easy for a lawyer’s marketers to do the same thing — and believe us, we market in two directions (to investors and tenants), so we know that game quite well. In short, when it comes to legal fees, there is absolutely zero guarantee that more expensive means more effective.
Here’s How a Serious Landlord Finds a Lawyer
There are a metric ton of laws that surround landlording, and you have to have a solid lawyer just to keep you on the right side of all of them — but there’s more to being a landlord than just ‘not breaking the law.’ There are conflicts with tenants ranging from “you need to repair my broken XYZ” to “this professional tenant just sued for code violations even though they’re the one who caused those violations.” That’s why it’s critical that a landlord have an effective lawyer with actual expertise. So how do you find one of those in a market dominated by advertising and glory-seekers? Let’s discuss two options.
The first involves looking up your local Landlord/Tenant Court proceedings and just showing up one day. Sit and listen. Pay attention for those lawyers representing landlords that are composed, professional, efficient, and win. Look for one that participates in a few different cases over the course of the day and is successful more often than not. Jot down their names, and do the typical Internet research and phone interview (what are your specialties, what is your success rate, how many of your clients have rentals/businesses like mine, your hourly rate, etc).
Another option is to attend a local real estate investors meeting and ask the landlords there – a lawyer or two may actually be there too. Now don’t make the mistake of assuming their lawyer-screening process will be up to your standards, no more than you should assume another landlord’s tenant-screening process is good enough for you! Get 2-3 referrals and have a standard list of questions to screen lawyers with.
The time spent screening lawyers might seem like a big investment, but if you want to skip past the marketing blitz and find a lawyer that is actually worth what they’re asking for, you are your own best witness.