Reducing Legal Fees: A Ten-Step Program

I can hear the response to this topic already: a lawyer advising clients on how to reduce legal fees is the functional equivalent of the fox advising the chickens on security. Well, it is true that my colleagues and I do benefit from the legal fees that boards incur, but we also believe that it is far more important to build long-lasting relationships with our clients than making a big fee and then getting replaced. In many cooperatives and condominiums, the attorney holds the institutional memory for the organization because, over the years, the board and management change. It is therefore important to protect the board-attorney relationship. With that in mind, the following is a series of suggestions to keep legal fees and expenses under control.

1
The Board Should Not Be Paying to Educate the Attorney
Many boards have wonderful and long-standing relationships with attorneys and send them all the legal issues that arise. However, not every attorney has experienced every issue that can arise. If a board is faced with a situation and the attorney has not dealt with anything identical or similar, there will be a steep learning curve. That should not be at the board’s expense. If the board’s attorney has not dealt with a similar issue, ask if someone else in the office has, and ask who could handle the matter. You can also consider referring that particular matter to another law firm, which does have experience in the area. Using another attorney for a particular matter does not mean that the long-standing relationship with the old attorney has to end. As an alternative, ask the attorney to bill the start-up time at a discount.

2
Don’t Micromanage the Attorney
Several times during the last few years I have seen the members of the board or the managing agent call the attorney daily to discuss the status of the matter and to offer suggestions and cross-examine him or her on how the matter is being handled. This adds significantly to the cost of performing the legal work because, as we all know, attorneys bill for those telephone calls. For instance, when I was handling a very complex matter for a co-op, the managing agent called me every morning at 8:45 to harangue me about the legal system and ask why things took so long. This went on for months and did not speed the process by a single minute, because judges decide motions at their own pace and never like having lawyers call them and demand a resolution. Sometimes, things are made worse when the board has a member who is also a lawyer – but who does not specialize in co-op and condo law – and who believes that he or she can be helpful. It does not always turn out that way.

3
Appoint a Legal Liaison
There is nothing more important that having a single point of contact between the board and the lawyer. It is a complete waste of everyone’s time and money if multiple members of the board have access to the lawyer. Each one of those duplicative calls will be billed separately. Moreover, over a relatively brief period of time, the lawyer and the liaison will develop a rapport, which will reduce the time being billed because each will be up to date with the history of the matter and that avoids retelling it.

4
Listen to the Lawyer
If the lawyer responds to an inquiry by noting that it is forbidden to do something based on the language of the proprietary lease, bylaws, or declaration, begging or demanding that the lawyer not object to it being done is not a very productive way of proceeding. These documents are written in English – or at least legalese – and they are decipherable. Ask the lawyer to point out the specific language that creates the objection and review it yourself to see it you agree with the interpretation. Then, if you don’t call the lawyer to see why he or she believes that it says what you don’t think it says.

5
Do Not Reject a Buyer without Discussing it with a Lawyer
Notwithstanding all the rhetoric we hear from politicians about all the buyers being rejected by boards, the actual number is quite small and significantly smaller than the number of applicants who want to rent an apartment and are turned down by the landlord. Nevertheless, cooperatives have been convenient scapegoats for the limited availability of affordable housing in this city. Don’t open yourself up for aggravation by rejecting a buyer without first discussing the reason for the rejections with your lawyer. Sometimes, what the board will consider to be legitimate grounds for a rejection can be reinterpreted by a human rights official as being an appearance of discrimination. If you are going to reject someone and they are a member of a protected class, then make extra certain that there is a solid reason for the rejection. If they file a discrimination claim with the agency, the burden of proof will be on the board that it did not discriminate.

6
Beware of Purchase Applications with Pictures
Do not permit your managing agent to accept any purchase application containing the buyer’s picture and do not schedule an interview until the board is satisfied with the application. The reason for these rules is simple. The board cannot be accused of discrimination if it does not know that the applicant is a member of a protected class. It may not end the discussion when the discrimination complaint is filed, but knowing that information will not be helpful to your case either.

7

Use Junior Partners, Associates, and Paralegals

Although you hired your law firm because of a certain partner’s name or reputation, you can obtain the benefit of that experience without having to pay the exorbitant hourly rates that some well-known attorneys charge. The senior attorney is responsible for everything that happens in the relationship and he or she will have to monitor the junior partner, associate, and paralegal, so why pay extra? I am regularly asked to handle routine matters and the client gets insulted when I suggest that someone junior handle it, but the reality is that the junior person will do a better job at a lower cost. Take advantage of that. We always suggest using the most competent, and least expensive person for the task.

8
Not Every Principle Is Worth Litigating Over
Every lawyer has clients and potential clients who approach him/her with a case that has to be fought over an issue of principle. Those always turn out to be horrible experiences because the client can become irrational over the principle and then, tens of thousands of dollars later, realizes that the lawsuit was a mistake. Lawyers make money representing clients in such litigations so, if your lawyer is attempting to dissuade you from bringing the lawsuit, perhaps you should listen. Most of us will bring a lawsuit if the client insists but we try to talk them out of it first. The most glaring example of this happened to me about 15 years ago when board members wanted to bring an action against a sponsor and I explained in great detail why it was a mistake. Their response: they found a lawyer who brought the case on their behalf and dismissed me. However, eight months later, they asked me to return and run their annual meeting because none of the board members wanted to attend or run again. It seemed that in the preceding eight months, the board’s new counsel had blown through $250,000 and not only lost a motion, but had to pay the sponsor’s legal fees because of the frivolous nature of the action.

9
Don’t Litigate Based on “Judge Judy”
I cannot count the number of times I have had clients decide to proceed with litigation because they knew that once they appeared before the judge and explained the situation – as on TV’s Judge Judy – the judge would side with them and they would win the case. Notwithstanding all the television shows about lawyers, no one appears before the judge the day after bringing the case, and trials, when they do occur, can last five years and cost tens or hundreds of thousands of dollars. Moreover, in most instances the other side also wants to tell the judge their side of the story. Judge Judy does not hold trials in any of the New York courts. The real judges are overworked, underpaid, and understaffed. They are handling far too many cases to have time to listen to your side of the story. Moreover, if you ever do get in front of the judge, he or she is going to be guided by the law rather than your tale of woe.

10
Blame the Lawyer
Now this is not what you think. We will give you good solid advice, which may not be what you want to hear and then you might not want to follow the advice we give you because it might make you look weak or vacillating. In those instances, just say that you wanted to be tough, you wanted to fight for truth, justice, and the American Way, but the lawyer would not let you. Regularly, I have had board members who knew that if they took a certain action, they would have a problem, but they did not want to have to answer a great many questions. My stock answer is telling them to say that the lawyer will not let you discuss the matter.