Cutting Legal Costs by Utilizing Management for Specific Tasks
Dec. 18, 2012 — Money is tight. Lawyers are expensive. Can you cut costs without cutting essential services? That's the question condo and co-op boards may be asking as they face the beginning of a new fiscal year. Many boards regard legal charges as a big cost that must be reduced. Yet is such cutting wise?
Not if you ask an attorney. "What we charge depends on the experience an attorney brings to the table," notes Eric Goidel, a partner at Borah Goldstein Altschuler. "[My competitor] may charge you half the price I charge but take twice as long to do the job. You can't just cut blindly."
But others say the situation is not so cut-and-dried. "Managing legal costs is not simply a matter of cutting costs to the lowest possible level," says John W. Toothman, president of The Devil's Advocate, a Virginia-based firm that has advised housing associations all around the country (including in New York) on ways to lower legal costs. "There are better ways to keep fees down."
Letter of the Law
Overly picky attorneys
insist boards consult with
them for every little thing.
One way is for co-op and condo boards to assess how willing attorneys are to cede work to management firms. Building managers are already doing some of the tasks previously done by lawyers, most notably by handling closings. There are other areas they are taking on as well. Managers often write the initial letters to residents about arrears problems, for instance, while disputes between two neighbors can (and probably should) be dealt with by the manager.
Having the manager coping with these matters in the early stages tends to keep the issues low-key. As soon as the attorney enters the picture, the stakes are elevated.
Veteran managers who have dealt with legal problems previously in other properties argue that they can use that experience to advise owners and save on the lawyer's salary. They say they sometimes can reuse and adapt letters written by an attorney for one property for another property with a similar problem. But a number of attorneys warn that there is a potential danger in that because similar-appearing legal situations may have subtle nuances that do not translate from case to case.
Picky, Picky, Picky
Toothman, of the Devil's Advocate, admits that legal nuance is a valid issue, but that boards should be able to tell when a lawyer is being too picky. He cites a recent case in Florida where attorneys are insisting that cooperative and condominium association boards consult with lawyers for every little thing.
"The theory is that when reading your own bylaws, you have to have a lawyer interpret what it means to have a quorum, which is absurd," says Toothman, a lawyer himself. "There are some issues that are clear in your rules; you don't need a lawyer for everything."
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