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Friday, August 10, 2012

Working with an HOA Lawyer Part I: The Hiring Process (Austin Lawyer Tip)

Finding the right lawyer for your Texas owners' association is not always the easiest task, particularly for volunteer Board Members that have little experience with property management.  This post is an attempt to provide a framework, from a lawyer's perspective, of what a board of directors or members should be looking for in an HOA lawyer.

The Lawyer and Areas of Practice

It is important to note, at the outset, that lawyers are not all the same.  The concept of the general practice lawyer that knows everything about every law passed is more of a TV myth than reality.  We've all seen LA Law episodes where the same lawyers handle criminal trials, civil trials, large transactions and divorces.  This is fiction.

Typically, lawyers find core competencies.  These are largely (and roughly) divided between transactional lawyers (who may form businesses, review contracts, advise on business transactions, review real estate title documents, etc.), or litigation lawyers (those that go to court, file lawsuits, advise on disputes or potential disputes).  Some lawyers do both, to be sure, but going to court or not going to court seems to be a dividing line most of the time.

Beyond the court/no court distinction, lawyers also usually gravitate towards "areas of practice".  These are the topic areas, within litigation or transactions, that the lawyer learns at a larger level of detail to attract its clients to their services.  These are things like personal injury, or divorce/family law, or, relevant to you, owners association management.

So in selecting a lawyer, don't just go to any lawyer that advertises.  Understand that there are lawyers that have read the codes and laws related to owners associations, have represented properties in the past, have found solutions to problems similar to yours in the past, and they will have much less error rates than lawyers unfamiliar with the HOA practice area.

So ask questions like, "what other properties do you represent?" or "how often have you dealt with property management issues?" or "are you familiar with the laws associated with property owners associations?"

The HOA Lawyer and Fees

It is not uncommon for this to be the biggest issue on the minds of the members of the Board.  "How much is this going to cost?"

The unfortunate thing about lawyers and fees are that to gain this kind of core competency requires years of schooling, training, practice, repetition and risk.  So working with lawyers is not always inexpensive, depending on the tasks involved.

So what is a reasonable fee?  This will vary greatly based on the level of expertise of the attorney, experience level, the complexity of the legal issue, the level of adversarial relationships involved (it's always expensive to deal with "the crazy neighbor") and responsiveness level that you anticipate.  So, in some ways, you're setting your own reasonableness level to some degree, and sometimes this is set for you by outside forces outside of your control.

Typically lawyers charge for "unknown and uncontrollable" legal issues on an hourly rate.  Although the temptation for an HOA is to contain costs through flat rates, the best firms rarely limit themselves before they analyze the issues involved.  Law firms are still businesses, with overhead, employees, malpractice insurance, general insurance, and office/storage space (and sometimes student loan debt) like other professional services. And their time is their "product inventory".  If they spend all their time working on an issue for you and they aren't compensated for that additional time, they never get that time back to sell to someone else.

So, unless it is a largely administrative task, typically a law firm will want to bill hourly for its efforts.  You will notice that partners are usually billed at higher rates, and associates are billed at lower rates.  When you are having a lawyer work on your file, and you believe it to be a simple or repetitive task, you should probably inquire as to whether an associate can handle your work rather than paying partner rates for these tasks.  Good law firms will typically have more than one lawyer familiar with your organization, governing documents and goals for this very reason. It is not a "slap in the face" for an associate to be working on your cases.  Very often this is a way to make the work more cost effective.

So what are acts done for flat fees?  These are usually things like standard collection letters, filing notices of non-payment of assessments, sending out letters of violations from a form.  But advice on amending your declaration, or handing litigation and disputes are usually not susceptible to flat fees due to the uncertainty of the time commitments before the fact.

Prepared by Austin Attorney Marc Lippincott

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