How to Get Legal Answers Before Calling a Lawyer

Question

I see a LOT of people asking questions about LLCs, Titles, Insurance etc that don't want to seek out a lawyer. Here's a few resources to get you closer to the answer so that you can figure it out yourselves, or get close enough to the answer to ask a very specific question, which will cost less to answer than a very vague one.

Option 1: Gilberts Law Summaries (contracts, real estate etc.). These are study guides that are used by 1st and 2nd year law students. They are written for people who know a little bit about the law, but aren't lawyers (although law students believe they know everything). These are light on case law, but heavy on rules. They are only about $30 each. The only drawback is that they are not state-specific. Sometimes it will tell you what the answer is, but sometimes it will say "in most states the rule is X, but some states, the rule is Y." Then you can figure out which rule your state follows. You can find these on Amazon, or if you live near a law school, the student book store has lots of these.

Option 2: "Horn Books" . Also arranged by subject, these are green, hardcover books that actual lawyers use. They are like the Gilberts, but longer and with more case law that you can cite or use a jumping off point for legal research. Also available online.

Option 3: Bar Review Prep Books. Bar-Bri, the bar review company gives review books for people who sign up for the bar review prep courses. They have outlines by subject (Torts, Contracts etc.) and practice questions. Unlike the above 2 options, they are state-specific, so you can get the NY version or the Texas version and get answers that apply to you specifically. You can find them used on eBay, but the drawback is that they are a set and they usually go for $500+ used on eBay (you can't buy them directly).

Daniel Chang · Answer

Just for kicks, I'll give the counter-soap box to @Louis Alvarez

You have to take into account how educated about tax/law a person is. Most of the questions about tax/law that are asked by BP are asked by newbies in the field. Ie, "should I create a LLC?" These people definitely need professionals. However, someone who takes the time to educate themselves on different matters in law/tax will know 80-90% of what a professional knows, except perhaps on how to do it. My experience over the years is that once you get to "higher level" stuff, all professionals do is to offer 'opinions', and if you ask 10 professionals their 'opinions', you get 10 different opinions. The problem is, you never know how self-serving the professional are. Hence I decided to just buckle down, read everything about entities and form my own opinion. The same as is with taxes. Once you get to the "higher level" stuff, it's all opinion based. I'm not talking about "can I deduct this?". Awhile ago, I was trying to find an answer to "If I have a W2 job, and a K1, can I max out both 401k contributions?". Several different CPA's all offered different interpretations of the tax law.

Not too long ago, I asked this question regarding LLC protection:

https://www.biggerpockets.com/forums/109/topics/30...

And didn't get much response. I actually expected to get very little response. This is because the whole discussion of LLC conferring true asset protection and everyone discussing about "commingling of funds", and "piercing the veil" ultimately is encased in whole bunch of theory with very little practicality. Yet you would get several opinions from different attorneys, some recommending that every single property be in a different LLC and domiciled in Delaware which throws laypeople into spending a bunch of money on .... theory.

In Louis's example, I'd imagine he's referring to a 1031 exchange. If his client has no clue about what a 1031 exchange is, then the option is not considered and that person ought to seek professional advice. However, if that same client had educated himself enough to know about a 1031 (not necessary how to do it), but decided not to do it (and there's very many reasons why not to do this), then why in the world would he shell out several hundred dollars to seek an opinion?

So I completely agree with resources to help the individual who's not a professional understand more about tax and law.

Louis Alvarez · Answer

(Dragging out soap box)

Peter,

I'm sure these are fantastic resources and I always encourage my clients to gain as much knowledge as they can, but the biggest issue I see is NOT getting the correct answer to your question. The issue is that there are likely two or three or four questions you need to be answering and if you don't talk to someone familiar with the subject you may not even know the correct questions. At the risk of sounding self serving, if you have a legal question or at tax question, you need to find a qualified attorney or CPA to ask, because it is likely there are other things that you are not even aware of. The old phrase "penny wise, dollar foolish" is very appropriate.

Last year a client of my firm brought in their information for us to prepare their tax return. In going through the information, we were shocked to see a transaction where they "sold/transferred" a piece of property. We asked them why they had not called us before they did the transaction and their response was that they did not want to pay for us to do any research or because we would have possibly referred them to an attorney which would have cost money. Long story short, the actions that seemed perfectly reasonable to them triggered an $800K gain and cost them over $300K in tax. Had they called us we could have likely structured the deal and avoided the tax, but instead of paying us to advise them on the deal, they saved a few pennies and paid Uncle Sam big bucks.

Your answer can be 99% right and still be 100% wrong. Find the right professional and pay them for their knowledge. (OK, I'll get off my soap box now.)

How to Get Legal Answers Before Calling a Lawyer

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