What is the hourly rate of your lawyer?

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What is the hourly rate of your lawyer?

Real Estate Investor · Minneapolis, MN · Member since 2017 · 164 posts · 30 votes

Hey everyone! I just contacted a Real Estate lawyer that was recommended to me, but her hourly rate was $250 (and no minimum). For now, I just need someone to look over our tenant documents and make sure they're all legal for Minnesota, but eventually I may need to call on them if I need to evict someone. $250 just seemed a little high for our requirements, so I was hoping to see what others are paying to see if that is the going rate or if I should be looking at other lawyers. I appreciate your responses!

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Heidi PliamPro Member

Attorney, Investor, Syndicator · Minneapolis, MN · Member since 2016 · 43 posts · 40 votes

@Kyle Doney, for example, (1) the learning curve is infinite and expanding, so just keeping up professionally takes time; (2) for me, I frequently don't feel comfortable charging for every hour I actually spend working on something, because it's un-affordable for my clients - yes, I really do do this to help people, not to get rich; (3) tons of time nurturing relationships; and (4) high overhead (not for me, but for many). There's a lot more too it, such as scalability limitations too. And, I'm not saying some lawyers are not striking it rich - it's possible if you're willing to do things I'm unwilling to do. I'm also not saying most lawyers struggle - but more lawyers are struggling than people ever imagine from their public profiles (I know because I coach other lawyers too).

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Account Closed
Investor · Denver, CO · Member since 2016 · 736 posts · 582 votes
9y
Some lawyers will perform some tasks for a flat fee and then will litigate/consult based on an hour rate.
I'm currently using a lawyer that also charges $250/hour but he's working on foreclosing on some tax liens for me that he charges a flat fee on.
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Kyle Doney
Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
9y
Most are in the $250 range. I still don't quite get how they are so highly paid. If they get 8 billable hours a day they are killing it.
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Kelly Conrad
OP
Real Estate Investor · Minneapolis, MN · Member since 2017 · 164 posts · 30 votes
9y
Interesting! $250 definitely seems a little high for looking over documents, but I suppose if that's the going rate for our area, then I can deal with it!
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Heidi PliamPro Member
Attorney, Investor, Syndicator · Minneapolis, MN · Member since 2016 · 43 posts · 40 votes
9y
$250 is actually on the cheaper side. I charge $265 currently, and 3 years ago I was negotiating a contract with some bigger Mpls firms who said they would bill me out at $350 to $400, which is what their lawyers with equivalent experience were charging back then. Fees vary greatly based on experience, specialty, firm size and geography. You pay more, but it's WELL worth it, if you hire someone with experience whose practice is focused on what you need done. Even within real estate there are different areas of focus, so you definitely don't want to hire a generalist who does more than two unrelated areas, like divorce, wills and real estate.
And to respond to @Kyle Doney why I'm not "killing it" when I charge that much, the main reasons is that I cannot charge for the majority of work I do to keep myself into position to be able to charge that much. It's a terrible business to be in if you want to make money, which is WHY I became a real estate investor :)
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Kyle Doney
Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
9y
@Heidi Pliam Can you explain "keeping yourself in the position to charge that much"? I've always been curious how many billable hours lawyers are getting and how it all works. I would think if you are full time and have enough clients, you'd be crushing.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
$400 an hour
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
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Suzanne Griffiths
Investor · Hugo, MN · Member since 2016 · 208 posts · 68 votes
9y
Ours is $250 as well. You have to remember that they have a cost of doing business as well. Overhead, liability insurance etc. When they are reviewing or preparing documents for you they are taking on liability. Some transactions are more risky than others depending on the situation (SEC compliance etc).
It's like saying a wholesaler's fee is too much, we don't know how much direct mail, negotiating or man hours it takes to get that deal done. As long as the numbers work for you, you shouldn't nit pick their fee.
For hiring lawyer what's the potential cost to you if you don't have them review that document. Say it takes them 4 hours, but they help you strengthen your document to protect your business and your assets, wouldn't your return on your investment be worth it?
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Heidi PliamPro Member
Attorney, Investor, Syndicator · Minneapolis, MN · Member since 2016 · 43 posts · 40 votes
9y
@Kyle Doney, for example, (1) the learning curve is infinite and expanding, so just keeping up professionally takes time; (2) for me, I frequently don't feel comfortable charging for every hour I actually spend working on something, because it's un-affordable for my clients - yes, I really do do this to help people, not to get rich; (3) tons of time nurturing relationships; and (4) high overhead (not for me, but for many). There's a lot more too it, such as scalability limitations too. And, I'm not saying some lawyers are not striking it rich - it's possible if you're willing to do things I'm unwilling to do. I'm also not saying most lawyers struggle - but more lawyers are struggling than people ever imagine from their public profiles (I know because I coach other lawyers too).
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John Woodrich
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
$250 is cheap, I pay $300, larger firms in Mpls do get in the $500s for a senior partner. In the professional services world our rates are based on what is needed to keep the business a float and continue demand for our professions. Continuing education, license fees, rent, software and other overhead expenses must be accounted for and are built into the rates that are charged. I don't know how many years in school it takes to become a lawyer but it takes 5 just for the ability to sit for the CPA exam. I added a master's degree so have close to 10 years of education. Add up the tuition costs alone and you will see why these people need to be compensated higher than some other fields.
Personally I write off a lot of time in working with new businesses and many clients I have met on this site. My firm isn't as happy about it but I do it to continue someone's dream. Charging $250 for a tax return may seem like a lot on the customer end, they don't even know that our rates have wracked up $850 in fees. Like Heidi I take on these jobs to help people.
For your contract I would work with the contract that has already been approved by MMHA and the MN Bar. If you are drafting your own contracts I think you should really re-consider where you want the risk in your business. If you pay an attorney to review your work consider this an investment in your real estate business, not an expense. This is something that will provide value and protection for years to come.
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Kelly Conrad
OP
Real Estate Investor · Minneapolis, MN · Member since 2017 · 164 posts · 30 votes
9y
Thanks for the input everyone! Glad to see this is within a reasonable range!
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David Moore
Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
9y
Too all posting that $250.00 is cheap, it is not. There is one main factor at work...the law of demand. Note that @Heidi Pliam said she will actually not bill her clients for all hours due to cost considerations. Many real estate investors won't use lawyers due to the cost. I had my lease written by a lawyer for $800.00. That was a big investment. But there is a big, untapped market out there, which is why Legal Zoom exists, though I've heard it is not always useful.
The higher the cost of a lawyer, the lesser the demand, the more landlords will just wing it. The high cost of lawyers means most will continue to avoid them, unless they absolutely have no option. I'd be curious to learn if an attorney here has ever tested the law of demand, and lowered their fee, to see if that increases demand for their services.
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Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
9y
250 is cheap. I know lawyers that bill 1000 an hour. They aren't real estate lawyers tho
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Mary Obidinski
Vista, CA · Member since 2017 · 10 posts · 6 votes
9y
I agree $250 is very reasonable for a knowledgable real estate attorney (though yes, I'm sure it depends on what part of the country you are in). As a lawyer, I also think it is very reasonable (and expected) for a client to ask me for a total cost estimate so they have a good idea of what they are getting into. When a client approaches me about something like reviewing a set of documents, I ask them to send the docs to me, I take a quick look, see what kind of shape they are in, and am able to tell the client how much it will cost them. Sometimes I agree to a flat fee (ex. I set up single member LLCs for a flat fee - they are predictable...) or a cap on billing, it just depends on the situation. I am also up front in situations where I really can't predict total cost. For example, if I am helping a client who is a tenant in a commercial lease, I can give an estimate for initial review and revision of the lease, but I can't predict how difficult the landlord will end up being, how much back and forth will go on, and how many rounds of revisions we will end up needing to go through.
We do realize the unknown of what it is going to cost to use an attorney is very daunting and turns people off from using us at all. Of course, I also realize that $250 an hour sounds like a LOT. As for why lawyers are expensive, I think people forget just how much liability we are taking on. We take a lot of liability on when we give you legal advice. If I miss something or give you wrong advice (we are all human...), it could cost you hundreds of thousands of dollars, or even millions of dollars. Our professional liability insurance alone costs thousands of dollars a year. The difference between using a lawyer and trying to wing it yourself - if you mess up and miss something and it costs you hundreds of thousands or millions, you are on the hook. If you hire a lawyer who messes up and costs you hundreds of thousands or millions, you can point to them and you may have some recourse... when you start thinking of things in that context, the $250/hour fee doesn't seem so unreasonable. Also, unless you are using a big firm, we are small business owners - a lot of our time each day goes to keeping the lights on and running the business aspects of our business - none of which is billable. A solo or small firm typically fills the role of lawyer, IT department, admin, marketing, accounts receivable/payable, etc. etc. If I wanted to bill 8 hours a day, I'd be working 16 hour days. If I wanted to work 16 hour days, I'd work for a big firm where my billable rate was 3 times what it is as a solo. If I outsourced that stuff to others, I'd have to raise my hourly rate to be able to pay the bills, so... that's how the math works out for me.
Bottom line - don't be afraid to approach a lawyer asking for an estimate of total cost - we are used to it (at least in my market...), and I am happy to provide that to my clients. Also, although we, as a profession, may not have the greatest reputation, there are many of us out there who are not rich and who are in the profession because we genuinely like helping people - we still need to make enough to make a living and pay our bills, but we do genuinely want to work with you and your individual situation as well.
On a different note, it is funny how it all works. When I first started my practice, I offered below market rates to try to bring in more clients and build a bigger base. Instead of bringing in more clients, many potential clients thought I must be cheap because "there was something wrong with me," or, "I must not be very good..." So... there is that to deal with, too! :-)
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Nick C.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
9y
I concur with the sentiment that $250/hour is cheap. If you think that's expensive, try getting sued by a tenant for writing a bogus lease downloaded from Legal Zoom while they live in your property for free and you're trying to navigate through the courts to get them out.
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John Woodrich
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
@David Moore
The problem with your supply and demand theory is that it doesn't consider all demand. You are only looking at the real estate industry, specifically small time real estate investors. This is just a small fraction of the demand for attorneys... Many attorneys work in different industries and serve many different client types. I can't speak from an attorney standpoint but as a CPA there are a lot more hassles working with many smaller clients than their are working on larger and bigger projects. Someone considering dropping their rate to grab the smaller jobs only seems reasonable for someone desperate for work.
If the attorney rates are too high I agree that some people may skip paying attorney fees. That may or may not lead to more legal fees on the back end but if it doesn't I don't think there are many attorneys who are going to be sad about not getting the work.
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Brett Sorenson
Investor · Minneapolis, MN · Member since 2016 · 57 posts · 36 votes
9y
$250 an hour is low in the whole scheme of things. Take it and build a relationship with that attorney.
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Justin Fox
Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
9y
I did the smart thing and married an attorney's sister.
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Joseph M.
Saint Paul, MN · Member since 2015 · 31 posts · 15 votes
9y
I'm an attorney in MN and $250/hour is cheap. Any cheaper and I'd wonder if the person you're working with is worth it. Below $250 an hour and your work is getting done by someone else (outsource, paralegal, etc.) and the attorney is reviewing it, or just doing pieces of it.

I'm in house counsel, and for bigger firm work on stuff in the tech industry we're looking at $400-450/hour for data privacy work, $550/hour for patent litigation work, and around $300/hour for general corporate.

For comparison, regular old IT consultants for any number of average IT gigs will run you between $200-250, so to expect an attorney to come in cheaper than that sort of consultancy is asking for trouble.

If you want to get a good deal, you gotta look at alternative fee structures, specifically flat rate fee for certain tasks. In house counsel like myself use this strategy all the time for outside counsel. What tasks they will be willing to do flat-fee is going to vary greatly from firm to firm, but given how transactional real estate is, you'll probably have success with it
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Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
My attorney is $385 per hour. He doesn't waste time and he gets results. That's my criteria. I've used lots of attorneys over the years and I hate correcting their math calculations and typos. One $250 per hour attorney was going to cost me big $$ because he didn't know a nuance of the law that I knew. Shameful.
How much do you make as a real estate investor? If attorney fees alarm you, you are not doing real estate investing profitably and should probably change your techniques.
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Dalton Osmanski
Real Estate Agent · Phoenix, AZ · Member since 2017 · 57 posts · 20 votes
9y
@Account Closed makes a valid point, you need to see the value and effectiveness of your attorney not just the $$ amount you're paying them. You can always find an inexpensive attorney but the quality, time, and outcomes will most certainly be inferior compared to just paying for someone who can get it done right the first time. In addition, do your homework if you want the best results and keep asking questions. Good luck!
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