FAQ: How much to form a corporation? Review a contract? Draft a living trust?

As an attorney, I am frequently asked by potential clients some variation of the following question:

How much to form a corporation, to review this contract, or to draft a living trust?

Usually, the honest answer is, it depends (although this tends not to be what the questioner wanted to hear). Legal services are professional services more akin to those offered by doctors or even automobile mechanics than to purchasing a fungible item like a television. With a TV, you know what you're getting before you buy, and you can price shop amongst competitors, because you know the product is going to be the same regardless of where it is purchased. Conversely, when you visit the doctor, you know you need a check-up or aren't feeling well, but until you get in there and the physician runs some tests, you aren't going to know how much it will cost. Asking an attorney, 'How much to fix X problem?' is often times akin to asking a doctor, 'How much to make me better?' or your mechanic, 'How much to fix my car?' You could ask what a doctor's visit costs, but one doctor's visit may not cure you. Likewise, you can ask me about my flat rate incorporations, but you may also need contract, employment, trademark, or other legal work, and in fact, a corporation may not be the best entity for you, so the number quoted must be put into context.

For contract negotiation, drafting, review, and counsel, my rates are hourly, and the final fee will depend on a host of factors. The fact that an agreement to be reviewed is five pages long is only one of these factors; the others will remain unknown until you sign on with me and I actually dig into the issues. (Just as your mechanic won't be able to determine what labor and parts are needed to repair your vehicle until you have paid him to look under the hood.)

Further, clients may not realize what they need. The question, 'How much for a living trust?' ignores that a living trust may not be needed at all, one living trust alone may not be sufficient, and that proper estate planning involves more than just drafting a revocable living trust (and even that is customized for each client's needs).

In summary, just as with the doctor and mechanic, some small leap of faith is required of the potential client. You must hire an attorney to analyze your circumstances and advise you; the component parts of the solution may have flat fees knowable in advance, but some legal work may additionally be recommended or even required to get where you want to go. After all, part of what you are hiring the lawyer to do is identify legal issues of which you might not be aware. Seen in this light, calling around to attorneys to compare prices for an LLC or a trust may give you an idea of the fee level, but the answers will rarely be precise, and others questions may be at least as useful. As a last resort, of course, you can always take your legal business elsewhere if your first choice for an attorney proves unsatisfactory, or you feel you are being overbilled.

Beverly Hills Lawyer

I recently received an emailed new client inquiry. She indicated that she was seeking a book contract to write on some new information regarding a celebrity trial, which would thus in her opinion (which I did not disagree with) be quite marketable. Specifically, she wanted to know if I had connections to get the book sold. I indicated to her that New York rather than Los Angeles was the locus of attorneys servicing book authors, because that is still where the vast majority of book publishers are located, but that with a book such as the one she had in mind, any ethical, honest, and hardworking attorney ought to be able to assist her in making the sale. (I also should have noted that book sales are usually and probably best done by book agents where one can be obtained, and that negotiating and documenting the finer points of the contract would best be done by an attorney regularly dealing with literary agreements, and working in conjunction with the author's agent, rather than by a Los Angeles film/TV entertainment attorney such as myself.)

Ignorning at least the portion of my email indicating to her that I was not well connected in the book publishing world, her reply email began by again asking whether I had the necessary connections to make the sale for her. But in the more interesting portion of her reply, she stated that she indeed already had a "Beverly Hills lawyer - right on Wilshire" that was not getting the job done for her due to his apparent lack of connections. The implication was that a Beverly Hills attorney would be a very good attorney, the best of the best in Los Angeles, and thus if a Beverly Hills attorney without connections was not going to get the job done for her, no connection-less attorney would. Putting aside the issue of whether Beverly Hills lawyers are all ethical, honest, and hardworking - I'm sure most are and some are not - the comment reminded me of something an attorney friend of mine who does indeed have a Beverly Hills office - right on Wilshire(!) - had told me:

He noted that clients seemed more willing to pay for his small law firm's services ever since the firm relocated from a Los Angeles to a Beverly Hills address. He was a bit amused and a bit perplexed by the phenomenon, shrugging his shoulders as he pointed out to me that he was the same lawyer, and his colleagues the same attorneys, that they were before they moved into their Beverly Hills office building; nonetheless, his clients were now willing to pay more for the same legal services (part of which was no doubt needed to cover the firm's increased rent, the balance representing extra profit for the firm).

Nothing against Beverly Hills lawyers, on Wilshire Boulevard or off, but the city or street of a prospective lawyer is, in my arguably biased opinion, at best one of many factors a client should consider when choosing an attorney, and perhaps one best disregarded altogether.