Why Attorney Fee Provisions are So Important for the 'Little Guy'

If you are a small business owner or an individual that is about to sign an agreement with a big(ger) company (or someone with deep pockets) it is probably in your best interest to request an 'attorney fee recovery' provision in your contract. Why? you ask...

As you probably already know, in our Legal System, parties are responsible for their own legal costs no matter who is victorious in a law suit. However, in a case arising from a contract, you can designate the losing party to pay the attorney fees arising from breach of contract within the agreement itself. Such provisions are not only inforcebale but also wise. Why is it in your best interest to have this provision? The short answer is: because $50,000.00 in legal fees mean more to you then to a deep pocket company- and they know this fact. Moreover, they are willing and able (and often do) take advantage of your financial vulnerability.

If the contract lacks an attorney fee recovery provision, you are more likely to settle your dispute for a lot less when your attorney fees become astronomically high and you just want this madness to stop. Sooner or later, your legal costs will become too much for you to bear, and they will be waiting for you to pull the plug or approach them ready to settle. Even if you can afford to litigate your case (when they throw every defense and counter-claim in your direction), if you lose, can you afford to appeal? Even if the trial court rules in your favor, the other side will surely appeal the decision, and your legal fees may continue to grow. The big guys can afford to take your case all the way to the Supreme Court if they have to.

You would be protecting yourself in multiple ways by including such a provision in your contract. Basically, if your claim has merit (and you thus have a good chance of success) the other side may think twice about low-balling you in a settlement or may even heed your demands to avoid litigation all together. You, on the otherhand, can protect yourself by seeking attorney advise about the odds of your success before filing a suit. If your chances of winning are not as great as you hoped then don't commence your action. Finally, the legal system benefits from such provisions because having them in contracts should (theoretically) reduce frivolous law suits- but no promises there...

Of course the situation is different if you are the one that breaches your end of the deal and a case is brought against you. Unless you have a good defense, you may be stuck paying the other side's fees in addition to your own and the judgment. So when signing an agreement, whether its an employment contract, a service contract or a contract for sale of goods, you should be willing and able to keep your end of the bargain, and then and only then will this provision serve in your favor. In sum, if your contract does not already provide for attorney fees paid for by the losing party, it would be prudent to get that in there. In addition, I would have a trusted attorney review your contract to make sure your rights are protected to the fullest.

Are you taking advantage of the elderly or just doing your job?

Elder Abuse in the Real Estate Business is unfortunately becoming more and more common. Some realtors target neighborhoods with seniors and continuously advertize their services, gain trust, and use 'scare tactics'- such as the declining housing market- to pressure seniors to sell their homes. For many of these seniors, selling their homes simply does not make sense. Many of them are already paid off and they may be on the hook for huge capital gains taxes. Furthermore, the seniors may not understand their options, all the terms, or even the fact that they agreed to sell their home at all. Because of their vulnerability and possible mobility issues, many seniors think that the realtors are acting in their best interest when they convince them to sell their home. Many do not consider simply renting out the house and living off the rent payments because they are not savvy enough. Most seniors would no doubt prefer to leave this asset for their children. A sophisticated client would be able to understand and rebuff these tactics, however, many seniors are too easily misled and pressured to sign agreements. They simply succumb to the pressure from the realtor without understanding the implications and consequences of their actions. Therefore, it could be scary for a realtor to deal with an individual of age, as they may face a serious allegation of elder financial abuse and risk their hard-earned reputation and discipline actions as well as a law suit.
In order to avoid problems, the honest realtor must be careful in the way they solicit, approach and conduct themselves with senior citizens. If the senior shows any signs of a weak mind, or even if he/she seems completely sharp and on their game, you need to take extra precautions to make sure that you are not pressuring them to do what they do not want to do, especially if it is not in their best interest. If you are not careful, not only is the transaction possibly voidable, but you may be risking accusations of elder financial abuse, unfair business practices, emotional distess, undue influence and breach of fiduciary duty. This is especially true if you are a dual agent and have the senior sign a dual agency agreement. A consent to such an agreement must be 'informed.' However, if the senior is vulnerable, weak, or has cognitive thinking problems, they may be able to claim lack of informed consent to dual representation in order to void the deal. Of course every case is different and they may not be able to prove any of these claims, nevertheless, when dealing with the elderly in your real estate business, in order to protect your reputation, do right by your clients and avoid unfounded allegations, you should cross your t's and dot your i's. In other words, you should make sure that you are not being overly aggressive in pressuring your client and that they have adequate consultation and advise, and are getting the best deal possible in the circumstances.