But, a growing number of people are now taking these matters into their own hands, hoping to save money on legal fees.
Richard Stim, a senior legal editor at Nolo, the leading authority on the do-it-yourself law movement, stopped by The Saturday Early Show to explain when a lawyer is necessary and when legal matters can be handled without one.
Settling Small Claims Court Cases
Small claims cases usually involve relatively modest amounts of money and often include tenant-landlord disputes, minor car accidents, problems with friends, neighbors or faulty merchandise. These cases primarily resolve small monetary disputes. The purpose of small claims court is to let you sue without a lawyer.
Stim says when your case comes to trial, you should be prepared to bring in witnesses and paper evidence.
Before filing a case with a small claims court, you should notify the person or company you plan to sue via a letter, offering the defendant a chance to settle out of court.
In most small claims cases, you will not need a lawyer. A small claims court usually allows you to sue a person or company without a lawyer. If the defendant hires a lawyer, however, you may want to consider hiring one as well. If you lose the case, you may end up paying his attorney's fees as well as the filing fee. And in small claims court, there are no second chances because you generally don't get to appeal your case.
Buying or Selling a Home
Stim says the buying or selling of a house is an extremely important transaction and should be taken very seriously, but that doesn't mean you need a lawyer to assist you. These transactions can be completed with the help of a good real estate agent or broker (who's working for you, NOT the other party), the escrow company and possibly a mortgage broker.
In most cases, you can sell your house without a real estate broker or agent. You must be aware, however, of the legal rules that govern real estate transfers in your state such as who must sign the papers, who can conduct the actual transaction and what to do if and when any problems arise that slow down the transfer of ownership. If you want to go it alone, be sure you have the time, energy and ability to handle all the details -- from setting a realistic price to negotiating offers and closing the deal.
You may want to hire a real estate broker for the more crucial tasks such as setting the price of your house, advertising your home, and handling some of the more complicated paperwork when the sale closes. If you work with a broker in a limited way, you may be able to negotiate a reduction of the typical 5 percent to 7 percent broker's commission, or you may be able to find a real estate agent who charges by the hour for specified services such as reviewing the sales contract.
Get a lawyer if:
- The fee for a lawyer is "cheap" in comparison to the purchase price
- Lawyers usually get involved in residential sales in your neighborhood or state
- You don't really trust the other party involved in the buy/sell (or worse, your don't trust your real estate agent)
- The property you are buying is in probate or foreclosure
- The purchase or sale is too complicated
Getting a Divorce
The average American divorce costs between $15,000 and $30,000 in legal fees. "If a divorce is strongly contested, it can be unbelievably expensive," says Emily Doskow, family-law editor at Nolo. The cost of a mediated divorce, on the other hand, rarely exceeds $5,000.
Stim says if you think you and your spouse can essentially agree on who will get what, you can probably sort things out with the help of a mediator rather than a lawyer. The mediator (usually a family lawyer who doesn't represent either spouse) meets with both parties to assist with paperwork and decision-making. Basically, the mediator tries to draw up a settlement that both parties can agree on.
Mediation almost always takes less time, is less expensive and results in a more solid agreement than using a lawyer. Of course, every divorcing spouse should know and understand his or her legal rights before agreeing to a settlement, even one reached through mediation. You might want to consult a lawyer or do some independent legal research early in the process and then have a lawyer review the agreement before signing.
Children of divorcing parents are usually the ones most affected by their parent's divorce. Using a mediator is becoming increasingly popular not only because it is cheaper but also because it usually enhances cooperation between the spouses and makes it much more likely that they will be able to communicate on child-raising issues after the divorce or separation. Experts who have studied the effects of divorce on children universally conclude that children suffer far less when divorcing or separating parents can cooperate.
Stim says there are, however, several instances where retaining a lawyer may be a necessity:
- If your spouse has a lawyer
- The relationship between you and your spouse is so bitter that you can't even communicate or agree on anything
- You're afraid your emotional state will cloud your decision-making process
- There is a lot of money and/or property at stake - especially pension or retirement plans
- Your spouse is an abuser (physical, substance or otherwise)
Starting a Business
These days it seems more and more Americans are starting their own businesses, perhaps for various personal and economic reasons. The technological advances in data storage and the popularity of the Internet make it easier for people looking to start a small business.
But with more people starting their own businesses, deals that were completed 40 years ago with a handshake are now much more complex. Legal rules affect almost every small business relationship, including organizing the business, dealing with co-owners, hiring and supervising employees and relating to customers and employees.
Stim says with issues being complex as they are, it may be a good idea to enlist the help of a small business lawyer to make sure you're not missing anything.
Writing a Simple Will
Though most Americans are aware that they need a will, the majority -- about 70 percent of Americans -- don't have one. There are lots of reasons we put off making our will, but writing a will doesn't have to be expensive, or even terribly complicated. And once it's done, Stim says you can rest a little easier knowing that your wishes are known and will be followed after your death.
Sounds simple, and it usually is, but it does involve some effort. Stim says there's more to it than sitting down with a notepad and writing your will, expecting that it will stand up in front of a probate court. There are a few technical requirements in order to make sure you've got a good will:
- The document must expressly state that it's your will
- You must date and sign the will
- The will must be signed by at least two, or in some states three, witnesses. They must watch you sign the will, though they don't need to read it. Your witnesses must be people who won't inherit anything under the will.
If you die without making a will, state law will determine what happens to your property. Your property will be distributed to your spouse and children or, if you have neither, to other relatives according to a statutory formula.
Stim says most of us do not need a lawyer to make a will. It rarely involves complicated legal rules, and most people can draft their own will with the air of a good self-help book or software program.
When it comes to making a will, you may want to consider getting a lawyer if:
- You think the will might be contested on grounds of fraud, or a claim that you were unduly influenced or weren't of sound mind when you signed it
- Your estate is high enough to warrant federal estate taxes (in 2004, if your estate was worth more than $1.5 million, it was subject to federal estate taxes)
- You co-own a business with other people and want to pass on your share of the business to your heirs
- You need to set up a special-needs trust for a relative who's disabled (to make sure he or she continues to receive government benefits)
- You do not want to include your spouse as an heir to your will; this usually is not allowed without your spouse's consent, but a lawyer will help you understand your options
Creating a Living Will (Healthcare Directive)
A living will also often referred to as a healthcare directive, is created in case you can no longer communicate for yourself when it comes to your personal affairs. For example, if you get into a car accident and slip into a coma, you want to have someone who you trust making decisions on your behalf. Who would act on our behalf to pay bills, make bank deposits, watch over investments and deal with the paperwork required to collect insurance and government benefits? Who would make arrangements for our medical care and see that our wishes for treatment are carried out?
Stim says this process is very simple and can save everyone a lot of time and aggravation should a situation arise. The forms that need to be completed are straightforward.