Don't Get Screwed: 3 Surprising Times When You Need a Lawyer


Lawyers get a bad rap.

From films such as My Cousin Vinny to TV shows such as Ally McBeal, you get the idea that lawyers don't know half the time what they're doing. This is why it seems that taking legal matters in your own hands or using an online legal service is just as good as hiring a lawyer. (See also: 7 Occasions When You Should Definitely Hire a Financial Advisor)

However, there are times that the opportunity cost is too high to tackle the job yourself. And some of them — like the three listed below — might surprise you.

1. Executing an Estate or Administer a Will

Let's imagine that your Uncle Joe passes away and Aunty Jude calls to ask if you could serve as executor of your uncle's estate or administrator of his will. If Uncle Joe meant a lot to you and you feel that is your duty to accept either task, it is a good idea to call a lawyer.

Executing an estate requires a lot of steps and forms. The three primary responsibilities of a person appointed to administer an estate are:

  • To collect and inventory the assets of the estate of the deceased;
  • To pay applicable debts, taxes, and liabilities of the estate; and
  • To distribute the remaining estate to the persons entitled to receive them.

If you have neither the time nor the expertise to do a thorough job, you may miss necessary state estate tax returns or notices (e.g. Notice of Proposed Action). Even worse, you become liable for any potential mismanagement of your uncle's estate. But that's not all. The estate's beneficiaries are most likely your relatives as well. So, you would get sued by your own relatives if you were to perform any wrongdoing, even if unintentional. Do you really need that drama in your life?

A lawyer would guide through the entire process and point out any potential pitfalls. For example, depending on the applicable estate laws, you may not be entitled to serve as an administrator for your uncle's will. A lawyer would check the statutes of descent and distribution to determine the next of kin entitled to serve as administrators.

However, probate attorney's fees are not cheap. The total fee for a "routine" estate with a gross value of $400,000 is about $20,000. You have three options for billing: hourly (ranging from $150 to $200 per hour), flat fee, or percentage of estate (only in certain states, such as California and Florida). Most legal professionals recommend to avoid percentage fees and to get the fee agreement in writing.

2. Forming a Corporation

Given that there are close to 3 million corporations in America, you would think that forming a corporation is a pretty straightforward process. However, forming a corporation is more complicated than setting up an LLC or business partnership. This is another time to pick up the phone and call a lawyer.

While many of the necessary forms are available online, such as the ones for the State of Delaware, you may not have the necessary skills to consider the tax and legal ramifications of how you form the corporation. There are important requirements, such as filing annual reports, filing bylaws, and requesting permission to operate outside the state of incorporation, that only a corporate attorney would know about. After all, you want your corporation to make headlines, but not for making a major legal blunder.

The rates of corporate lawyers to form a corporation fluctuate a lot. They can start as low as $300 and go all the way up to $5,000. Hiring an ultimate pro can run you over $1,000 per hour. Of course, these estimates don't include fees, such as the IRS fee for tax exempt nonprofit corporations.

It's important to shop around and get several quotes to make an informed decision. However, don't rely solely on price. Make sure that the lawyer specializes in corporate law, ask her for recommendations, and check her background with your state and local bar associations. By investing the time in finding the right corporate lawyer, you have completed the necessary legwork when the need rises again for one.

3. Filing a Patent

There are plenty of websites claiming that you can file a patent for just a couple hundred dollars and in under one hour.

But if you truly have a billion dollar idea, you shouldn't risk it going it on your own. When you have the golden goose, the patent trolls will try their best to take a bite out of it. For example, Apple faced 92 patent lawsuits over a three year period, and Google has faced over 140 patent lawsuits since 2009.

Several inventors recommend that you seek advice from a registered patent attorney or agent when filing your provisional patent application. A professional provides expert advice on what language to use to:

  • Meet the requirements of 35 U.S. Code 112 for inventions and their connections;
  • Avoid unnecessary restrictions to your provisional patent;
  • Provide counsel on additional registration systems (e.g. trademark); and
  • Achieve the right balance between broad and specific descriptions.

The total cost for a provisional patent application for a mechanical or electrical device is about $2,500 or less. The portion for the cost of attorney time is at least $2,000 and the remaining is for filing fees and applicable expenses, such as drawings. If your product development is successful and you're ready to file a nonprovisional patent application, be ready to spend over $10,000 in legal cost and fees.

Better safe, than pillaged by a patent troll!

What are other times when you need a lawyer? Please share in comments.

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