Many community associations are facing budget shortfalls due to the downturn in the economy and are accordingly looking for ways to be more cost effective. One of the expenses for community associations is legal fees.
Here are a few ways for Boards to reduce legal fees:
Governing Document Amendments/Restating Governing Documents
Many Boards try to save money by re-writing the declaration or bylaws themselves, having the membership vote on them, then ask the attorneys to review for legality. Unfortunately, it usually takes the attorneys longer to revise changes made by the Board than it would have if the attorney made the changes from the beginning. The best policy is for the Board to give the attorney a laundry list of changes to be made and later have the Board work off the attorney’s revised copy. This will also prevent the need for a re-vote or re-recording if something was done improperly.
Due to budgetary shortfalls, Boards often want to be aggressive with collection efforts. This may include filing foreclosures against members. However, foreclosures are very expensive to initiate, so in order to save money, Boards might want to revise their collection policies to offer the option of either small claims court (which will allow for garnishment of wages, etc.) or put in a longer waiting period for a foreclosure. If the lender files foreclosure first, the association can “ride the coattails” of the lender, which may save the association thousands of dollars in court costs, title work and attorneys fees.
Often times, Boards or management companies will send out initial enforcement letters to owners in order to save money on attorneys fees. However, keep in mind that the letters must contain specific language with regard to hearings, timeframes, etc., in accordance with State Law in order to be effective. So if an incorrect letter goes out, the Attorney will have to start over in order to initiate enforcement proceedings. Flawed warning letters may result in a dismissal of a case filed by the Association.
Involvement Right Away
Keep in mind that your Board hired attorneys because your governing documents and State law allow you to hire professionals in order to assist the association with daily operations. If you have a question about whether a decision made by the board is legal, ask them. All too often, they are not made aware of situations until the complaint filed by a unit owner comes to them. A few minutes of legal advice may prevent unnecessary litigation for the association and save thousands.
Litigation-documentation and organization
Make sure to keep copies of as many documents as possible and in an orderly fashion. Should the attorneys need to review documents for litigation purposes, having said documents organized or even indexed can save many hours worth of legal fees.
Utilize paralegals Paralegals, law clerks or other experienced legal professionals can be used for more general legal tasks, so utilize them as much as possible. Paralegals often bill at a much lower rate than attorneys.
Hire Attorneys who work primarily in Condominium/HOA Law
Since the majority of their practice would involve community association law, they may have already dealt with issues that may be facing your association. This means that they will probably not have to bill you for hours worth of research on a problem because they have an answer from a previous case.
Since you are all volunteers, it may be difficult to devote even more time to educating yourself on community association law. However, utilize free newsletter and free seminars when you are able. Taking a few minutes to read the newsletter may teach you something new. Share interesting or relevant items with your Board to keep them on top of the latest. Again, what you learn in online or at a seminar may prevent future litigation for your association.