Ambulance Chasers Attack Realtors
April 24th, 2008 Categories: Market Trends, Real Estate News
I got this email today regarding an underhanded maneuver by the Colorado Trial Lawyers Association (aka Ambulance Chasers):
Before you read about it in the paper, we wanted you to be aware of a new ballot initiative filed that would limit commissions for real estate brokers. It’s a sliding scale but still no good. Here’s the breakdown: 6% = up to $250k; 3% = $250-500k; 1% = above $500k.
This initiative is brought by the Colorado Trial Lawyers Association. They filed #109 and seven other initiatives as a response to another initiative dealing with capping attorneys fees.
You wanted to be there. See Gretchen blow her top.
Here are my thoughts on this unfortunate ill-advised action. Go sell your house yourself! Pay upfront for the marketing, the photography, the brochures, the website(s), sit the house open weekend after weekend. Call yourself and explain why the market is flat and you haven’t had a showing in weeks. Network with all of the Realtors you know because most likely the buyer will be the result of a co-op from a broker. Work for a bank and watch them already cut your fee (I’ll bet they don’t for your representation of their foreclosure actions).
Trial Lawyers fight every year when legislators and the general public try to put caps on awards or damages. They certainly don’t want their fee cut. Do you know what the routine percentage a lawyer earns if a case goes to trial? 40% of the award or damages. 50% if there’s an appeal, and 33% if the case is settled. Joe Blow gets run over by a truck and his life is ruined. He’s awarded $1 million to live the rest of his life. His lawyer walks with $400,000.
Is this a reaction to the mortgage crisis? Are the lawyers in the pockets of the banks who for the most part got us into this mess? Lawyers are representing banks everyday in foreclosure actions, and getting paid hourly. I get paid peanuts for the hours of work I put in. We’re spending money on our credit cards to market properties that may take months to sell, and then we pay a co-op to the buyer’s agent and a split to our company. Lawyers representing banks have a vested interest in this crisis stretching out for as long as possible. Realtors are actually trying to alleviate the problem by getting properties sold.
I don’t make money off of other people’s misfortune. I actually lost money last year when I helped a friend/client out of a mortgage mess brought on by a divorce and job loss. It was such a stressful time for my client that not only did I advocate for him with the bank to take a short sale, I marketed his house and paid for his inspection items out of my own pocket to get him out of the home. I am not a vulture. I am paid a fair wage and deserve to make a living just like an ambulance chaser does.
Something seems wrong with this picture. The CTLA, the alleged advocate for the underdog, is attacking Realtors in favor of banks and mortgage companies?
If this initiative passes, I’m sure the lawyers will be waiting in line to represent us to overturn it as unconsitutional. I’ll ask, “will you take 1/6th of your fee?”
You go Gretchen! Speak on it! I love your fearless passion and ability to call a spade a spade, especially appreciate your analysis of fees- 40%! I really should have gone to law school.
Thanks Shannon,
I appreciate your nice comments. I always lose a little bit of sleep when I let loose like that!
You tell ‘em!! Ridiculous attempt to restrict fair trade. That will be the day in Virginia. I have actually asked clients to list at a x+% to encourage agents to show the listing for a higher split.
Love the blog, great photos, keep us advised on the results of the lawyers attempts to run your business.
Thanks Michael, Does the higher split work? I’ve tried it, but still think that good agents will show everything that fits their client’s needs regardless of the co-op.
Fortunately they haven’t got a snowball’s chance in hell to pass such legislation. They know it, we know it. They are just fighting back because that’s what they do.
Great rant!
kk
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kk
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That is infuriating, but just won’t cut the mustard or even get to the sandwich, thank goodness. This is going to turn around to bite them in the a**. Question: Do you use real estate attorneys in Colorado?
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Rebecca, We don’t generally use attorneys here. They’re usually a bit grumpy about that. I just got word today that all bills regarding capping real estate commissions and attorneys’ fees have been pulled off of the legislative table.
“Trial Lawyers fight every year when legislators and the general public try to put caps on awards or damages.”
You might want to consider who is awarding those damages. The lawyers don’t award them, it is the jury and thus, the general population.
Also, the reason many trial lawyers charge contigency 40%, or whatever you quoted, is because theyhave to front the money for the cases, and when they lose they lose everything. You see, your Joe Blow, whose life was ruined, usually doesn’t have the money to pay the lawyer by the hour. Lawyers have to take the risk themselves.
If it wasn’t for them, Joe Blow’s life would be ruined and he would receive nothing…ZERO…whith out the lawyer.
I am not saying all plaintiff’s attorneys are great people, but it is hardly fair to talk badly about an entire sector of society. At the vary least, be fair, and give both sides.
By the way, the reason the legislators are trying to cap those fees, is because corporations are sinking huge amounts of money into state lobbyists. You may change your tune when something happens to you because of corporate negligence and you are not entitled to enough money to take care of you and your family.
Most of the plaintiff’s lawyers I know got into to help the underdog and then they get trashed to hell for it. If they only cared about the cash…they would have gone corporate.
J - I appreciate your stopping by and leaving comments. It’s definitely a charged issue, and soon after this article was written, the bill was pulled from the table at the Colorado Legislature. It was a politically motivated action from the beginning. The Trail Lawyers Assn was putting the cap on fees forth in an effort to use that as leverage against a bill they didn’t like. That’s how politics works, it seems.
You’re right, not every trail lawyer is just out for the money and not every Realtor is a used car salesman. Many plaintiff’s attorneys (most, I think) care deeply about the people they are representing.
I still think that some of these fees are exorbitant. My husband, a lawyer, agrees. Of course they take a risk when they take on a client who may or may not receive an award. That’s why they evaluate carefully the merits of the case before they take it on. Real estate brokers also work “for free” until there is a resolution (i.e. a closing). We often put hours and hours plus many dollars into marketing properties or driving around buyers, which sometimes doesn’t culminate in much more than a “thanks.”
This is a response to “J”.
While it is nice to suggest that attorneys serve a noble purpose, the decision to represent a client on a contingecy basis is ultimately a business decision. In other words, experienced attorneys will only take the “winner” cases.
The attorneys who take cases on a matter of principle are either freshly minted or independently wealthy (or perhaps a touch crazy).
This means that plaintiffs with scant financial resources are not able to buy the same level of “justice” as their wealthy counterparts.
Interesting that anyone with a house to sell will find an agent to represent them.
As I see it, agents represent all types of buyers, sellers, castles and heaps.
If the attorneys (politicians and corporations who are run and owned by people and live in houses) are able to reduce the amount of commisions realtors can charge, don’t be surprised to see the foreclosure rate sky rocket because the lower income individuals with lower priced homes will be unable to find someone to represent them.
Sounds like the beginning of a new type of class action suit. Any takers?