Getting more than one legal opionion before spending HOA funds on litigation?

Emma,

It's always good to get opinions. Unfortunately, many individuals shop for answers. That is to say, they seek opinions until they find one that they agree with. Well, to be realistic, I think we all do that. Some may take the time to do their own research to see what conclusions they draw, but generally, if the individual believes the answer makes sense to them and it's an outcome that they desire, I doubt they will seek a second opinion.

For example, when you have your eyes examined, do you go to a second optometrist or ophthalmologist to see if they give you a different prescription for glasses? Typically, the answer is no. You had your eyes examined and you were happy with the results. Therefore, you don't bother with a second opinion.

Our Association would likely only seek a second opinion if the attorney in question provided an opinion that the Board did not agree with. Now, that doesn't mean that the Board won't ask what the opinion is based on (statute, case law, etc.) and do their own research. However, if we trust that the answer is honest and, given the same resources we draw a similar conclusion, we would not spend additional funds shopping for an answer.

Well said.

True, that both opposing sides may discover the others "strategy" or "point of view". I think they all should be aware of the other sides position in the first place.

In my opinion that would be a "good thing". (These are fellow neighbors/human beings not enemies.) Maybe expensive litigation could be avoided that way. Who wouldn't want that? Maybe it can be settled out of court instead of stuffing attorneys pockets. Maybe HOA funds could be used for more positive things.

What is the ultimate goal? Does anyone really want to spend HOA funds on lengthy litigation if can be settled another way?

If it is the BOD and their attorney that's at the root of problem, then the membership needs a way to discover that too. Not all members have time in their lives to do legal research on their own. Some BODs just let their attorney do all the thinking for them and don't apply common sense to situations.

Some BODs know exactly what to say to convince naive members they are doing the right thing---Why not lay out the facts on both sides, inform members and let the members think and decide for themselves if they want their money used that way?

To me it open communication always should be a goal. If you have a BOD that is secretive and does not promote open communication/transparency, then there needs to be way to control that BOD and not let them make poor decisions that could cost everyone in the end. (voting them out in some situations is not an option sometimes its simply not that easy).

But my question was really about getting another legal opinion even for the same position as the HOA BODs attorney, maybe just a more inexpensive legal path to accomplish the same goal? for the membership to be able to Lawyer shop a little and have a vote on which attorney to represent the HOA.

I mean most people get second opinions for many things, doctors, car repair, etc:.

Just my opinion that that area could use some work in HOA to help make all happier and trusting.

Depending on how things work out in my situation I may very well end up sitting on the board. I'm doing my homework now. A couple of my neighbors suggested it (not everybody hates me).

Does anyone have any new and different ideas on this subject? Choosing a Attorney to retain?

I appreciate those of you sharing what you do and have done.

But I might want to make some unique suggestions to my neighbors to keep them feeling on the inside of decisions if I serve. I plan on being very member conscious and oriented if I serve. I will try to help everyone feel more like a family rather than an enemy or a peon. I will be total opposite of what is going on in my neighborhood now.

Top of the list Communication and common sense and just caring. I will look to find innovative ways to keep everyone involved and in the loop.

The way I see it its like any job if Employers work to keep the employees happy then the employees are more productive and respectful and stay. Everyone wins!

*****My question on this post really does not refer to my personal situation, I was looking towards the future. When the scenario changes as new people move into my neighborhood and I may be on the BOD.

(that being said I realize some BODs have legit gripes about member participation and are only doing their best it just is not what is going on in my situation.)

I think your fundamental question is: How do other boards hire attorneys??

Here's how my HOA does it, which follows CA legislation. When we hired our new HOA attorney--our general counsel-- about 1-1/2 years ago, our PM presented us (7-member Board) with packages of information about three firms including their own brochures, list of fees, etc. Our PM also included a list of local references for each firm. As an urban high rise, we are different than, say, 200 detached homes. Our PM is very all connected with other high rise PMs in our area.

We interviewed members of each firm in executive (closed) session for about 40 minutes apiece, which is sanctioned by our state statutes. We then voted to hire one of them at an annual retainer of $500 in ex. sess. Phone calls to them by the president (only-no other directors may phone them)
are free.

One problem with interviewing prospects for contracts in open session is that the prospects' responses very well may influenced because of the presence of an audience.

When we had to pursue construction defect litigation against our developer, we followed the same procedure as above but interviewed firms that specialize in that field of the law. The firm we hired revealed all information to Owners that was sanctioned by our state's laws during the litigation, which lasted about 2-3/4 years. We often had to meet in executive session to keep strategy, problems, etc. secret from the developer who ha very close ties with several Owners. The attorneys met with Owners about four times with progress reports, reports from our expert witnesses, etc.

Kerry,

Your HOA seems very organized. I'm jealous. Your also in CA remember I'm in SC they are worlds apart, Ive been here only 3 years, still adjusting. I'm originally from MA which has more in common with CA on some issues and ways they deal with things.

thanks again

Back to your subject line, Emma. Because we interview three firms for all of our big contracts, we, in a sense, get three opinions for free!

So, in our construction defect case, we asked many question of the members of three CD law firms. All three replied quoting the same laws, statutes of limitations, etc., etc. In the end, the one we chose had to do most with how we felt their firms' size, past cases, and partners fit our situation.

I think three bids apply whether the HOA is 25 homes, or 211 condo units. Btw, CA laws does not require three bids or proposals--but our contract with our Mgmt. Co. requires three.

Your Board could make a policy that any work estimated to cost more than xxx requires three bids.

OK, so now the question changes to how to choose an attorney.

One thing to keep in mind, and you are aware of, COAs/HOAs have their own unique area of study. The issues faced can involve property rights, contract law, corporate law, collections and, if there is a pond, wetland or other stormwater management areas, EPA issues.

The Association will need someone who has a large enough firm that they have a section for each specialty needed. The other option is to hire someone versed enough in one or two main areas that your Association is dealing with and be willing to hire other attorneys for different areas when the tasks are needed.

You will also want to know about billing and general costs. For example, our firm, by having them as our registered agent ($175 per year) will make themselves available to us when needed. If we don't need them that year, there is no additional cost. If we do need them, then the we pay for services used.

To me, the questions to ask any potential attorney are:

1) What is your area of specialty
2) What areas of law does the firm handle on a normal basis?
3) What size is your firm (i.e. are paralegals used - which has a big impact on how much you are charged)?
4) Please provide some case law where you have represented other Associations
5) Lets say I have a collections issue, what would the process of filing a lien and removing the lien typically cost (ballpark figure)?
6) What are your hourly rates?
7) Do you require a yearly retainer and, if so, what does that provide?

Prior to seeking an attorney to ask questions of, the Association should ask themselves the following questions:

1) What do we think we will use an attorney for over the next 5 years (which varies by Association)?:
Transition from Declarant
collections
Legal Opinions
enforcement
governing documents rewrite (goes with legal opinions but more time consuming)
Registered agent

2) What, if anything, do we need an attorney for in the next year (you will need that specialty first)?

3) How much money do we have for legal expenses and how easily is it to increase assessments if needed for legal expenses?

4) How active is the membership (if the membership is very active, you may be able to utilize their expertise to assist in various areas - researching an issue for example)?

I'm sure that there are other things to ask. These were off the top of my head.

Here is some additional info:

Working with an HOA Lawyer Part I: The Hiring Process (Austin Lawyer Tip)

How To Hire An Attorney from expert law

College of Community Association Lawyers (CCAL) from CAI

What Does it Mean to Have a Lawyer on Retainer? from findlaw

Three Factors An HOA Should Consider When Hiring An Attorney article from an attorney's blog

There are a lot more. Simply do an internet search on HOA hiring an attorney

And every one of those opinions will be worth just what you paid for them. Guaranteed!

A legal opinion requires research into both the facts and the law. Research takes time and costs money. No attorney is going to invest his time and his money so he can deliver a free opinion to you. What you got was three sales pitches, each one based on the assumption of unverified "facts" applied to generic law.

Most association boards are made up of ordinary people with little experience in dealing with attorneys. I would hope that your HOA attorney had some input into your selection.

Hi Emma

We have one of those complex legal disputes that goes on for years. We have not initiated suit yet (and we may never do so), but we have made a significant investment in our present attorney. To change attorneys now would be quite costly to the association.

As we worked through this dilemma with our present attorney, we adopted some of his recommendations and we seriously questioned how he could have come up with other recommendations. Knowing what we know now, we probably wouldn't have hired him to be our attorney on this matter. But that's a conclusion we came to in hindsight after working with him for years and after the issue itself took some twists that we couldn't have anticipated at the outset.

Our board has had numerous conversations (all private) on whether we should change lawyers, but every time, we have concluded that given the potential risks, rewards, and switching costs, we'll stay put.

Because of the complex nature of the issue, we believe that it would be senseless to look for a second opinion. Like most of these complex situations, our issue is about who has certain rights, how can certain responsibilities be enforced, and who is obligated to pay certain expenses. We don't need a second opinion to confirm that there is a difference of opinion on these rights, responsibilities, and obligations. And we don't need a second opinion to tell us that it's not a slam dunk for any of the people involved. If there was a clear cut solution, it would have been reached voluntarily years ago. No one on any side wants to waste time and money unnecessarily.

You ask about a second legal opinion, but I get the sense that what you really want is a different legal opinion. If the board got a second lawyer who agrees with their first lawyer's opinion, I doubt you would be satisfied. You would probably find some defect in the board's actions if they came back with anything other than a different game plan.

If you want to be a positive force, then let me suggest the following, assuming that all sides are already represented by counsel. Recommend to all sides that their lawyers pursue Alternative Dispute Resolution (ADR). Lawyers from the different sides can try to reach a mutual agreement on whether mediation, arbitration, mini-trial, or some other form of ADR is appropriate and advisable under the circumstances. The attorneys can mutually agree to select a master/arbitrator/mediator/facilitator who will set the agenda and control the proceedings, while leaving the issues for the parties and their lawyers to work through in a less formal. less time consuming, and less expensive setting than a courtroom.

If we had a situation where we thought ADR could be beneficial, we would pursue it. But we wouldn't go to the membership for their opinion or approval. If a particular member has specific expertise that we thought could be beneficial, we would reach out to that individual for his or her input. But short of that, we don't need a bunch of novice cooks in an already crowded kitchen.

I am all for some sort of third party mediation whenever possible. I realize it may not work in all situations but I would certainly be open to it as a means reaching a mutual agreement without risking a ridiculous amounts of $$$$ on attorneys fees.

This is another thing I would like added into our process. We are very small neighborhood and I think it would be a excellent solution for us to incorporate into the scheme of things.