How to Reduce Legal Costs and Turbo Charge Your Equity Release Legal Process Via an ERSA Lawyer

What on earth is E.R.S.A.? Well its a bit like N.A.S.A. in that it helps your equity release legal process get off the ground rapidly. The abbreviation stands for Equity Release Solicitors Alliance, a small but growing band of specialist UK law firms focused on Lifetime Mortgage and Home Reversion Scheme conveyance with fast track technology and systems. Members have huge experience of equity release schemes so this avoids the expensive and time consuming learning curve that may be endured through an inexperienced conveyance service. very few firms of solicitors that focus on providing a such a specialist service.

Many law firms have dedicated mortgage departments that employ supervised admin staff able to churn out traditional conveyance work like a conveyor belt. However Lifetime Mortgage work is much more specialised and could mean involving one of the firms partners to do the work. If the firms employees are inexperienced, the fees may increase substantially, not to mention undue delays?

E.R.S.A. was formed in June 2008 and now comprises of seven specialist solicitor practices. Members undertake to provide a high quality efficient service for their clients in a timely and efficient manner. Their extensive customer charter includes a promise of “no fees payable” if your Lifetime Mortgage or Home Reversion does not complete for any reason such as an adverse valuation.

One of the most important tasks of your specialist solicitor is to make sure that you completely understand your Lifetime Mortgage or Home Reversion Plan. The solicitor must sign a certificate which is forwarded to the product company and confirms that your solicitor is confident that you fully comprehend the terms and conditions of your equity release plan and that you are still happy to proceed. Your legal adviser will send legal and title deed documentation to the Lifetime Mortgage or Home Reversion company to ensure a quick completion.

Unlike traditional mortgage solicitors, E.R.S.A. members have access to Lifetime Mortgage and Home Reversion case management technology that can mean the difference between weeks of delay in correspondence as opposed to as little as twenty four hours.

Six Simple Ways to Cut Your Legal Fees

It is common knowledge that most of us don’t like paying legal fees. It is because of this that the tax rules come in handy, you can substantially reduce your legal expenses. Read along to find out how…

I. Legal Fees for Tax Advice are Deductible.

All taxes including, income, estate, gift, property, sales, use and excise tax, even if they are personal, are deductible.

II. Legal charges in Employment Cases are Fully Deductible.

Wages, in most employment lawsuit recoveries, are contained on a (form W-2) while non-wage incomes are usually on a (Form 1099). You still must include 100% in your income, even if your lawyer receives 40% of it. Before reaching adjusted gross income, the legal fees above-the-line can still be deducted. You then end up with no tax on the legal fees; no regular tax and no AMT.

III. Business Legal costs are Deductible.

In case you sustain legal fees in a trade or business, then the fees are deductible by corporations, LLCs, partnerships, and proprietorships. However, you are required to capitalize and add some fees to the basis of assets. In case you are trying to sell your business and spend $50,000 in legal fees, it is a necessity that you add it to your basis in your company.

IV. Personal Legal bills are Non-Deductible.

Legal expenses of personal nature like expenses incurred in a divorce case or if a family sues you for slander, are usually not the least deductible. However, if your business or investment is impacted by personal legal matters, then some deductions are possible.

V. Watch out for Lawyer’s Contingent Fees.

According to the U.S. Supreme Court, you are considered as having income once it is established that indeed you can afford to pay your lawyer’s contingent charges. This means that you need to consider how to deduct the costs. In case you win a lawsuit amounting to $1 million, out of which you owe your lawyer 40% in contingent payment, then you might assume you have $600,000 of income.

In cases that involve purely personal physical injuries like a motor vehicle accident, the entire recovery is tax-free. In this case, recovery considerations including your lawyer’s charges or the net do not matter. However, the difference between what is and is not tax-free is not very clear.

VI. Payment Made to a Lawyer in an Investment Are Miscellaneous Itemized Deductions.

Legal expenses that don’t relate to your business but only to investments can be deducted but usually, only as a miscellaneous itemized deduction. That means a 2% threshold, phase-outs and not so good Alternative Minimum Tax ( AMT ). Just as the business legal fees, some investment legal fees must be capitalized to the basis of the assets (such as legal fees for the purchase of investment property).


With tax deductions, the pain of high legal bills can be lessened. Sophisticated tax analysis can make you incur legal fees falling into more than one category. There are often several ways of allocating fees, so you need to plan well to reap the benefits.

Reducing Legal Malpractice Exposure

Many legal malpractice claims share common allegations/themes that can be avoided if law firms have the proper risk management measures in place. Implementation and maintained use of some very rudimentary systems and procedures can reduce the likelihood of being sued, or in the event you are sued, can bolster your defense. Below are some basic tips law firms can utilize to help reduce their legal malpractice exposure.

Engagement Letters – Legal malpractice claims often hinge on whether or not the claimant can establish that they were a client of the attorney (or at least owed a duty of care in 3rd party claims) and that the attorney agreed to handle the matter in question. A written engagement letter prepared for each client or potential client can serve to establish the facts of the lawyer-client agreement. Ideally an engagement letter would include the following:

o Name of client

o Scope of services (and in certain circumstances specifying what services are not being performed/included is also appropriate)

o Fee amount and billing schedule, including payment expectations

o Identification of any potential conflicts of interest

o Name and contact information of primary attorney handling the matter including outline of firm’s communication guidelines (i.e. timeframes for responses to phone calls, faxes, letters, etc.)

o Client’s obligations to the attorney and/or firm

o Dispute resolution method and initiation procedure

Non-Engagement/Declination Letters – These are often the difference in getting a meritless claim dismissed. As important as engagement letters are, non-engagement/declination letters are equally important. Written documentation to the former potential client advising that you will not be representing them is critical in establishing that no professional relationship existed. Non-Engagement/Declination letters should include the following:

o Name of potential client

o Date the attorney and/or firm met with potential client to discuss representation

o Details of the potential case which were discussed

o Statement clearly advising the potential client of the attorney’s/firm’s decision not to accept the case

Disengagement Letters – Various circumstances may arise that prompt a severing of the professional relationship between a lawyer and client. This often occurs before the matter for which the attorney was hired has reached a final resolution. In such circumstances it is crucial the “disengagement” be documented in a letter to the client. If the client subsequently hires new counsel who makes an error, the disengagement letter may be the best defense to establish who the responsible attorney was at the time the error occurred. Disengagement letters should include the following:

o Name of client

o Date the attorney and/or firm are terminating their representation of the client

o Statement clearly advising the client of the attorney’s/firm’s reason for disengagement (i.e. case concluded, client request, non-payment of fees, etc)

o Successor counsel: if known include their name, if not include a statement advising client to seek new counsel

Professional Liability Insurance – Consistent use of the letters described above may help you reduce the possibility of being named in a malpractice suit, however they won’t eliminate the possibility of claims. Lawyers professional liability insurance won’t eliminate claims either, but it can serve to minimize the impact a malpractice claim might have on your firm.

When deciding whether or not to carry professional liability insurance, consider the following:

o Frequency of client claims and malpractice law suits are on the rise. The National Law Journal has reported that an attorney can now expect to be sued at least once during their career.

o Defending a malpractice claim is expensive. History tells us that approximately 35% of loss payments in professional liability claims are due to litigation expenses, so even if you prevail with your defense it will be costly.

o Your personal assets may be at risk without appropriate professional liability insurance in place.

o Many clients, especially larger companies, are now requiring proof of professional liability insurance before they will enter into an engagement.

o Many, if not most, referral services require the attorney or firm have professional liability insurance in place before they will begin referring cases.

o Some states and jurisdictions now require that you disclose to clients whether or not professional liability insurance is in place.

DISCLAIMER: The information in this article is provided for general discussion purposes only, and does not constitute legal advice. For specific advice contact your own legal, financial, insurance and/or other advisor.