Real estate agents are exposed to substantial legal risk; they fill out contracts, they touch hundreds of thousands to multi-million dollar transactions, and they are the trusted party guiding a client through the swampy legal glades of a real estate purchase and sale. Your job as an agent tends to be addressing risk, limiting it, preventing it, or at the very least letting the client know that the risk is present. What’s the risk if you mess up an addendum and the client gets into a lawsuit? How bad could it be, honestly? Let’s look into it a little:
When most people get into lawsuits, the first thing most do is hire an attorney. Attorneys are not uniform; there are variations in skill, expertise, practice area, and billing practices. All of those affect the cost of the lawsuit.
Billing Practice:
Flat Fees – some attorneys will charge flat fees for services. This tends to be for simpler, more rote things like drafting a letter or completing a deed; it is rarely the approach taken on more complex or fluid disputes because the amount of time and expense of the more complex matters will regularly outrun the flat fee and turn the client’s file into a loss for the law firm.
Contingency Fees – some attorneys, mostly in personal injury practices, will bill and seek a percentage of the outcome as a payment. This tends to be something where the lawyer takes upwards of 40% of the end award if they are successful, but $0 if not. It is less common in real estate, but can still sometimes happen. The attorney will need to justify the contingency, generally through proof of hours worked, complexity, experience of the attorney, and proof of personal funds expended on experts and evidence. It also really only applies when there is money at stake. If you’re arguing over the validity of an easement, an attorney can’t take 40% of the invalidation of the easement.
Hourly Billing – Hourly billing is the most common version in real estate lawsuits. Every four or five years, the Oregon State Bar does a survey of the members to determine how much they charge. The last time it was done was in 2022. In that report, they found that hourly billing rates were as follows: in Portland, the range was $125-$1,150/hour with an average of $380/hour. In the upper Willamette Valley, it was $105-$500/hour with an average of $300/hour, and in eastern Oregon it was $75-500/hour with an average of $288/hour. Prices go up if the attorney has been in private practice for longer, so a new attorney will usually be about 10-25% under the average, while a lawyer who has been in practice for more than 30 years will cost you a little more than the average attorney [the numbers get a little wonky, but generally speaking, the most expensive attorneys are the longest practicing ones]. Real estate lawyers are more expensive than the average attorney in most places, and are, on average, the most expensive kind of attorney pr hour in Southern and Coastal Oregon.
Law and contract will usually establish a fee-shifting practice, typically “the winning party’s attorney fees get paid by the losing party,” but there are exceptions. For example, under ORS 20.190(6), there are no prevailing party fees for certain class actions and condemnation proceedings. Even with a fee-shifting provision in place, the chance of losing a lawsuit is always present. The point of a trial is that both sides are arguing what they believe to be reasonably likely arguments. It is very rare that someone goes to the risk of going to trial, paying an attorney, and putting up a completely vacant argument.
Remember also, your attorney expects to be paid, even if they lose. The hourly billing model can result in extremely swingy outcomes where one party suddenly owes thousands of dollars to multiple law firms on a minor point of dispute.
Typical Hour Expectations:
Assuming you are working with hourly billing, the number of hours spent on a file will change the cost substantially. For simple review and drafting, you’re looking at around 2 hours of time. For negotiations and research, up to 20 hours; for complex litigation and actual courtroom hearings, the number is fluid, but is almost certainly more than 30 hours. In the Sitzer/Burnett lawsuit, the lead attorney claimed he spent nearly 7,000 hours on the lawsuit with a base hourly rate of $1,450/hour [Sitzer was filed in April of 2019 and completed in August of 2024; even assuming some substantial legwork leading up to the filing, the lead attorney was claiming nearly 20 productive hours of time per week for over 5 years devoted to the singular issue]. The collective of the law firm and their associates and paralegals collectively billed 107,500 hours on the lawsuits. Remember that fee-shifting provisions can be applied against you, so even if your lawyer is circumspect about how they spend their time, the other party’s lawyer may be spending all their time diving down every legal rabbit hole to find a way out of the dispute.
Recovery:
If you win at trial, you get an award order. Let’s imagine you sue someone over a $10,000 earnest money issue. You win, but both of you had attorneys working 40 hours through a trial at $300/hour to get there. The loser of that lawsuit now owes you $10,000 and another $24,000 in attorney fees. If the losing party only had $10,000 to their name [hence them fighting so hard to keep it], you will have an extremely arduous journey ahead of you to get any sort of payment whatsoever. The attorneys will typically be paid first out of the award pot and any recovery that follows that, and the winning party will need to figure out how they will recover the remaining sum, whether it be through garnishment, levy, or liens. Debt collection agencies will take anywhere between 10% and 50% of the amount they’re trying to collect on, so if that route is taken, it can further complicate the math. Roundabout way of saying, sometimes a lawsuit just won’t pencil out.