When someone says, “I’m going to have to talk with my attorney about this.” Doesn’t it just send chills down your spine? There’s a lot of heat packed into that sentence (if you screwed up, it might end up being more than just a grammatical sentence! i.e. a prison sentence). The rich know that it’s always best to prevent problems at the onset, well before anything happens. They have their lawyer look over the situation and tell them, “You’re fine to sign” or “Don’t even think about it, this has ‘con artist’ written all over it.” Having read How to Win Friends and Influence People, they know that the best arguments/fights ever won are the ones never fought. It goes along the same lines as America’s world policing policies, we’re so afraid of losing assets (in this case, reputation, investments, overall dominant presence, etc.) that we go around the world trying to keep small problems from turning into WWIII – although some may argue different. The smart rich are the same, they have their lawyers police their transactions, businesses, etc. so that small problems don’t end up turning into bankruptcy, thereby keeping the peace and prosperity.

Now, how about us Middle-class? How can we utilize the above principle? Let’s take for example your home owner’s insurance or renter’s insurance. Everybody has it, or at least should have it, but the policies aren’t all the same. Suppose you have some antiques, high valued baseball cards, and some first edition books from the nineteenth century. Looking over the policy you see something like this “In the event of a qualified unforeseen, unpreventable disaster or damaging factor, the worth of all the items within the domicile shall be paid to the undersigned…” Luckily, after reading this article, you know that lawyers can keep you out of big troubles by nipping them in the bud. Your attorney reviews it and notes that the “qualified unforeseen, unpreventable” clause is really vague and it probably wouldn’t cover you if there is a flood, fire caused by a neighbor kid, etc. The “worth of all the items” clause depends on the inventory statement you give to the insurers, and with antiques and the other valuables above, they increase in value with time. Your attorney says that it would be better to find a policy that would pay for the replacement of the items, regardless of value. I happen to know a guy who did just that, and all the first edition antique books in his basement were completely ruined during a flood. The insurance company paid to replace these books, which cost into the tens of thousands of dollars per book!

So how else do lawyers keep the peace? Well, let’s get to the meaty stuff. You get pulled over by some power-hungry highway patrol officer. Shining the light in your eyes and seeing your blood shot eyes (actually from being tired and having a cold) as being a sign of being intoxicated, he invites you to “step out of the car.” Being a mile from home, you happened to just take some NyQuil. Your ears are plugged from the sinus infection and your balance is slightly off. Things aren’t looking good. He has you walk the line. Next thing you know you’re in jail on a DUI. Juicy… “Who you gonna call?” Ghost….nope, your lawyer. Don’t say it won’t happen to you. This same exact thing happened to my poor, little old aunt. She’s never had a drink in her life, and there she was sitting in a cell with Lorretta the female rapist.

This sort of thing happens in the movies all the time. Guy gets thrown in jail on bogus charges and the guy knows his rights, so he demands to talk with an attorney – the real peace keeper.

Let’s say you get in an argument with your renter/landlord over the contract. She calls the cops. The officer shows up, but what is he going to do?? Nobody has done anything wrong that he can take of. You call your attorney, he writes a short letter to the renter/landlord and problem resolved. Peace kept, money saved. If it is worth $200 or more, then getting a lawyer involved is worth it. Chances are it won’t take him long to draft the letter.

The list can go on and on, but I hope you see the point. Lawyers are trained in negotiation and dispute resolution, i.e. peacekeeping. This is their job above all, to keep things running smoothly and smooth out the bumps before and after they become mountains.

Comment below if you have any experiences when a lawyer was able to maintain “the peace” for you.

Here are some fun facts about the wonderful Coverdell ESA:

• Unlike retirement IRA’s, contributions must be made before December 31
• You can put up to $2,000 into the fund each year. (max total 18yrs x $2,000 = $36,000)
• A healthy plan for contributions could consist of $166/month installments, totaling $1992/year.
• If you set it up for your child, even he/she can contribute to the fund. A great way to teach about saving.
• You can contribute to multiple Coverdell ESA funds, but the contribution limit remains at $2,000.
• There are a few limits to who can contribute, but it depends on their modified adjusted gross income. $110,000 (single) and $220,000 (joint).
• The best part! The earnings on your contributions will never be taxed.  Unfortunately the contributions themselves are not deductible, but the beneficiary avoids the capital gains tax and other taxes when withdrawing funds (as long as the money is used for qualified purposes. e.g. tuition, fees, books, limited housing, and school supplies).
• The funds can be used for virtually any public, private or religious primary, secondary or post-secondary school tuition, fees, etc. So you can save money early to send your kid to a private school if you want.
• Careful when withdrawing fund for non-qualified expenses, because you’ll be taxed and maybe even penalized. Ouch!

Consensus: The Coverdell ESA has come a long way as far as allowable contributions (it used to be $500/yr), and it is a great way of investing in your or your child’s future. The fund is a little limited, especially if you end up paying $30,000 tuition, but it can save you tax dollars in the end while safe-guarding quite a bit of education money.

For more information see this link and contact your attorney to set one up.

More educational funding options to ask about (I’ll also write about them later):

1. The American Opportunity Credit
2. The Hope Credit
3. The Lifetime Learning Credit
4. Enhanced benefits for 529 college savings plans
5. Tuition and fees deduction
6. Qualified Tuition Programs (QTPs)

1. Cost Savings All the Way are in store for those that choose to use an attorney to fight their traffic tickets.  Let’s say that you got pulled over and your ticket was written for $80. You might be thinking, “It’s just $80. I don’t want to waste my time fighting it in court or worse, paying an attorney bookoo bucks to fight it for me.” This is exactly what the State wants you to think. They need revenue and traffic tickets are a pretty good source of it. Paying it is also an automatic admission of guilt — not good if you are challenging it. But, the main killer is your insurance premium. For the numbers let’s look at an article written in MSN MoneyCentral:

Ouch is right! So to recap the numbers: from “good-driver” status ($736 annually) to one ticket will for the next 3 years (how long insurance companies usually remember your traffic tickets) will cost you a total of $1179 ($393 x 3 yrs); after the second ticket you’d be at $1,479 annually, costing you a total of $2229 ($743 x 3 yrs), etc.

2. A Lawyer Does This for a Living But, you’re probably wondering, “If I pay an attorney to fight it for me, then I’ll just end up paying more and I don’t know if he/she will be able to do anything for me.” Good, you’re thinking. Let’s look at one of the plethora of testimonials I’ve read about people using an attorney to represent them in traffic court:

To emphasize this, imagine you are fifteen years old again. You pull a harmless practical joke in class and get caught. Who would you rather defend you before the teacher, the captain of the debate team, who the teacher adores, or you, the accused? Now to put that into perspective, Judges generally like lawyers because they are or used to be lawyers themselves. You are probably untrained in the law, courtroom procedure, etc. To a judge, you are a little kid asking that your “time out” punishment be shortened. A lawyer on the other hand is akin to one of the judge’s buddies on his bowling team. They’ll probably go out for a drink after your hearing and gripe about people that try to represent themselves.

So, spend the $100 to have an attorney represent you in traffic court and save points on your record and thousands in your wallet.

(1 – Pre-Paid Legal, Inc. “In Their Own Words: a collection of our members’ success stories.” 2006)

Lawyers are a major part of the backbone of a complex system that keeps our society organized, functioning and progressing. Part of what they do is helping in the interpretation of the laws made by the legislative and executive branch of the federal, state and local governments. Legislators cannot foresee every situation where the law they just wrote will encounter problems in the real world, how it will be applied and tested. Lawyers though, are the guys that have to confront those situations before anyone else.

For instance, in court, a lawyer has to use reason, evidence, and perseverance to persuade a judge to rule on his/her new perspective and application of a law as a result of circumstances unforeseen by legislators and prior court cases. This is the reason why law’s relating to the first amendment’s free speech clause keeps on reappearing in the U.S. Supreme Court. People need to be told time and again, in different circumstances, that telling the truth is still an American value. So contrary to common stereotypical expectations, lawyers actually fight year after year to prevent people from being allowed to lie (especially in court cases).

Tens of thousands of cases are tried each year that challenge the ways our laws are interpreted circumstantially. This is what keeps our system progressing and prevents the legislative group from having too much power. Courts of appeal and supreme courts are given the power to reinterpret laws and even declare some laws unconstitutional. E.g. The Brady Gun Control laws. Apparently, politicians, although many were lawyers, often set aside reason and opt for what looks good to their political careers instead of considering what is actually legal. Keep in mind though, once a politician, never a lawyer.

It is important to know the following distinction in order to know how to use a lawyer. What is the difference between laws that congressmen make and the ones judges make?

First of all, yes, judges can make laws. But, they cannot proactively make laws, only legislators can do that. Legislators make what is called statutory law, or written law. It is the law that is codified and has no interpretation coming off the governor’s or President’s desk. It is what it is. That is until someone breaks it or gets in someone’s way. This is when it eventually winds up on some lawyer’s desk, and he looks at it like a Rubik’s Cube. Long story short, he takes the case to court, the judge likes/dislikes what he says, the judge rules on it, the ruling is recorded and bam! it has become what is known as “Common Law”. A long time ago, this law was not written. Sometimes it is still referred to as “Unwritten Law.” Common law is flexible. It molds to new circumstances and cultural norms. What one judge ruled fifty years ago doesn’t necessarily have to be obeyed by a judge today in the same level of courts. This also applies to laws that once were deemed constitutional a century ago, but today they would be absurd and unconstitutional. Isn’t our system great?!

So, even though you got arrested for breaking the law that says you can’t ride a donkey backwards down Main street on Ash Wednesday, that law may be deemed unconstitutional with a decent lawyer and a well-fed judge. And if you are told you can’t pray in a state park, be glad that judges can interpret the law to say that you can. There is always hope in America for honest people, because of honest lawyers.

Then why should you do that when you talk with your lawyer? Now, I am not saying that you shouldn’t take the advice of your doctor or lawyer. That would be stupid. But it would be equally stupid to call up your lawyer having no idea what he was talking about, or miss something important you need to know when you have free resources like IRS.gov, FindLaw and Google Scholar.  That’s right…free!

FindLaw, for instance, has some great FREE resources for people that don’t know how to research law, but still need help narrowing down some questions. For the more advanced search, if you took some law in high school or college and think you can find your way around, they also have court cases, U.S code and some state code, buteven if you don’t know how to look up codes or cases they have a large collection of invaluable articles written by top law firms in the professional area of the site.

So now you have the resources…great. Now what do you do? Well let’s say that you want to finally go after the American Dream and start a business of your own. Most people think, “I’ll just go online to the Secretary of State’s website and file for a sole-proprietorship or corporation and get started selling thing-a-ma-jigs.” Well, that might work if you are going to be selling afghans (the blankets, not the people) and doilies to your the rest of the folks at the senior center – that is, if you paid your sales tax, etc. But if you happened to buy pesticide laced yarn from China and it killed Fluffy, Mr. Goldworthy’s pure-bred cat  (I know it’s a stretch), you might be facing a lawsuit. If you filed for a sole-proprietorship then you could be in the hole quite a bit of bingo money due to unlimited liability – where the business’s debts and legal problems are your personal ball and chain. To avoid that, use your resources. For instance: FindLaw’s “Starting a Business” linked from their home page. You would learn about many aspects of starting a business legally. Now here’s the rule: Research done before talking with your lawyer can (if you get info from the right places) save your lawyer time trying to teach you what to do, therefore saving you money. By the way, if you didn’t know already, lawyers work by the hour. So every minute you spend researching on your own saves you money by saving your lawyer time.

To drive home the point, let’s say that you work for $25/hr, or even $50/hr. That means that if you spent two hours researching some business laws and lingo it would be equivalent to a $100 loss in the short run (hopefully it will pay off in your business later on). Now if your lawyer had to spend half that time (an hour) teaching you the same stuff, you would lose $200-$300+. That is a difference of more than $100-$200! Plus, if you learn it yourself, chances are you’ll retain it better and you’ll be able to converse on nearly the same level as your lawyer. He’ll still know more, but you’ll understand what he’s talking about. If you did your research right, you could present him with your situation and possible solution and he might even agree with you! He might not even charge you for it either.

For further proof, let’s say that you are starting your business at home. Talking with your lawyer, he/she forgets to tell you about your insurance needs; what is covered under home owner’s insurance and what is not. Through unfortunate events, the cable guy working on your house cuts into some electrical lines by accident and starts your house ablaze. You end up loosing over $3000 in inventory. Or, you get burgled and they steal your inventory. Your home insurer says they don’t cover business losses. Now, they might not say that if you’re lucky, but had you done some research, you could have asked your attorney about your insurance needs and saved a $3000 permanent loss and the cost of having to replace the inventory.

So, lesson learned: don’t be a dumb sheep when talking to your lawyer. Do some research yourself, and still get the right legal advice at a fraction of the cost. Remember, lawyers are tools. You need to know how to use them just like any other tool.

Helpful links on how to do legal research:

http://library.lawschool.cornell.edu/WhatWeDo/ResearchGuides/Basics.cfm

http://www.nolo.com/legal-research/