Real Estate Professionals Can Learn from Lawyers

A man walked into a lawyer’s office and inquired about the lawyer’s rates. “$50.00 for three questions”, replied the lawyer. “Isn’t that awfully steep?” asked the man. “Yes,” the lawyer replied,and what was your third question?”

One of the reasons there are so many lawyer jokes is because they are so successful at what they do. But besides jokes, real estate professionals could learn a lot from lawyers about managing our businesses in difficult times.

Have you ever heard a lawyer bemoaning the recession, or complaining that business is down due to the economy? Regardless of the poor health of the financial system, cyclic downturns or recessions, the ranks of lawyers in the USA continue to grow exponentially year after year for decades. Unlike many of us in real estate who worry about the housing crisis, apparently lawyers never let a good economic downturn bother them, so secure are they in their profession. Despite the world recession, law schools today keep cranking out counselors at an exponential rate, and lawyers keep getting work. According to the American Bar Association, on a national average, today there is one lawyer for every 235 citizens. That, by anyone’s measure, is way too many lawyers.Yet have you noticed, it never seems to affect their business? Or their business outlook?

Two more law schools opened recently in the USA. The United States now has the unique honor of having 200 accredited national law schools. Compare that with real estate, where there are at most ten national real estate schools.

In some states it is even more absurd. California’s 200,000 lawyers for 26,000,000 residents works out to 1 lawyer in the Golden State for every 130 people. Contrast that with Japan, which has one lawyer for every 7055 citizens. In New York City there is one lawyer for every 75 people. One lawyer for every 75 people? No wonder in his book, The Death of Common Sense, author Philip K. Howard convincingly argues that most of our problems in Washington D.C. come from having too many lawyers in this country, dreaming up problems to “fix”.

But my point isn’t about the number of lawyers, it is about the attitude of lawyers, and their temerity in how they approach their work as it compares to real estate professionals. From that I can learn. Let me explain.

According to the NAR, the number of Realtors peaked in October 2006 with 1.37 million Realtors in the United States. Since then our ranks have fallen 11% to 1.23 million as of the end of last year, and in 2009 there has been an additional 7% reduction.So today there are about as many realtors in the USA as lawyers. In many states, we have fewer realtors than lawyers. Virginia Realtor Brian Block has some nice charts on his blog that show there are 41 states out of 50 that have a realtor/population ratio of 200 or more. You can see the charts here:  http://activerain.com/blogsview/679289/Everyone-and-Their-Cousin

Yet, despite having what even the American Bar Association themselves called essentially a crisis of proportion, (in that there are way too many lawyers in the USA per capita) we never hear about law firms struggling to keep business coming through the door.

Why is that?

Part of the reason has to do with attitude. A law student recently told me the attitudinal perspective that they all seem to have, based on three unwritten axioms of the legal profession:

  1. Act like what you do is rocket science.
  2. Always charge for everything.
  3. Assume everyone will need your services sometime.

Only item number three has interest to me. As a real estate professional, I make commission on most transactions, so I cannot “charge for everything” like a lawyer; and I would feel like a hypocrite acting like my job was “rocket science.” But what I can learn from lawyers, and can adapt to my own business, is their universal belief that “everyone” will need their services sometime.

It is this unfettered, almost arrogant faith in the necessity of their services, and the eventual need for those services by everyone, that I want to replicate in my practice.It is the legal profession’s immunity to economic downturns, that I want to copy. Because in the final analysis, I have two great advantages over lawyers:

– There are fewer of me in most states than lawyers;

– The public doesn’t hate me, like they do lawyers.

I’m not suggesting it will ever be as easy as it was in the early 2000’s. What I am suggesting is that we stop whining, and stop fretting about this “housing crisis”, and start looking at our jobs like lawyers look at theirs – as a necessary and invaluable service, for which we study and obtain a license, that no one else can do.

Lawyers wake up each day knowing that, whether justified or not,they are the least liked professionals in the world, and that there are way too many lawyers competing with them. Yet they still believe that they’ll win the client, win the day, and win the case.

Do you believe that about your practice in real estate? In my next post I’ll expand on this theme more, and illustrate some practical ways we can do just that, without becoming the punch line of a joke!

Want to find out if you have what it takes to be a Real Estate Agent or Broker?

About The Author: Geoffrey Thompson is an owner and founding partner of Express Schools, LLC. Since 1996 the companies under this banner have offered online real estate licensing and insurance licensing courses as well as online real estate exam prep and insurance exam prep.

Disclaimer: I am happily married to a lawyer and she approved this post.

Comments / Questions

  1. Hello Geoffrey, I came across your blog post while searching Google for real estate, and the points are interesting. In fact, the ending should be called “Beat This:” rather than “Disclaimer”. I guess Disclaimer word itself a legal influence! Great post.

    Talking about how RE Agents can do better today, I can share this video with you.
    http://www.youtube.com/watch?v=ldJUgvguAQg
    Its by Peter Vekselman, a real estate investor in my network, who explains how Real Estate Agents can benefit by working with Real Estate Investors in the current economy where investors are more active than retail buyers. Many people have by benefited learning from him.

  2. Geoffrey,

    Your advice is very good. Real estate agents should assume that everyone needs our services at some point. The top agents and brokers do abide to this principle.

    I certainly appreciate you referencing and linking to my blog post regarding the number of REALTORS per population in the various states. Since I wrote that post back in September, I’m sure the numbers have changed quite a bit, at least in some areas. In Northern Virginia, I know that our local association of REALTORS has dramatically decreased from ~15K agents around 2004/2005 to just under 10K agents today.

    A few other points:
    * There have been announcements of quite a few lawyer layoffs at some of the bigger firms since the financial crisis began.
    * Certain areas of lawyering have most definitely been affected by the economy — some for the better, some for the worse. Bankruptcy lawyers, real estate lawyers, and some others are doing quite well. On the flip side, attorneys specializing in helping companies go public are certainly suffering.

    As a REALTOR and an attorney, I’ve heard all the jokes.

  3. Oh, just one more thing. It’s not really a fair comparison to compare # of law schools in the U.S. with # of national real estate schools. Unlike law schools, which teach would-be attorneys how to think like a lawyer, and then allow them to go on and take the bar in whichever state they wish, real estate is much more localized. Most of the real estate schools solely prepare a would-be real estate agent to take the licensing exam within their own state.

  4. This is a good article about disclosure for real estate professionals. That being said I have a lawyer joke to share “How do you know a lawyer is lying………? Their lips are moving”.

  5. Attitude is really a small part of the differences; a more important aspect is the prevalent “easy money” perspective of many swelling the ranks of practitioners (I reserve the term “professionals” for other applications) during the ascending part of the business cycle. Those are frequently the same folks found in the practitioners “exiting the business” statistics when the cycle turns the other way. This is directly related to the very low barrier to entry to the field. True, there are a great number of professionals within the ranks of the practitioners (I consider myself one, being a licensed broker for most of the last 30 years). It pains me to see how our business continues to be colored by the incessant ebb & flow of these opportunistic gadflys.

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