Isn’t a POA Expensive If a Lawyer Drafts It?

The quick answer is “no.” And here’s why:

Considering that a Power of Attorney (POA) is a legal document affecting a person’s lifetime financial security and personal liberty, people should invest in having it done correctly.

How Much A Power of Attorney Document Costs

How much of an investment, you ask? It is usually a couple hundred dollars for both the POA for Property and the POA for Personal care.

This is less than the cost of a hotel stay for one night, gas for your truck for the month, or a haircut and colour. And yet, many people think the cost of paying a lawyer to discuss and draft their POAs is not worth it.

Here is a quick lesson in the business of law. Lawyers typically do not make much, if any, money on POAs; in fact, these are what we refer to in the business as a “loss leader.”

How so? Lawyers are typically paid on the basis of time spent, often called the billable hour. A lawyer’s time is their stock in trade, just like consultants and many other professionals.

Why does it matter? When lawyers are hired to advise clients on and draft their Powers of Attorney, they typically charge a flat fee, not the actual time spent. The flat fee reflects only a fraction of the actual time spent. While a lawyer can charge their full billable rate doing other legal work like litigation, they typically only charge a flat fee doing a Will or POA and so, the lawyer is getting paid significantly less for their time.

How Much Time It Takes To Make POAs

How much time does it really take the lawyer to make your POA documents? More time than most people realize. The less visible time and energy the law firm invests in your POAs are described below:

The lawyer’s office will receive your initial call; perform a conflicts check in their system to ensure they are not precluded from acting as your lawyer; schedule and then attend an initial meeting with you to explain the law and the purpose of POA documents; take your instructions; make a memo to file capturing your instructions; draft your POAs including reviewing, revising, and redrafting them to tailor them to your specific instructions; send the documents to you for review; answer follow up questions by phone or email; make subsequent changes to your POAs if you change your instructions; arrange a signing appointment; meet with you to  read-over, review, confirm, and then execute your documents in front of the lawyer and a witness (a second staff person whose time is being expended); prepare and send you a reporting letter detailing the services provided and giving you a copy of your documents; oftentimes store your original documents; render their invoice; and collect payment.

For more complex POAs, or if the lawyer must consider issues of capacity or undue influence, the lawyer’s time increases considerably. It is not uncommon for clients to request several meetings or drafts, or for the lawyer to have to consult with the client’s physician regarding mental capacity. In complex cases, the lawyer may charge an hourly rate above the flat fee, to more fairly reflect the time spent.

In general though, for more straightforward POAs, the flat fee the lawyer charges for preparation of your Power of Attorney is probably half, or even a quarter, of what they can get paid doing other legal work. Hence, the term “loss leader”.

All of this is to say that lawyers discourage do-it-yourself POAs for clients’ benefit, not for lawyers’ benefit. This is because lawyers see the legal, financial, and emotional fallout when DIY documents are wrong.