Never before has it been so easy to find contracts and legal documents at the click of a button. The internet is chock full of copies of contracts, websites that give advice on legal terms or what certain clauses mean. There are also a number of online legal portals out there that promise to give you the services you need for a low, low price (but read the fine print first).
I frequently tell my start up business clients pennies count. And I really mean pennies. When you are just launching your business, you have a finite pool of funds available to get that business off the ground. You have to make tough decisions and decide where to put your money to take your business as far as you possibly can. This may mean cutting corners on professional fees, including lawyer fees, so you have more funds available for marketing or rent.
Another thing I commonly say to clients is that it’s my job to tell you the risks of the decisions you are making. You as the business owner get to decide whether to take that risk. That includes the risk of using forms you find online or automated legal documents rather than a traditional law firm’s services. As long as you are aware of the risks – rather than assuming that you are fully protected with these documents – then it’s your call. You get to decide how to run your business. So, let’s talk about some pros and cons.
Pros: Its free (if you don’t consider your internet bill)
Cons: You really don’t know what the document says and does. Sure, you can look up different clauses and definitions, but how do they apply to your situation? If you are using someone else’s contract, that contract was likely fully negotiated between the parties taking into account their own preferences and deal terms. Those terms may differ from what you are trying to achieve, and you may be unintentionally giving away ground for free.
You may be thinking, it is all attorney boilerplate anyway. We hear this a lot. Yes, attorneys use legal forms, but we do so as a starting point for your document, not as the final draft. Attorneys use their years of knowledge and their own wealth of previously drafted documents to revise language and ensure it does what their client needs. The key is making sure that you have the right provisions in a document, and those provisions say what you want them to say and do what you need them to do.
Frequently google lawyers merge various documents they find, resulting in documents that have conflicting clauses and capitalized words without definition. When documents like that end up in litigation, that “free” document isn’t so free anymore.
Legal Zoom and other Legal Document Websites
Pros: Low cost and quick turn around
Cons: Read the fine print.
Legal Zoom and Rocket Lawyer, two popular document automation sites, and other similar sites, have some fine print that would surprise many of its users.
Look at its Disclaimers: Here one type of common disclaimer:
“The information you provide to LegalZoom is not protected by attorney-client privilege.”
When you hire an independent law firm, your communications are generally protected by what’s called attorney-client privilege. Yet communications with companies like LegalZoom do not have that same level of protection. Cornell Law School defines attorney-client privilege this way:
Attorney-client privilege refers to a legal privilege that works to keep confidential communications between an attorney and their client private. Communications made to and by a lawyer in the presence of a third party may not be entitled to this privilege on grounds that they are not confidential.
What this means is that if you are in a legal dispute, your communications would not be protected, and the other party will likely be able to get copies of any emails, forms, or other communications and can use them against you in court.
When could this matter? Here’s an example: Jane is in the process of forming a business and has been talking to John about possibly joining her in that business. The discussions between Jane and John are all verbal conversations and they don’t have anything in writing that sets out the contingencies and other caveats they both agreed to that may limit John’s right to ownership. Jane reaches out to a company that has readily available forms and legal services for low cost – let’s call the company “Speedy Legal”. Jane’s internet submission says the owners are Jane and John. She doesn’t list the conditions as it doesn’t seem relevant at the time. Fast forward six months. John didn’t do any of the things he agreed to do, and he and Jane are in a legal dispute over who actually owns the company. John subpoenas Speedy Legal and gets that written submission. Jane has nothing in writing to support what John was supposed to do before he got ownership in the company… how do you think that’s going to go for Jane? Likely not well.
Here’s another common disclaimer:
“We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.”
Please note that Rocket Lawyer is not a “lawyer referral service,” “accountant referral service,” accounting firm, or law firm, does not provide legal or tax advice or representation (except in certain jurisdictions), and is not intended as a substitute for an attorney, accountant, accounting firm, or law firm.
“At no time do we review your answers for legal sufficiency, draw legal conclusions, provide legal advice, opinions or recommendations about your legal rights, remedies, defenses, options, selection of forms, or strategies, or apply the law to the facts of your particular situation.”
What does this mean? These online legal portals are telling you flat out – they are not lawyers. That means you are not actually getting legal advice. You are getting forms that may not actually be what you wanted or that protect you in the way you need.
Remember how this article started: it’s a lawyer’s job to tell you the risks of the decisions you are making. You as the business owner get to decide whether to take that risk. You get to make the decision on the legal services that are right for your business. If cost is a factor, then automated legal sites may be the best you can do at the moment. If you can afford a law firm, then making that investment upfront will likely save you money in the long run. But it’s your call. At the end of the day, you decide how you want to run your business.
At Navigant Law Group we know the ropes of the legal system. Business services include Contract Law, Employment Law, Intellectual Property, WBE / MBE / VBE / LGBT / DBE certification, Commercial Real Estate, and other general Business Law services. Individual services include Estate Planning, Wills and Trusts, Administration, Probate, and Guardianship.
If you have any questions, or would like to schedule an initial consultation, please contact Navigant Law Group, LLC at (847) 253-8800 or email us at firstname.lastname@example.org.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.