Using DIY legal documents is choosing self-representation
The first bullet point of LegalZoom’s Terms of Service reads (emphasis ours): “I understand and agree that LegalZoom is not a law firm or an attorney, may not perform services performed by an attorney, and its forms or templates are not a substitute for the advice or services of an attorney. Rather, I am representing myself in this legal matter. No attorney-client relationship or privilege is created with LegalZoom.” Most legal template websites include a similar disclaimer, among many others, that, for example, limits remedies available to users in the event of a dispute and assigns the user as solely responsible for the final legal documents. Your legal protection is equal to the quality of the legal document you created–without much ability to seek relief from the software company.
Recommendations for avoiding common pitfalls of online legal templates
According to an IBIS World Online Legal Services Industry Market Research Report, as of 2021, 15,000 companies are in this space, with combined revenues surpassing $11B. The market’s growth, 11.1% annualized from 2016 through 2021, suggests this upward trend will likely continue. But before you choose an online legal document service, consider these recommendations for how and when to potentially incorporate them into your legal strategy.
Choose online DIY legal documents or templates only for more simplistic legal documents.
Is there anything wrong with using LegalZoom, RocketLawyer, or any other number of online legal document companies? No, and in fact, legal DIY services can provide a cost-effective, easy-to-access solution for some less complex needs; however, if misused, they can lead to unintended complications, greater expense, and even inadequate legal protection. For those more complex situations, legal fees pay for an attorney’s experience and expertise, which enables the attorney to better anticipate potential legal challenges and proactively include specific language to address them.
According to MSN senior partner Rick Stotser, engaging an attorney instead of only utilizing a DIY legal document solution is akin to taking out an insurance policy. “Hopefully, you never have an issue that requires using the legal protection afforded by your documents,” says Stotser. “However, if these challenges arise, the legal costs to address them can be many times higher than the typical costs to initially draft legal documents specific to you or your business. Further, the quality of legal documents can impact the favorable outcomes available to the person utilizing the document.”
He recommends speaking with an attorney for advice regarding which agreements might work well as DIY solutions based on your specific needs. For example, non-disclosure agreements are typically less complex than non-compete agreements, which are impacted by various laws and industry standards. To afford the most legal protection, a fact-dependent analysis should drive the drafting of a non-compete agreement with factors for consideration including, but not limited to, the type of business, the role of the specific employee, and whether a company is being sold in conjunction with the non-compete agreement.
Consider the intersection and gaps of legal documents.
Stotser adds, “I’d argue that using online templates to create your own legal agreements can, at times, be more legally perilous than simply not having those documents because of the additional issues potentially created by ambiguous, contradictory, and omitted language within each document and across documents, as well as the false sense of legal protection they can provide.”
Viewing legal documents as an interconnected shield protecting your personal or business interests and proactively stipulating remedies for potential challenges–rather than stand-alone documents–is essential. If you are using an online DIY solution to create multiple legal documents, consider investing in a periodic, cohesive document review by an attorney to identify any exposure gaps and verify there are no ambiguous or contradictory clauses across agreements, which can, in a worst case scenario, lead to unenforceable contracts.
Strategize with an attorney.
Most of us have had the blurry realization that someone else’s prescription readers are not a one-size-fits-all, and in fact, can cause headaches, eyestrain, and more when worn by another individual. Off-the-shelf magnifier options abound for those preferring to avoid the time and expense of an optometrist visit and prescription readers. However, while magnifiers can help, they are typically more likely to cause unnecessary eyestrain without confirming their use with your eye doctor.
Increasingly, people are choosing the off-the-shelf version of legal services: online DIY solutions. For a cost-effective solution with increased legal protection, consider an initial assessment by legal counsel (including a review of any existing legal documents, if needed) followed by an open discussion about your best options based on your specific goals, concerns, timeline, and budget. Your attorney can likely provide recommendations such as prioritization and timelines for any needed documents or updates and which ones might create the best opportunities for cost-effectively leveraging a DIY legal service website (likely with a final review by your attorney!). Further, your attorney–especially in conjunction with your CPA or accountant–may also be able to suggest additional strategies, such as various entity and estate planning structures, that can save you money over the longer term.
Choose your legal document path to success.
Online DIY legal agreements can work well for specific, less complex needs. Keys to success include knowing when legal templates might be a viable option and remembering your various documents should align and provide a cohesive strategy. Often, achieving these steps can mean discussing these strategies with an attorney initially and before the actual use of DIY legal documents. These discussions can help identify the best solutions to protect your business while also aligning with your goals and budget. Schedule a time to talk to one of our local attorneys, and we will help you bring your next steps into focus.