Although it’s tempting to choose online legal forms from legal services sites like LegalZoom or Rocket Lawyer, the money you could save upfront on a business lawyer may not pay to fix the problems you could face.
As professional business attorneys, the team at Lawyer For Business has seen many clients come to us to fix legal messes started by a poorly executed online legal form. Today, we’re sharing our thoughts about the common pitfalls of online boilerplate legal forms. Contact us if you’ve encountered these common problems.
What Is LegalZoom and How Does It Work?
LegalZoom offers online legal services for common needs like drafting a will, forming an LLC, applying for a trademark, or even getting divorced. Since its founding in 2001, the company has grown to be one of the most popular providers of online law documents.
Users select the service they need from a menu, fill out a questionnaire to help the selection bots on the site find the appropriate document for their needs, and pay a fee.
Then, a standard template form is generated using the customer’s information, which they can print, sign, and file. It is not custom-generated for you or your business.
For an additional fee, customers can also receive an attorney consultation or legal advice about their matter before they file the form.
The simplicity of filing legal forms from the privacy of their home and the low upfront fees of the service make these online legal services sites attractive to many, but there are several drawbacks that could cause a lot of legal trouble later.
The forms provided online are for simple, basic needs; clients with more complex legal matters may not be able to use the forms provided online to solve their matters.
Although LegalZoom is intended to be a convenient and cost-effective alternative to hiring a lawyer to draft certain documents, LegalZoom's business formation services cannot replace the insightful legal advice of a lawyer who understands your unique situation.
Why LegalZoom May Be Not the Best Option for Your Business
Depending on the nature of your business and your legal needs, there could be several reasons that the online services provided by Rocket Lawyer or LegalZoom may not provide the protections you require.
1. Your Business Is Unique and Needs a Tailored Legal Solution
A unique business has unique goals and may not take the same route to achieve them as its competitor. An attorney takes the time to get to know you and your business and work with you to develop solutions that protect your assets and help you achieve your goals.
When you download law documents online, you get boilerplate documents that every other business uses, regardless of the number of employees, the type of industry you’re in, or even where you’re located. The templates may not include all the necessary components to be compliant with the requirements in your state. When you hire Lawyer For Business as your personal legal advocate, you get documents and contracts customized for your business.
2. No Attorney-Client Relationship
LegalZoom has an extensive disclaimer on its website, essentially absolving the company from any responsibility for errors in the legal forms or even the accuracy of the forms.
Law firms, on the other hand, must adhere to strict professional ethics for client interactions, the quality of legal advice provided, and the accuracy of the forms.
The LegalZoom disclaimer states:
- It is not a law firm and not a substitute for legal services;
- It cannot provide legal advice, only self-help service at the user’s direction;
- It cannot engage in the practice of law and is prohibited from providing advice, opinions, or even an explanation about a user’s legal remedies, defenses, rights, or options;
- The user’s answers are not reviewed for legal sufficiency, nor is the site permitted to apply the law to certain facts in the user’s case or draw any legal conclusion;
- The legal information on the site may not be up-to-date, correct, or complete.
LegalZoom’s disclaimer also absolves the site of any injury, loss, liability, claim, or damages resulting from the customer’s use of the forms and information on the site.
3. Lack of Legal Advice
Many clients come into our law offices with certain ideas in mind of what they wish to accomplish, but after we ask insightful questions, we may advise other legal options.
Some of the questions we ask aren’t available in online prompts intended to get just the general information that can apply to any user. Without certain information, the right documents for your needs cannot be produced online.
When a customer requests certain forms for business formation, they may not realize that they need additional documents or registered agent services. So the customer’s business risks exposure because of a lack of sufficient legal protections, which a lawyer will inform you that you must have.
Lawyers advise clients of the legal implications of each decision they make and document they draft. They also place certain personalized provisions in the documents to ensure that each client's need is met.
Finally, a lawyer can advise their client about other protections or considerations they need, in addition to the legal forms, which an online service cannot.
4. Template-Based Documents
Laws aren’t static; each year, states and the federal government pass new laws or revise existing ones. Lawyers are aware of changes in the state and municipal changes that can affect their clients, and they take proactive steps to ensure that their clients’ businesses are still protected as the laws change.
Case law is also ever-changing, as judges’ decisions are woven into precedents for business matters. Only attorneys who keep abreast of changes in their practice areas may be able to apprise their clients about changes that affect their business.
Some smaller businesses or startups may be able to take advantage of economic subsidies passed by Congress, but if the business owner isn’t aware of them or doesn’t have the right legal documents in place to take advantage of them, then they cannot receive the stimulus.
5. Incomplete or Inaccurate Information
The LegalZoom disclaimer notes that the site isn’t responsible for any errors in the documents, and that includes any inaccuracies or outdated information. Business owners who file documents with outdated or incomplete information may see significant delays in certain actions, like a trademark application, or may inadvertently be unprotected.
6. Limited Customer Support
Although LegalZoom offers legal consultations for a fee, these are limited in scope and cannot replace the attorney-client relationship you get when you work with your own chosen attorney. Clients benefit from the lawyer’s experience in cases similar to theirs and years of legal study and exercise, which you cannot recreate with online prompts.
Potential Risks of Using LegalZoom
In addition to the subpar customer service and lack of legal advice customers get when using online legal document services, there can be some significant risks to drafting documents based on an online questionnaire.
Legal Consequences and Liability
If your downloaded LegalZoom documents are challenged in court, you’re on your own. Or you’ll have to hire a lawyer to defend a document they didn’t draft.
LegalZoom cannot provide legal representation in court, so if you have a breach of a contract you downloaded or have an employment issue based on your LegalZoom documents, you could lose to the other party.
Alternatively, perhaps your legal documents aren’t compliant with legal requirements for your particular business. In that case, the protections you thought you had are no longer there. You risk losing your entire business or even having your personal assets seized in a lawsuit.
Additional Time and Money to Change Your Business Documents Afterwards (Sometimes, It Can Be Impossible)
Some business owners think, “Well if I run into legal trouble, I can just hire a lawyer if I need one”. Although at Lawyer For Business, we’re skilled in legal business matters, we also see clients come to us with a legal mess because of errors in their online documents.
Sometimes, you can’t unring a bell, and the solution we’re able to achieve may not be as positive as it could have been if you had drafted and filed the documents correctly in the first place.
Damage to Reputation and Business
Using boilerplate legal documents can affect your business reputation. You risk looking unprofessional at best if your contracts contain errors spotted by the other signatory. You could jeopardize your legal ability to operate a business if you lack the right licensing or regulatory compliance exposure.
Using LegalZoom means that you could overlook vital legal requirements to start or expand your business. Even if the forms are available online, if you don’t know exactly what you need, the site cannot tell you what you’re missing. A lawyer can.
Personal Experience: Issues Our Law Firm Helped to Fix After LegalZoom
At Lawyer For Business, we have worked with several clients to help repair business issues caused by poorly constructed documents provided by LegalZoom:
- LegalZoom may file newspaper ads in the wrong county or not file them at all;
- The documents contain spelling and grammar errors;
- Names are misspelled or include unnecessary punctuation;
- The document names an unnecessary registered agent, wasting $350 per year;
- Non-profits are errantly filed as for-profit entities.
The last one can be especially difficult to fix, as the company cannot just be closed. A final tax report must be submitted, which can be difficult for an entity that was operating as a tax-exempt business.
These are just a few recent cases we have repaired; some of the most complicated ones can result in a business being forced to close, which affects profits and creates stress when re-opening.
Your business venture is too important to entrust to an online boilerplate legal document service. Additionally, fixing problems caused by using an online service like LegalZoom can be expensive and may not achieve the results you want.
At Lawyer For Business, we can help you start your business correctly with all appropriate legal protections in place. Contact us today for a personal appointment with a skilled New York business lawyer.
Schedule Your Initial Consultation
Back to Blog