LegalZoom or LegalDoom?

LegalZoom or LegalDoom?

Ask any lawyer who focuses his or her practice on the representation of small businesses and small business owners whether they are competing with online document preparation service providers like LegalZoom, and you are bound to get a variety of answers. Some practicing attorneys with many years of experience will get incredulous at the thought that they might be competing with non-lawyers, while other lawyers may recognize that a portion of potential clients that otherwise may have sought out their advice, are electing instead to use low-cost non-lawyer document preparation services. My thoughts on companies such as LegalZoom, is somewhere in the middle.

For my practice, the Philadelphia Small Business Law Center, the existence of low-cost document preparation service providers like LegalZoom has been a mixed blessing. While I have definitely lost potential clients who elected to utilize the services of LegalZoom because it was less expensive, my practice currently derives a decent portion of its revenue from small business owners who are under some form of  duress wrought by poor service, poor document drafting, or some other form of tragic mistake that you would not otherwise expect to see were it not for the fact that these small business owners relied on the advice of non-lawyers and were led to believe it was just as good as the advice provided by practicing lawyers. More importantly, these aren’t just problems my clients have faced, it is much more widespread than that. You don’t have to take my word for it. Search on Google for “LegalZoom screwed up” or LegalZoom complaints” and read for yourself, or read this online review, titled “Very Dissatisfied with LegalZoom” about the issues a small business owner had with LegalZoom.

I understand that in order to save money, small business owners often look to the internet, instead of lawyers, for legal advice.  The internet is a great resource and it is a great way for business owners to get a base understanding for a legal issue they may be facing.  However, it is not a good substitute for the advice of a real-life practicing attorney. These types of low-cost legal document preparation websites are akin to medical websites such as WebMD.com.  WebMD is great for getting a basic understanding about health issues and concerns you may have, but would you use it to perform surgery or other medical procedures on yourself? Of course not! When it really comes down to it, you’re going to see a licensed medical doctor and leave the real diagnosis to a professional.  Legal issues with your business should be treated in the same fashion.

The reality is, LegalZoom is a tremendously successful e-commerce company. There are many things it does right, and it likely has an advertising budget that is greater than most lawyers annual revenues. Their marketing messages are top-notch when it comes to getting the attention of potential customers. However, sometimes it is helpful to look a little closer at those marketing messages and see what they really mean.

LegalZoom’s 100% Satisfaction Guarantee: However, if you read the fine print, you only get a portion of your money back and you must make the claim within 60 days of purchase. Unfortunately most small business owners know that the legal problems that typically arise in a small business don’t necessarily adhere to LegalZoom’s 60-day limit. What happens if the issue surfaces on day 65? Even if the legal issue does arise within the 60-day limit, is getting your $150 back that you spent on a document going help solve your problem?

LegalZoom’s $50,000 Peace of Mind Guarantee: Again, read the fine print. Your ability to take advantage of the $50,000 Peace of Mind Guarantee is subject to you abiding by LegalZoom’s Terms of Use, Terms of Service, Supplemental Terms of Service for Corporate Center, Supplemental Terms of Service for Advantage Subscriptions, Legal Plan Contract and Privacy Policy.  Go ahead and click on each one and read them if you like. I will be honest, I didn’t read all of them, but in my opinion they appear to be quite long and overly complicated. Ironically, you probably should hire a lawyer just to help you read and understand the fine print, and interestingly enough, LegalZoom has the following language listed in its Terms of Use: “You may speak with independent counsel before using this Site or completing any purchase.” In my opinion, LegalZoom’s $50,000 Peace of Mind Guarantee is worthless. In fact, I believe it becomes even more worthless when you read that “LegalZoom reserves the right to amend this guarantee unilaterally at any time by posting the new terms on the LegalZoom website.” This means, one day you could wake up and the $50,000 Peace of Mind Guarantee you were counting on could have been changed, without you knowing, to the $1.00 Peace of Mind Guarantee. I know I sound harsh here, but the reality is LegalZoom’s $50,000 Peace of Mind Guarantee is nothing more than a clever marketing message designed lure customers in and provide them with a false sense of security. It would be interesting to see how may of these $50,000 guarantees have actually been paid out by LegalZoom. I suspect not too many.

Legal Help is Here: This message is all over the LegalZoom website. This makes them sound like they are attorneys. It makes them sound like they are offering legal help and legal advice. The reality is, LegalZoom is not a law firm, there are no attorneys reviewing your documents unless you agree to a recurring monthly fee, for which they will refer you to an attorney. Again, don’t take my word for it, right on the bottom of LegalZoom’s website is the following disclaimer: Communications between you and LegalZoom are protected by our Privacy Policy but not by the attorney-client privilege or as work product. LegalZoom provides access to independent attorneys and self-help services at your specific direction. 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.” It’s in very tiny print, hidden on the bottom of each page, so it may not be as easy to spot as the claims of “Legal Help is Here”, but if you look carefully it is there.

A good lawyer doesn’t just draft documents and hand them off to their clients. Good lawyers provide small business owners with advice. Good small business lawyers make sure that a document or a contract truly meets the small business owner’s needs.

Anyone can fill out a form and even fill it out correctly.  But neither a form, nor website, can ask you the questions that get to the heart of an issue which allows you to proceed in the best manner. As website or a form can’t advise you on the best business entity for your company…whether you should register your trademark…whether this lease is beneficial for your needs…whether your partnership agreement reflects the intent of all the partners.  One a practicing small business lawyer can and will do all of these things for you.

If you read through my website you will understand that I practice, what I like to call, “Preventative Law.” I work with small business owners who prefer to take the time now to invest in preventative measures to ensure that they are not subjected to costly and time-consuming legal issues down the road. Like all preventative measures taken in life, whether they be with you health, your car, or your home, the preventative measures taken to protect your business may require you to make more of an upfront investment, but the rewards you will receive down the road are almost always far greater than that upfront cost. Using a low-cost online document preparation service like LegalZoom may save you a few dollars on the front end, but it has been my experience, and the experience of many small business owners that subjecting yourself and your business to the added risk and headaches down the road is simply not worth it.

If you would like to learn more about the services the Philadelphia Small Business Law Center can provide, please call me at 215-914-6880 or send me an email at stuart@psblc.net.

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