Altus Legal
THE LAW FIRM FOR ENTREPRENEURS

Articles

Using online legal form providers? We don't recommend it.

As attorneys, part of our job is to guide clients away from risk. That often comes in the form of advice that could be classified into “good, better, best” categories. It is the reality for some clients that doing the “best” thing isn’t practical, either from a business or cost perspective. When that’s the case, it’s generally better to pursue the good” or “better” option rather than take no action at all.

Now, how does “good, better, best” apply to the myriad of online legal forms available to consumers today? I’m talking documents from legalzoom, rocketlawyer, etc. Well, the answer is that custom drafted forms tailored to the client’s case by an attorney are “best”, while forms from the online legal forms are…less best and are sometimes outright the “bad” option. Here’s why.

1.      Documents from an online legal form provider cannot typically be tailored to a client’s specific needs. At worst, the online legal form is a single boilerplate document sold to every customer. These documents typically contain numerous unnecessary provisions while leaving out numerous more necessary provisions. At best, some of the online form providers at least walk customers through a checklist with an eye towards tailoring the document to a particular situation. The unfortunate reality is that an online checklist, much less a simple boilerplate document, isn’t up to the task of covering all of the situations that a custom drafted document can. A perusal through the cases on this subject reveal that online boilerplate wills, trusts, and business documents have turned what should have been simple matters into full blown multi-year litigation. It is the very definition of “penny wise, pound foolish” when in an effort to save legal fees now results in very expensive and time-consuming disputes and/or litigation down the road.

 

2.      Documents from online legal form providers aren’t always up to date. Legal form providers generally do their best to keep their forms up to date, but they don’t always succeed. Along with the issue of outdated forms, is the issue of changing legal standards. For example, Utah in 2016 passed a law limiting non-compete agreements to one year. As a result of this change, we notified our clients and suggested updating their non-compete agreements. Today, years after the new law was passed, we continue to see new clients with non-compete agreements downloaded from online legal form providers prior to 2016 that are not compliant with the new law. Aside from the non-compete agreements being unenforceable, the clients are exposed to legal liability stemming from the improper non-compete agreements. So, assuming the online legal form is up to date at the time it is downloaded, not a guarantee, your online legal form provider certainly won’t be notifying you when their form isn’t up to date anymore. In either case, you are the one holding the bag.

 

3.      Online legal form providers are happy to charge you for documents you can get free or at low cost elsewhere. If you’re interested in drafting a Utah Power of Attorney the online legal form providers are happy to take your money to do so. Except that Utah has a statutory standard form that can be used for free and is perfectly fine for most purposes. Similarly, the Utah court system has implemented the “Online Court Assistance Program” that will generate forms for many of the most common legal issues people run into, e.g. divorce, landlord tenant, small claims. The forms provided by OCAP are both cheaper and better than the comparable forms available from online legal form providers. We’ve referred many many potential clients to these resources when they look like they’ll be a good fit for the client’s needs. We’re not in the business of soaking clients for fees and are happy when a better and lower cost alternative exists. Online legal form providers appear to not feel the same.  

 

4.      Finally, and perhaps the most important point, is the legal form providers do not stand behind their product. A review of their terms of service confirm that they A. they are not providing any legal advice, B. that no attorney-client relationship has been formed, and C. their liability for anything nasty that happens as a result of your use of the form is limited (often to whatever amount you paid for the form). So, if the boilerplate Will or LLC Operating Agreement results in years of litigation costing tens of thousands of dollars, the legal form provider is happy to reimburse you the $75.00 you paid for the form.

 

In contrast, when you use an attorney to draft your legal documents you form an attorney-client relationship which requires that the attorney act in your best interests at all times. An attorney will also be happy to give up to date and relevant legal advice about your particular situation and what it requires. Finally, if whatever advice or document an attorney provides for you turns out to be wrong, you are able to pursue legal action against the attorney for the full damages their bad advice or poor contract drafting caused you. Attorneys are required to stand behind their work, the online legal form you downloaded is not.

 

So, to sum it all up. If you literally cannot afford the couple hundred to couple thousand dollar cost of having an attorney draft your documents for you and the stakes are low e.g. preparing an estate plan when you have few assets and few/no heirs, a boilerplate legal form downloaded from an online legal form provider may be a viable option. Otherwise, using an online legal form provider may not even be the “good” option, but instead actually be the “bad” option making the situation worse and leaving you or your heirs to spend the time and money to mop up the problems created by a poorly drafted or inappropriate legal document. Coming from attorneys this advice may seem suspect, but really, spend the money today to get things done right and have an attorney draft custom documents in order to prevent costly problems tomorrow.

Craig WinderBasics