There are a number of do-it-yourself online legal document services that have popped up over the past few years.  The appeal is obvious – they are cheap.  Most folks who start or run a business know they need governing documents, contracts, and a number of other legal documents.  Lawyers are expensive and these document services have popped up to compete purely on price.  They offer the “same” documents as experienced lawyers for much cheaper prices.  Right?

So is it possible to avoid spending the money on an attorney and use one of these cheap online legal document services? Sure, but you get what you pay for.  While you might save a little money now you may very well end up destroying your company in the future.  You should understand that the services aren’t the same.  The value isn’t the same.  As you will see below, there is a reason an attorney’s services are more expensive.

So why is it that these online document services have been relatively successful?  The answer is that these online legal document services have successfully positioned themselves in such a way that their customers don’t realize what they are and are not buying.   Its just like a long cell phone contract in that business owners are not reading the fine print, at least, not until a problem arises.  That’s when they get bit in the ass.  Or perhaps they just don’t care.

I would bet that most of their customers think they are buying legal advice on drafting a proper legal document that meets their needs, achieves their objectives, and contains all of the legally required information for their situation.  But that isn’t what they get.

Let’s take a look at some of the typical Terms of Use for these services and you will see what I mean.  These are not actual quotes but if you look at the Terms of Use for any of these services you will find something similar to the following buried in there.

The Service provides a general understanding of the law and online legal document drafting software to individuals who choose to prepare their own legal documents.  These are self-help fill in the blank forms based on the information you provide.

Key thing to note here:  they provide forms and a general understanding of the law and you prepare a document for your specific situation using their forms.  Why are these services limited? Because….

The service does not review your answers for legal sufficiency, draw legal conclusions, provide legal advice, provide opinions or recommendations about your legal rights, provide counsel about your legal options, provide advice on the selection of forms, or apply the law to the facts of your particular situation.

Why not? Because it would be illegal for them to do so.  It’s called the unauthorized practice of law and you can read the statute here.

But more importantly, this single statement tells you all you need to know about what you don’t get: legal advice; assurance you are creating the appropriate document for your needs; assurance the document is legally sufficient; assurance the document is legally enforceable; advice on whether or not it is the best alternative for your situation; or any legal advice whatsoever for your specific situation.

In fact you could prepare a legally insufficient document using their services, the service could know it, but the service could not warn you about it.  That would be illegal.  So they don’t.

Each form document and any applicable instructions or guidance is not customized to your particular needs.

Once again, because that would be illegal.  But more importantly, that document isn’t drafted for your business or your needs.  Other than the information you fill in, it’s drafted with the same terms as every other person or business who used that form.  If that doesn’t make you nervous, maybe this will.

The legal information contained on this website and in the form documents is not guaranteed to be correct, complete or up-to-date.

You aren’t getting legal advice.  And even better, the information and forms you do get may or may not be correct.  They may or may not be complete.  And they may or may not be up-to-date.  But go ahead, give them your money.

Now it’s too late.  You didn’t pay attention to these terms.  You used their services and just realized the documents you received are worthless.  Now you are facing liability to the tune of tens or hundreds of thousands of dollars.  Don’t worry, there is a quote for that too:

Any liability on the part of the service will be limited to the amount paid for the products and/or services.

So your recourse may be limited to the amount you paid for those online fill-in-the blank documents.  I know they are cheap, but perhaps you should just save that cash and draft something from scratch yourself.  You’ll have the same guarantees.  Or perhaps you should rely on another section of the Terms of Use which provides:

If you need legal advice for your specific problem, you should consult a licensed attorney in your area.

In sum, here is what you receive from an online legal document service:

1. Spell check.
2. A general understanding of the law which may or may not be correct, up to date, or complete.
3. Self help fill in the blank forms which may or may not be correct, up to date, or complete.

Now compare that with the value that you receive from an attorney:

1. Advice on the appropriate documents for your business’s needs and objectives.
2. Counsel on alternative options and solutions to your specific situation.
3. Assurance of the legal sufficiency of any documents provided.
4. Opinions and recommendations about your legal rights.
5. Analysis and application of the law to your specific situation.
6. Representation of an attorney.
7. Actual legal advice.

There are very good reasons why an attorney’s services are more expensive.  I hope that the next time you see an advertisement comparing the services of an online legal document service versus the price of an attorney you will understand the true value of what you receive from each, and more importantly, what you don’t receive.