by Andrew Sohn, Esq.
Here are some of the major problems we see and why you should think TWICE before engaging these online DIY legal platforms:
1. You act as your own attorney.
I like to point out the fact that LegalZoom (and most likely the other major DIY online legal platforms) have a heck of a disclaimer and terms of service. I don’t have enough time to pick it apart paragraph by paragraph and there are way too many facets to that terms of service to cause concern, but I want to focus on the most important portions. (I would highly recommend reading carefully through their terms of service):
First, they have disclaimed ALL legal responsibility and disclaims any attorney-client relationship with you. You tread forward at your own risk. This is an important point. Why would you take on the role of attorney when you can hire experienced attorneys at a comparable cost? It makes absolutely no sense. You are your own attorney and represent yourself.
Self-representation. Their terms of service clearly states,
“1. 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.”
2. You have no privacy.
The most frightening aspect of the legal services being offered on these DIY legal platforms is the fact that most clearly tell you as the consumer that there is no “attorney-client privilege,” meaning that there is no legal obligation for Legal Zoom or any of these companies to keep your sensitive information private. Effectively, they maintain the right to disclose your sensitive and private information, while attorneys are governed by the attorney-client privilege. If any attorney breaches this attorney-client privilege, the legal ramifications include disbarment, hefty fines/penalties, and potential damages in certain situations. This is the precise reason attorneys take this privilege so seriously, it’s our license and livelihood at stake, we do not want to toe the line.
3. You’ve waived your rights.
LegalZoom’s Terms of Service includes a detailed and comprehensive indemnification clause:
“I WILL HOLD LEGALZOOM AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS HARMLESS FOR ANY INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGE, HOWEVER IT ARISES (INCLUDING ATTORNEYS’ FEES AND ALL RELATED COSTS AND EXPENSES OF LITIGATION AND ARBITRATION, OR AT TRIAL OR ON APPEAL, IF ANY, WHETHER OR NOT LITIGATION OR ARBITRATION IS INSTITUTED), WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE, OR OTHER TORTIOUS ACTION, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY CLAIM FOR PERSONAL INJURY OR PROPERTY DAMAGE, ARISING FROM THIS AGREEMENT AND ANY VIOLATION BY ME OF ANY FEDERAL, STATE, OR LOCAL LAWS, STATUTES, RULES, OR REGULATIONS, EVEN IF LEGALZOOM HAS BEEN PREVIOUSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. EXCEPT AS PROHIBITED BY LAW…”
You get the picture. I’ve provided for you the readily available terms of service indemnification clause for legal zoom. Whether it’s a breach of contract cause of action or negligence, any business tort, or ANY ACTION arising from your dealings with LegalZoom, you have essentially waived your right to seek legal relief if it becomes necessary in the future. At least they put it in all caps to draw your attention to it (!)
4. You think you’re saving money, but end up spending more.
The question remains, do you actually save that much MORE money by doing it yourself on these DIY online platforms? If you consider the potential risk and liability, not to mention continuous revisions and changes in the future, the immediate cost differential will all be recouped throughout your lifetime. What will you do if investors or future business partners want to see your company’s operating agreement? Formation records? What are you going to do if you want to amend your estate planning documents? What about if there’s a change in law and you MUST change your estate planning documents? Will these DIY online platforms be able to effectuate those changes for you?
Estate planning has to do with sensitive topics such as guardians over your minor children, administration of all of your major assets, nomination of conservators, management and control over your assets throughout your lifetime, and the list goes on. If you wanted to skimp on costs on anything else, estate planning would not be an area where you would want to focus on “savings.” This is an aspect of your family’s future where it’s crucial for it to be done correctly and excellently versus being done “at a discount and ambiguously”.
On the other hand, business formation has to do with exactly what the phrase indicates, you are forming your business so that you are authorized and permitted to conduct business in the State of California. It may seem like a simple process, but the price differential in hiring a business attorney versus these DIY online platforms means that you are CERTAIN your business will be set up correctly (with your business goals and vision in mind). It’s all about laying a proper foundation for your business while also ensuring that you have a working relationship with a dedicated business attorney for your business’ future, as you’ll undeniably deal with constant business legal matters moving forward as you conduct business.
As a Partner at the Avodah Law Group, Andrew W. Sohn, Esq. advises, represents, and provides legal counsel to small to medium sized businesses across a variety of industries. His firm is dedicated to serving as outside general counsel for business owners across the globe (see his extended bio here).