Legal Zoom, Rocket Lawyer, et al.

People often ask me if services such as Legal Zoom, Rocket Lawyer and NOLO are a good alternative to hiring a lawyer. If you are starting or running a business, pre-made legal documents can seem like the perfect way to achieve legal protection while also saving money. On the one hand, a penny saved is a penny earned. On the other, you have to spend money to make money. Here are some points to consider.

The biggest problem I have seen with documents prepared by these services is they do not always tailor them to each specific jurisdiction. The U.S. does not have one concise body of law. Instead, there is the federal law at the top along with the laws from the 50 different states plus, possibly, local rules and regulations. In crafting any legal agreement, whether it is a lease or a will or a contract, the drafter must consider the facts of the specific situation and how to utilize the law in his juridiction to best protect the client. While at some point, online solutions may acquire the knowledge to adapt to most common situations, currently, this is not the case.

Many people will point out that tax law is easily automated even though it is fairly complex. This is a false comparison for a number of reasons. First, most people just have a job, a house and retirement along with a few other accounts. One individual’s situation is often very much like another’s, and this lends itself to automation. However, if you have a lot of money or trusts or other complex financial assets, Turbotax is not going to cut the mustard (Full Disclosure: I use and love Turbotax. It is an awesome product). You need a CPA, just like most businesses need a lawyer. Second, business law is, I think, incredibly complex compared to tax law, or at least, tax law for the vast majority of people. Lawyers can anticipate problems a computer may not catch, and this is what makes a lawyer’s services valuable.

The last reason I do not like these services, is there is no attorney-client relationship. If I make a mistake on a contract and it damages my client, I am liable. I must fix it or I risk being sued, possibly harming my reputation and/or, in extreme cases, losing my license to practice. The online legal document services do not offer such protection. If your document contains problems, you have little recourse against them.

In conclusion, if your legal problem is fairly standard and simple, using the forms from one of these document preparation services is probably ok. But, if you are doing anything remotely interesting and especially if there is a lot of something at risk, hiring an attorney to draft your documents for you is a better option than using a computer. That being said, I do hope advances like these websites increase the efficiency of legal work and ultimately lower costs for the consumer.

Check out this Consumer Reports article for more.