Alternatives to Lawyers
In the past ten years, we have seen market disruptions across several industries. Airbnb is now an alternative to traditional hotels. Uber has changed the way we get around town. Netflix ended the reign of Blockbuster. Even Amazon, which has been around since the 1990s, has become a major disrupter in the brick and mortar retail industry.
What about the legal field? For decades, even centuries, the practice of law has really not changed all that much. If you need a contract prepared, you hire a lawyer. Considering a divorce? Hire a lawyer. Want a will? You get the idea. But with the advent of the internet and the forethought of savvy entrepreneurs, the legal marketplace has changed. Companies like LegalZoom and Rocket Lawyer have sought to provide an alternative to traditional lawyers. And to a large extent, they have been successful in doing so. These companies promote online document creation for wills, trusts, contracts, and business formations. The consumer logs onto their website, answers check-the-box questions, a few fill in the blanks, and boom – their online will, contract, or LLC is created.
Are Online Legal Service Providers Worth It?
So should you use these popular types of online services? If you ask Google this question, you will find many lawyer blogs bemoaning companies like Legal Zoom and Rocket Lawyer. And to a large extent, I agree with them. There are genuine reasons why you should not hire these companies. But the true, unbiased answer is it depends on what you want to accomplish and what your budget is. Here are two primary reasons why these online services might work for you:
Cheaper Legal Services
The primary advantage that online services have over traditional lawyer is that they are cheaper – way cheaper. In some scenarios you can create a basic will for less than $100. Attorneys generally cannot compete with that price. Does this mean that you will be handed a will that is as good as any will prepared by a competent estate planning attorney? No. Remember: you generally get what you pay for. I cannot tell you how many times I have had to correct online will forms that clients brought to me. It's not that the actual wording of the will is bad. The real reason is that these online forms aren't humans. They don't ask you pertinent questions that can substantially impact your estate plan and they don't help you execute them correctly.
If You Need a Document Immediately
Another advantage of online legal services is that they can immediately provide you with basic contracts, wills, and other such forms. If you are in a pinch and need a form quickly, these documents can suffice. For example, if you are headed out of the country on a trip and want a basic will in place, an online form might be a decent option. Or let's say you need to hire a landscaper for your house and want a basic contract. A contract from one of these companies could suffice.
Disadvantages of Online Legal Services
While online legal service companies may be cheaper and produce documents almost instantaneously, they do have major drawbacks. Here are some of the reasons why you should think twice before using these companies:
They Are Not Lawyers
All online companies, from LegalZoom to Rocket Lawyer, state clearly that they are not lawyers and cannot give legal advice. They recommend speaking with an attorney if you have legal questions. Some companies even have a network of live lawyers you can call and speak with, but of course you do not develop a relationship with that lawyer, you pay extra, and your time with that attorney is limited.
You Are Responsible for Properly Executing the Document
If you have an online company prepare a will, trust, or other legal document, it is solely up to you to make sure it is executed properly. For example, a will must have two witnesses and you ought to have a self-proving affidavit attached to the will. In certain states, your revocable trust also needs to witnesses to be there when you sign the document. Many times clients bring a document they downloaded offline and it is not properly witnessed or is missing important signature pages. These type of issues make it more difficult to probate the document you paid for.
They Could Cost More Money in the Long Run
Meet Kristen. Her mother passed and she needed help probating a will that her mother prepared using LegalZoom. When Kristen sat down with a lawyer, she told him that her mother's estate was very simple and she was looking to save some money by creating this online will. The will appeared professional, had well written clauses, and was executed properly. However, as the attorney began asking Kristen about her mother's estate, it became clear that the will was problematic. In short, there was a disconnect in what Kristen and her mother thought they were getting with the LegalZoom will and what they actually received. The will failed to include critical clauses and testamentary trusts that were necessary to achieve her mother's objectives. As a result, Kristen's mother's estate was unnecessarily complicated, and it cost Kristen more money to unsort the mess the will created.
Stories like Kristen's are not uncommon. While basic forms can indeed save you money, they can also create a legal disaster that is costly to clean up. If you are not sure what you should do about a particular legal matter, call an attorney. Obtain legal advice before making a decision on what you want to do. Attorneys can be more expensive than these online businesses, but the investment it well worth it when you are trying to protect your family.
They Don't Ask Questions
One of the biggest problems is that these companies don't ask detailed questions. Let's say you fill out their form for a will. It will ask for your spouse's name, your children's names, etc. But LegalZoom and Rocket Lawyer will not ask more probing questions. For example, maybe your child is disabled or has an alcohol problem. Maybe they are about to go through a divorce. Do you really want your child to receive their inheritance outright? Probably not. What if you don't want to leave your husband anything, do they advise of the repercussions of that action? You need a lawyer that will take the time to ask you the right questions and make sure that your planning goals are met.
Not for Larger or Complex Legal Matters
If you have a legal matter of any significant size or complexity, these online companies are not a good fit for you. Most online service companies focus on smaller, simpler matters. The companies themselves readily acknowledge their focus is on relatively basic estate planning or business forms. More complex issues will require more contingencies, detailed planning, and thorough language that should be handled by a competent attorney.
Bottom Line: Be Wary of Online Legal Services
The legal marketplace has changed in the last 15 years. Companies like LegalZoom and Rocket Lawyer have sought to provide an alternative to traditional lawyers. And to a large extent, they have been successful in doing so. Just be careful about using their services. Remember, no legal form can replace sound legal advice. If you have a matter that is super simple, these companies do offer a decent alternative. But if you aren't sure exactly how to approach a legal matter call a licensed attorney who can help guide you where you need to go.