“One size fits all” is the wrong approach to take when dealing with estate planning and business documents. And when you purchase legal forms from the internet, that is exactly what you are getting. For estate planning, no person’s circumstances and wishes is going to be identical to the next. For businesses, while forming the LLC or incorporating may be simply accomplished by using the Secretary of State’s forms (no need to even use RocketLawyer, here, for example), what about the other documents that you may need to go with it? We’ve talked about the importance of operating agreements before. Those are absolutely not one-size-fits-all.
Here are some risks:
1) The document may not be valid at all. I have personally had a client bring me a form he purchased online that was advertised as North Carolina-specific that was NOT valid in North Carolina. He wasted money on that form and then paid me to re-do it, when it could have been done correctly the first time. Attorneys oftentimes say, “Pay us a few hundred dollars now to do it right the first time or a few thousand dollars later to fix it.”
2) While valid, the document may not be the best. Admittedly, the online legal form websites sell forms that are likely valid. They put just enough stuff in there to make them valid. However, they leave out state-specific clauses and references to statutes that may save you and your family or business tremendous time and money in the future. Here are some examples:
a. Attorney’s fees provisions. In North Carolina, these are only valid in some types of contracts and only if reciprocal. Without these clauses, you could be out thousands of dollars if a dispute arises. Or, you could have a false sense of security thinking you will be entitled to attorney’s fees if a dispute arises, only to find out that your type of contract or the way the clause is written does not allow for attorney’s fees.
b. Leases. Did you know that if a tenant breaches a lease, other than for non-payment of rent, you cannot evict the tenant unless the lease specifically provides for such? This has happened to a client of ours – the lease did not provide for it, and he was stuck with that tenant. Also, you can put language in a lease that waives notice requirements prior to evicting them. Online form leases do not contain this language.
c. Wills. We have already discussed the very important language that can be included in a will that will save your executor time, money, and stress when they are handling your estate. It goes without saying, the only way to ensure that your last wishes are accomplished is to hire an attorney. There’s no way of knowing if you use an online form. I have spoken to attorneys who litigate estate cases (after someone has died, for example contesting a will on behalf of a beneficiary, or just asking the court for guidance in interpreting a will) and their business is booming thanks to online legal forms.
d. State laws are different. North Carolina treats non-compete clauses and forum selection clauses differently from Florida, for example. Laws are created by the courts, too. A legal form website is not going to be current on courts’ interpretations of a state’s statutes. Just take a look at LegalZoom’s terms of service: “. . . LegalZoom cannot guarantee that all of the information on the Site or Applications is completely current. The law is different from jurisdiction to jurisdiction, and may be subject to interpretation by different courts. The law is a personal matter, and no general information or legal tool like the kind LegalZoom provides can fit every circumstance. Furthermore, the legal information contained on the Site and Applications is not legal advice and is not guaranteed to be correct, complete or up-to-date. Therefore, if you need legal advice for your specific problem, or if your specific problem is too complex to be addressed by our tools, you should consult a licensed attorney in your area.”
3) While valid, the document may be worse than not having one at all. You may leave language in an online form that actually puts you in a worse position. A business owner may do something that puts him personally liable for the business. The devil is in the details. In a case out of Canada, a poorly placed comma cost a business nearly $1,000,000.
4) No attorney-client relationship. By having personal interaction with an attorney, the attorney can draw information out of you that is important that you did not know was important. As a layperson, you don’t know what you don’t know – and that’s what you pay an attorney for. Hopefully you develop a long-term relationship with your attorney. You can continue to seek advice from someone who knows the ins and outs of your business or knows your family. On a different note, an attorney is a fiduciary who owes a duty to you. If they do something incorrectly which costs you money, you can sue the attorney for malpractice. You cannot do this with online legal forms.
As simple as your legal issue may seem, there is value in consulting with an attorney. The document itself, in my opinion, is free.
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