Attorney goes “undercover” to expose the flaws DIY legal websites don’t want you to know about.

Attorney goes “undercover” to expose the flaws DIY legal websites don’t want you to know about.

The bottom line: DIY legal websites are NOT a smart solution, but their existence is completely the fault of the legal profession (we’ll get to this later).

There's no doubt about it, the legal market is changing. Startup and small business clients are no longer interested in paying hand over fist for the once-revered "firm prestige" filled with unrelatable human bodies that take weeks to return a finished product. Spend five minutes searching online and you will find hundreds of articles forecasting the downfall of the big firm model. Many commentators suggest this disconnect between law firms and clients is created by a generational gap, that is, the elite few who are running large law firms have different priorities and ways of conducting business than the hoard of Millennials and Generation Y entrepreneurs who are dominating today’s business landscape.

Last month, Georgetown Law issued a press release entitled, “2017 Report on the State of the Legal Market Finds 10 Years of Stagnation Changing the Industry.” The press release emphasized the slow and painful death of the billable hour and encouraged attorneys to recognize that they are now very much in a buyer’s market. Unfortunately, it appears the legal industry is taking far too long to shift out of the billable hour stone age, and what have emerged to fill in the gaps are so-called “do it yourself” legal websites that entice customers with low prices and immediate, print-from-your-house turnaround.

We have all seen the commercials and billboards—but, have you actually stopped to take a look at the form-doc work product being pumped out of these companies? While I realize there is little credence in attorneys criticizing legal websites, I do believe that attorneys are in the best position to recognize and understand the problems associated with using them. I stumbled across an article last week written by an Ohio corporate attorney who went onto a DIY legal website and chatted with a live “expert” about starting a Limited Liability Company. The full link is posted below, but here are some of the juiciest parts of their exchange:

A representative will be with you shortly. You are now chatting with ‘Jaron’

Jaron: ‪Hello, how are you?

You: fine, thanks. So I’d like to know, for your LLC formation package, is the operating agreement a single-member or multi-member operating agreement?

Jaron: ‪The operating agreement can go either way

You: Well, which is it?

     …       

Jaron: ‪It is whatever you need it to be

You: and does it include transfer restrictions?

Jaron: ‪like heir to heir?

Jaron: ‪Or ownership?

You: like a right of first refusal if my co-owner wants to sell to an outside party

Jaron: ‪Yes, you can include that in the operating agreement. We also provide a guidebook with further instruction on that as well.

You: and all of this is the same price, regardless of what I want included? Regardless of whether it’s a single-member or multi-member?

You: all for $385.95

Jaron: ‪YEs

You: How many drafts of it will you do for me, to ensure it’s the way I want it?

       …

Jaron: ‪Let me double check. Bare with me [spelling error his, not mine – another nice touch from the experts]

You: double check on all those questions, please

Jaron: ‪Sure… one moment [long delay]

Jaron: ‪You can supply the operating agreement after writing it out. We provide the template. You can update it at anytime with written consent. The only time there is a fee is if you have a third party update it

You: So you provide a basic template, and I have to make all the changes? You don’t write these in for me?

Jaron: ‪We do not. You will write them up, we will file them internally

You: So the transfer restrictions and all that aren’t in the agreement you provide. I have to write all that up for you?

Jaron: ‪Correct. We file it for you, you provide the structure that you want.

You: What do you mean, you file it? [note: you don’t file an operating agreement with anyone; it’s a contract between the business owners and the LLC]

Jaron: ‪You will supply us with the language and draft of the operating agreement. Once you notarize it and send it in, we can update it to your liking at anytime [another tip – you don’t have to notarize an operating agreement]

Jaron: ‪If you need to update or make changes, we can do that. No fee

You: But I provide the language

Jaron: ‪Yes

Jaron: ‪We provide a template. You can use it if you wish

Jaron: ‪Or provide your own language [kind of like going to a restaurant, but bringing your own ingredients and cooking them yourself]

You: One last question. On your website, you say the Ohio LLC filing fee is $125 plus a $5 document retrieval fee. But the LLC filing fee in Ohio is $99. Why the difference?

Jaron: ‪I will get you the breakdown, one moment [long delay]

Jaron: ‪Sorry for the delay

You: Yes?

Jaron: ‪$125 is the LLC filing fee of for Ohio anywhere

You: Not according to the Secretary of State’s website.

Jaron: ‪I am really sorry about the confusion. I am not sure why the fee is more. All of the service companies charge the $125 rate…

You: No, I’m just concerned that you wouldn’t know what the correct fee is. Aren’t you the experts?”

My purpose for writing this article is twofold. Of course, I hope to convey to any startup or small business owner the imperative nature of adequate legal representation. This means more than finding the cheapest avenue to get something slapped on paper. I encourage you to interview attorneys and law firms to find one that’s best for your company. Think about your timeframe, your professional culture, your method of preferred communication, your budget, and your comfortability when deciding on who to trust as your legal counsel. Find someone who is active in the business community and who has a history of advocating for the best interests of startups and small companies.

As one New York attorney wrote, put your business in the best position for success by spending money on a few hours of a qualified attorney’s time, “someone who can ask the right questions and provide the right drafting solutions in a well-planned, comprehensive operating agreement, [instead of] buying a $149 form agreement that provides no solutions when problems arise or, worse yet, adds fuel to the fire when they do.”

A few years back, Consumer Reports did a blind study on documents purchased from LegalZoom, Rocket Lawyer, and Nolo, sending the documents to three law professors (an estates and trusts specialist, a contracts specialist, and a consumer and commercial law specialist) for review. The verdict? “[U]unless your needs are simple—say, you want to leave your entire estate to your spouse—none of the [services] are likely to entirely meet your needs. And in some cases, the other documents aren’t specific enough or contain language that could lead to an unintended result.” In one instance, a law professor reviewer found a blatant disregard of a critical federal disclosure in a DIY lease agreement.

This brings me to the second purpose of this article. The clients I have worked with that have shaped my legal career and passion for the industry are those who the current legal market has alienated. They are dedicated, hard-working business owners who recognize the need for care and personal attention from their attorney. They want flexible, affordable, and up-front billing practices. They want increased electronic communication and virtual meetings. They want an attorney who is available on their schedule. They want responsiveness and quick turnaround. They want to call their attorney for five minutes without being billed for it. They want to be acknowledged and validated, no matter the size of their dream or the depth of their pocket. Finally, they want to be supported. With that being said, shame on every attorney or law firm who has ever made a current or prospective client feel cheated, neglected, insignificant, or helpless. We have failed every person who chooses to go the DIY route.

I am proud to be working for a law firm that understands the changing legal market and is ahead of the curve in working affordably and efficiently with startups and small businesses. The firm’s founder was even recently nominated for the Houston Business Journal’s 40 Under 40 Awards due to his progressive practice and commitment to bringing business back to Main Street. Fulton Strahan, PLLC in Houston, Texas, is just one example of law firms across the country who have shut the door on stagnant large firm principles and extended a hand to the business owners who are reshaping our future. So to every business owner reading this, please do your research and pick a fantastic attorney (I promise they are out there!) —and for Pete’s sake, stay off of DIY legal websites.

Read the full article about the attorney who chatted with a legal website “expert” here.

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