Zoom Past LegalZoom
A couple of months ago I received Sirius satellite radio as a gift. I love it except for one constant ad that drives me absolutely bonkers. About every fifteen minutes I hear an ad from LegalZoom, a legal document company. LegalZoom touts that its fees are 85% less than those of lawyers.
First, with most Iowa lawyers the fee comparison is just not accurate. Second, while LegalZoom's ad says it is not a law firm it fails to highlight an important part of its disclaimer pointing out that the legal information on their site is not legal advice and is not guaranteed to be correct, complete or up-to-date. But as they say, it is experience you can trust. Or is it? Be sure to check out this post from a Colorado lawyer who loves LegalZoom because he has landed more business fixing mistakes from LegalZoom than he would have earned had he done the work in the first place.
One of the craziest things LegalZoom offers is a prenuptial agreement. First, if you have enough money for a prenuptial agreement you can afford a lawyer. Second, a prenuptial agreement is one area of law that if a mistake is made it could cost you - I'd say approximately half your assets. Let's just say I have trouble believing any attorney worth his or her salt - including those "top attorneys" who founded LegalZoom - could in good conscience recommend a person use a legal forms company for a prenuptial agreement. I also wonder what my friend Brett Trout thinks about their offers on patents, trademarks and copyrights.
Use LegalZoom if you must but I highly recommend talking to an attorney before you go that route. You might be surprised by the expense comparison, and even if the cost is slightly more, the legal advice is usually worth it. As the saying goes, you can pay now or pay later. The choice is up to you.
Rush,
Great post. I side with the Colorado attorney. Back when I was young and naive, I tried my best to steer prospective clients away from second rate legal help I knew would get them in trouble. While I was able to save them in some cases, the clients I "saved" often turned out to be much more difficult than average.
However, if they hired me AFTER ignoring my advice and AFTER they got in trouble with the second rate alternative, they turned out to be GREAT clients, taking my advice as gospel. I just think the type of client that shops on price alone is ultimately happier making the mistake themselves and learning from the experience. C'est la guerre.
Brett
Hi,
I have to say that I totaly disagree. I used LegalZoom to start my business, and they did a awesome job. I took it to my accountant and lawyer and they both were impressed. When I talked to them, they were straight forward, and in fact they told me that if I was not sure that I should talk with an attorney or an accountant before I incorporated. I have told many people to use LegalZoom, and will continue to do so!
Philomina:
Thanks for your comment. I am glad you had a good experience. But my main points are still valid: 1) I know LegalZoom's fees for small business incorporations are not 75% less than my fees for full small business incorporation services. 2) You talked with an attorney and an accountant regarding the documents. Smart move to make sure you were properly covered. There are several considerations when forming a business entity. The actual forms to incorporate are only one piece of the puzzle. 3) A prenuptial agreement is no place to take chances - be sure to get legal advice.
Wow. I'm sooooo surprised. A lawyer not liking legalzoom? Like an accountant not liking turbotax or a travel agent not liking orbitz or cbs not liking youtube. Tick tock tick tock tick tock.
Heather,
I am not soooo surprised by your criticism. I fully expected someone to say it. In general, do-it-yourself document companies don't bother me. But I will admit, misleading ads do.
Rush
I have to agree with you Rush. While the DIY sites and software tout themselves as saving you money, it is likely only saving some money today, but not the future. The potential mistakes from the DIY route may create additional work that a professional will have to try and resolve in the future. I've had to administer wills before that individuals drafted themselves. They created more work and costs for the family, and me as the attorney, than what should have been necessary.
I'm sure I could probably find a site that explains how an open-heart surgery is performed, but I'm not going to try and do it myself.
Hey Rush. I was the Colorado Attorney who wrote the blog article you referenced.
Of course, I really don't like Legal Zoom and find them a menace to the legal community. But truth be told, just this past week, we received a new client that had used a similar document preparation service to prepare his trademark and the end result was an issued mark that based on case law was invalid. Taking the advice of an employee of this document preparation service, he effectively committed fraud on the Trademark Office. Now, we are tasked with fixing the problem, which will cost the client a significant sum.
We actually find the amoutn saved by using Legal Zoom in the first place to be very small. Couple that with the significant chance that you Trademark, patent or business enity formation is invalid because of their inability to provide you with legal advice and these guys just don't make sense.
There are a few people out there that are very intellegent and astute and can prepare the legal zoom documents and save money over going to a lawyer. BUT those same people can probably perform file their own trademark, prepare their own Provisional patent application and for their own enity for less by just going to the websites of the respective agencies with which they will be filing and using the forms and instructions provided thereat.
My biggest problem with the Zoom is their advetising which promises to save substantial money over an attorney thereby equating themselves with an attorney in terms of the services provided, BUT THEN in fine print discliaims that they are a substitute for an attorney.
Thanks for the reference to my blog post,
Rush,
I have to say that I read your blogs because I find your information to be accurate and insightful. However, I have to TOTALLY disagree with you in reagrds to LegalZoom. I used them to file my provisional patent, used them to incorporate my business, and also used them for my living trust. I can afford to see lawyers, but I feel I am smart enough to get things done right. The most important thing that separates Zoom from most attorneys is that they actually return my phone calls and are very, very customer friendly. I have never had a problem with Zoom and recommend them to all of my business associates. Thanks for reading my note.
Eugene
It was a pretty funny a couple of weeks ago. A new client came to see me to write a contract. He had just formed his LLC through LegalZoom. I had no qualms with the documentation. It was done correctly. The funny part is that it cost him more money through LegalZoom than it would have using my services. He couldn't believe it. My biggest problem with LegalZoom is two-fold:
First, the company's ads state that their services are 80 percent less than an attorney for incorporation and LLC formation. This is absolutely false in my case when you compare comparable services. I am a lawyer that does not believe routine incorporation and LLC formation should be cost prohibitive. Many lawyers I know in Iowa are the same way.
Second, how does the ordinary person really know which entity is best for their situation? LegalZoom cannot give legal advice. Without the advice of a competent accountant and attorney you may be shooting in the dark. Sure, LegalZoom may work out quite well for many but if the costs are similar why not choose the professional advice over a customer service representative. And I will return your call.
Rush
Hi Rush,
I would venture a guess that LegalZoom works for some people... and not others. This site has both good and bad LegalZoom reviews.
As well, some lawyers loathe LZ and some could care less.
What I want to know... is this: If they claim to save up to 85%, who are they saving 85% from? Robert Shapiro prices? Not all attorneys charge $300/hr...
Thanks for the insightful post.
I recently called Legalzoom for an address change.The person on the phone said"I have BAD news for you!Your LLC has been revoked."I didnt know a thing about this and they said I owed the State of Nevada $850,for 2 years no lists or payments.The agent changed and never contacted me on this.Its 2 years behind.Now I must dissolve my LLC as no monies were made and I cant afford to Pay legalzoom,fees or nevada fees.I got no letters from legalzoom.Ive contacted them by phone and internet with no answers or help on this matter.I should have got a atty.Legalzoom llc pkg and 2 years agent?$695.00 plus this problem with late fees and dissolve..$935.00...Priceless
I love legalzoom ! Its cheap and easy.
Cheap and easy? I find the cheap and easy set rarely make good clients. LegalZoom does have its niche. Good luck with the coupons.
Rush
I used the LegalZoom service for a Will. The online questionaire never asks for the state of residency - only for your current address. Needless to say, my will now states that I am a resident of Georgia - where I am now stationed - but my residency is in Maine. Thanks for nothing, LegalZoom.
I've started using legal zoom for my small business and so far they've been nothing but helpful. I just wrote a blog post about the discrepancy in price between hiring a real lawyer and using LegalZoom and I had no choice but to take the online route. There are definitely risks involved and it pays to do some research on the tasks you are asking LegalZoom to perform for you. But I think with some foresight and planning, it can be a valuable asset.
I asked to talk ROBERT SHARIPRO the founder of legalzoom after exhausting ALL options,with the past problem.The man on the phone said he no longer works there...I just saw him on tv...
THE MACDONALDS OF LAW.
I looked at Legalzoom and then I shopped around. There are many places that offer similar services for less. Way less. If you're going to go around the right way, using a lawyer and paying a higher price - what is the advantage of using LZ over one of the other do it yourself services? They are seriously expensive - but maybe most people don't shop around and figure - if it's cheaper than a lawyer "works for me".
Two posts before me Matt wrote - Legal zoom has been nothing but helpful. Yeah! Maybe you just paid them 200 to 500 more than you would have to do incorporate yourself. They'd better be helpful!
After hours of consideration I called the people at florida-incorporation.com and found the guy really helpful and friendly. I saved over $300 from legal zoom. I feel like a champ.
For other legal services I don't know - is legal zoom more expensive? I haven't looked into it. Maybe in the future as business gets underway. Great article - thanks Rush.
I always have to smirk when consumers say that had a great experience with Legal Zoom. They assume that just because the patent or trademark office accepted their filing, that what they field is actually valid and enforceable. Of course, attorneys who practice in this area know that with years of experience, it is still extremely challenging to not only file paperwork with these government agencies but to get the paperwork right so that when the matter goes to threat letter or court, it is actually enforceable.
My problem with LegalZoom is that -overall- their marketing is highly suggestive of the fact that you are getting legal advise "Founded by attorneys" "Attorneys have reviewed our filings and found them airtight" . These statements are fraudulent suggestions of legal advice in my opinion.
Other than that, I think the fact that people who can't afford a lawyer at least have the option of doing it themselves in this great internet age. I wish the advertisements made it clear that it is purely self-help in terms of legal advise, and that disclosures prominently told consumers that what they file may be worthless if in fact they do it wrong.
BTW. I reported a consumer class action against legal zoom in this post.
My experience is that they are always messing things up. I can't count how many times people have come into my office needing to have things fixed that LegalZoom has messed up. I had another one in my office today in fact. My best advice for anyone is don't use them! If you need to have legal documents done, either see an attorney or check your state laws regarding non-attorney assistance. In California for example, non-attorneys are required to be registered with the county they conduct business in and are regulated under Business and Professions Code 6400-6415. First be sure any company you are dealing with is operating legally. That doesn't remove all problems unfortunately, but it does reduce them for many people.