Wednesday, March 9, 2011

What's the deal with LegalZoom?

LegalZoom promises to provide you with the forms you need to achieve certain legal goals.  The problem with the idea is that many processes require more than merely filling out forms.  And since they can't give legal advice, LegalZoom runs the risk of practicing law without a license.  However, the idea of making the law accessible to all is a laudable one, even if the implementation is flawed.

One thing that bothered me as a Patent Examiner and later as a Practitioner was that the details of our legal system are not really well explained to the general public.  Even if you were interested in learning about the law or legal procedures, there were (and are) few resources for the individual that are not overly complicated or obtuse.

Part of this is due to the fact that no one wants to be handing out legal advice generically and end up being sued later on, when someone acts on your summary of the law and screws it all up.  And of course, part of it is due to most Attorneys not wanting to "give it away for free."  An uneducated client is a client you can bill.  And many Attorneys live by the mantra "Never tell a client more than half of what they need to know."  And, unfortunately, many other professionals, including accountants, practice the same way.

Thus, the idea behind LegalZoom seems interesting.   Take basic forms and provide them to the public at a fairly low cost - far lower than one billable hour of legal time.  Writing out a basic will should not require a lawyer, should it?  Yes, there are tricks and pitfalls to drafting your own will, but most of these tricks and pitfalls are there because the legal profession has created them.  Lawyers will challenge wills on behalf of disgruntled relatives, and the courts have created "gotcha" scenarios where otherwise perfectly clear and valid wills can be tossed out.  For example, in some States, if you don't mention a close relative in your will (because you wanted to disinherit them) a lawyer could argue that you "forgot" to mention them.  Better off to leave them a dollar than to not mention their name at all.

And unfortunately, it is that sort of subtlety that gets lost on the general public, and illustrates why taking the forms approach to legal matters is something fraught with peril.  While a lot of legal matters are routine and lend themselves to forms, such as incorporating an LLC, changing your name legally, and even writing a will, other types of legal agreements are more complex.

For example, contracts are rarely a "fill out a form" kind of deal, as rarely are two alike, unless they are sales agreements or the like provided by a seller.

LegalZoom also claims to offer forms for Trademarks and Patents.  While Trademarks can be fairly simple to obtain, there are some subtleties to the art that can bite you hard if you are not versed in the law.  Moreover, since you can fill out the Trademark Application online at, I am not sure why you would need to pay LegalZoom for a "form" unless their service includes instructions on how to apply for a Trademark.  And such instructions are dangerously close to practicing law - and generic instructions can probably be found in a library book for free, or even on the USPTO website.

Patents are a whole additional level of complexity.  And while I strongly support greater transparency in this business and believe that an inventor should at least draft a Specification for his Attorney to review, the arcane business of claim language drafting is not something you can learn about in a form.  And it is not something that could be simplified for the novice.

Patent claims are the legal definition of what is, and is not, your invention.  They set forth the metes and bounds of where your innovation lies and what is public domain.  And you can't learn how to draft them overnight.  Many inventors have no clue how to draft claims, often writing things like "I claim my invention is really good."

The Patent Examiners will help you draft claims, as a pro se inventor.  But Examiners often draft claims that are unduly narrow in scope.  Obtaining a Patent is not hard to do, but obtaining a valid Patent that has a scope of protection that is worthwhile, well, that is a lot harder.  You can get a Patent that is essentially worthless if the scope of the claims is too narrow.

And there are other areas of law where forms may be nice, but might not be necessary.  When I formed two LLC Corporations in the Commonwealth of Virginia, I merely called the State Corporation Commission, who forwarded to me a package of materials, including sample Corporate Charters and other documents.  They also answered all my questions over the phone.  LegalZoom may sell you the forms, but the State Corporation Commission has them for free. Why do you need LegalZoom again?

LegalZoom has come under some criticism for its practices, which some claim skirt dangerously close to giving legal advice and practicing law.  And of course, some folks would argue that the legal profession doesn't like competition and is trying to shut down LegalZoom - and there may be some merit to that argument.

But while I support the idea of making the law accessible to all, if you are engaging in a legal matter of any importance whatsoever, it would be worthwhile to at least consult with an Attorney.

But there's the rub.  For most folks, their legal matters are of small import, and thus not worth spending hundreds or thousands of dollars on legal advice.  For most married couples (or even unmarried ones), a Will might not even be necessary, as properties held in joint tenancy will automatically transfer to the surviving spouse.  If you die intestate (without a Will), your property will likely transfer to your wife.  If she predeceases you, your children will get your inheritance.  While a Will is a nice thing to have, if you want to leave money to others, if you don't have much of an estate (less than one million dollars) it really is not that big a deal.

So Joe and Josephine Paycheck write up their $39.95 Will with LegalZoom, and chances are, it really won't make much difference.  When Joe dies, most, if not all of his Estate will pass to Josephine anyway.  And when she dies, her kids will get what's left, Will or no will.  That's pretty much the law in all 50 States, but consult with your own Attorney for specific legal advice.

So yes, they provide cheap forms.  But it may be that you don't need the forms in the first place.

So, I would do more research before sending off money to LegalZoom.  You may not need their services (sample wills and other forms can be found in books at your local library or even online) or their services may not be sufficient for the complexity of your legal actions.

But I understand the trepidation people have about consulting lawyers, as well as the expenses involved.  Like many others, even I have been stuck with "consulting" bills from unscrupulous lawyers.  There is a sound reason why many people hate us!