3 Reasons why you shouldn’t rely on legal forms from the internet

Let’s face it: we all like to save money.  A good lawyer wants to save his or her clients money by being efficient and cost-effective. One way that some clients think they can save money is by using online legal forms, whether for an incorporation, a will, a lease, etc.  They think using these forms is just as good as using a lawyer, but a lot cheaper.  And it usually is cheaper (but not always!), but not necessarily as good as using a lawyer.  Let’s see why.

The online companies that sell these forms give the impression that they are offering services and products similar to those of an attorney.  However, they are not attorneys or law firms, and they can’t give legal advice. They even state this on their websites; go check for yourself.

Why should you be careful about using online forms? First, they are not customized or tailored to your specific situation, which is probably not a “generic” situation. These forms may be a good starting point for an issue because they have the basic elements of the document, but they are generic, even if created for use in a particular state, and may not include provisions that are applicable to your needs.

But wait, you say, don’t attorneys use legal forms? Attorneys don’t write everything from scratch, do they?  That’s usually true, but we use forms and templates as a starting point, not as the final document where we just “fill in the blanks.” Attorneys will revise language to ensure the document does what each client needs. Online services cannot do that for you. Some may assure you that you can “make changes to fit your needs,” but without good legal advice, you might not know all of those needs.

Second, these forms don’t work when the client’s needs get complicated. There are some tasks for which these services can save you money. I have a number of clients who have used them to incorporate a corporation or form an LLC on their own, and that’s usually just fine.  These are simple, straightforward things that most non-lawyers can do on their own.

But once things get more complex, you should have the advice of an experienced attorney. For example, these services may not offer a shareholder’s (buy-sell) agreement for corporations or an operating agreement for LLC’s.  But these agreements are a critical part of starting such a business, and without them your investment and your business are at risk.  Or they may not include the right kind of indemnification or limitation of liability for your business needs. So while these online services offer many types of agreements, they do not offer some of the most important, because those require experienced legal advice.

Third, what happens if you create a do-it-yourself and you get sued?  The online document companies may disclaim all liability or responsibility: all they did was sell you a form, and after that they can’t control what you might do to it.  If you use an attorney and you get sued because of a mistake he or she made, you may have a malpractice claim and the attorney’s malpractice insurance might make you whole.  If you did not use an attorney and created a flawed document on your own, you’re on your own if you are sued.  In other words, by saving a few hundred dollars up front, you may end up paying thousands more in a lawsuit.  Not a good return on your investment.

So should you never use online legal form services?  For simple actions like an incorporation, or a one-time simple agreement, they can be just fine, and a way to save money.  But for more complicated business contracts, employment agreements, wills and trusts, etc., you are better off getting quality legal advice up front.