By now, most people have heard of the online self-help legal services companies that pride themselves on their low pricing. While the low costs may seem enticing at first, the hidden fees, recurring payments, and inaccuracies in their documents are not so appealing. The minimal upfront costs may seem like using one of these services is a smart business and financial decision, but it will more than likely end up costing you a lot more time and money in the long run. 

In a lot of these companies’ terms of use, they make it a point to repeatedly state that they are not a law firm nor are they a replacement for an attorney. They have various disclaimers stating that the information provided is “not guaranteed to be correct, complete, or up to date.” Essentially, their customers are paying hundreds, maybe even thousands, of dollars for legal services, which may or may not be complete or correct. Could you imagine going to a business attorney and her telling you that she will draft documents for your business, but those documents may not be correct, complete, or up to date? Of course not! Nobody would hire that attorney, but since most people do not know about these companies’ disclaimers and terms, people continue to use their services.

When you hire an attorney, you are not just paying her for your documents. You are paying for that lawyer’s value and warranty that the work she does for you is complete and correct.  If you purchase a boilerplate form document from a self-help legal services company or find one off the internet, however, there is no one to accept the responsibility for the errors, except yourself. If the document is at all incorrect in any way, you have absolutely no recourse for those mistakes. In more extreme cases, your local government can shut your business down for not adhering to the correct requirements.  

Moreover, these disclaimers remove any right you may otherwise have to sue these companies for poorly drafted or incomplete documents.

Some people attempt to alleviate their concerns regarding these companies by planning to hire an attorney if they run into any trouble with the documents in the future. In theory, that might work out, but unfortunately changing your business’s documentation once you have already started can be harder than it sounds. Anyone who is well positioned with your original documents can push back on you making changes that would be unfavorable to them.  For example, if an investor invested in your original company and the company’s documents gave her voting rights and the ability to seize your personal assets to repay her investment then it is unlikely that the investor would allow you to change your entity’s documents without at least some opposition. In this example, the original documents may allow the investor to, at any time, for any reason, seize your house, car, or other personal assets and sell them at a public auction to recoup her original investment. Additionally, any changes that you make to your original documents can severely change the incentive arrangements involved, the powers of partners or shareholders, dividend disbursement processes, and more.  These details are important to consider because people may simply hold out and refuse to sign the new documents when it is not in their best interest, even if it would help the company.

Your company is unique, and this means that your company, from a legal perspective, will have its own unique legal needs. Self-help legal services companies give you the same documents as all of their other customers, no matter what industry the companies are in, the number of employees they have, or recent changes in state laws. One of the reasons that documents from these companies have so many inaccuracies is because their documents are not tailored to meet the customer’s specific needs; the documents are as broad and as general as possible so that they can try to obtain more customers. They are focused on quantity, not quality.

The law is constantly changing.   Every year, hundreds of new statutes passed by state governments and Congress and there are also changes in case law from judge’s decisions.  All of these laws and changes can affect your business. Congress even passes new laws that subsidize startup businesses in an effort to boost the economy, but in order to take advantage of these opportunities, your documents must meet certain requirements and specifications. Downloading a boilerplate document, even from paid legal services websites, leaves those opportunities on the table. Attorneys who specialize in that particular type of law are more equipped to advise you and draft your unique documents that reflect recent changes. 

Ultimately, self-help legal services companies’ low upfront costs are not worth it. All that their customers receive for paying that low price are documents that are often poorly drafted, generic, and potentially inaccurate. Hiring an attorney who specializes in business law from the start is more beneficial, less costly, and less time consuming, and not to mention will provide you with the peace of mind for the warranty of your documents.