What is LegalZoom?

LegalZoom is a California-based company that offers on-line paralegal document preparation services on a nationwide basis.  A nationwide advertising program, financed in part by a relatively large capital investment from Polaris Venture Partners,  is now underway in major national media markets with the goal of branding LegalZoom as the leading legal services web site on the Internet. With Robert Shapiro of OJ fame,  as the company's leading spokesperson, LegalZoom uses the  tag line: "We Put the Law on Your Side", a claim that the company could not make if it were a law firm under the marketing roles that govern the legal profession in all states. LegalZoom, as it is not a law firm, is not bound by these rules, Nevertheless, the company claims to be the leading legal web site. Is there something wrong with this picture?

When a customer arrives at the LegalZoom web site they are presented with a menu of legal documents that are sold for a fixed price. The documents are common legal documents that range from wills, powers of attorney, living wills, and no-fault divorce, on hand to business documents such as incorporation, trademark, and copyright on the other. The customer completes a web form and pays with a credit card. From the data inserted by the customer into the web form, a paralegal aided by document assembly software of some kind, generates a legal document or form, which is returned to the customer in paper format by regular mail.

Under long standing bar rules that are operative in every jurisdiction in the U.S, LegalZoom as a non law firm,  cannot give legal advice of any kind, cannot modify a customer's answers in any way, and cannot do any custom drafting that is responsive to a customer's particular set of facts. The company in a very fine print disclaimer makes clear that it is not a law firm and that" "LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies. " The company does do a review which has to be limited to making sure that all answers are completed in the Questionnaire, that the spelling is correct, and minor tasks that are limited to very narrow role of being a proof-reader of the customer's data entries.

The company claims that: "With LegalZoom's lawyer-free service, you can save up to 85% off the rates an attorney would charge for the same procedure. " This comparison misrepresents the contribution that an attorney makes when serving a client. It suggests that the LegalZoom service is equivalent to the services of an attorney, when it clearly isn't. The representation suggests that a consumer will receive the same result that they would get if they went to an attorney, which is clearly not the case. Moreover, there are many attorneys who charge fees which compare favorably with LegalZoom's fee structure, so the fees that lawyers charge for comparable transactions which are published on the LegalZoom web site are true of some law firms, but not all solo and small firms.

LegalZoom's prices are in fact not cheap, when you consider that with a bit of effort searching  on Google a customer can find identical forms on the Internet that are either free, or which are sold for a modest fee, when compared to the "document preparation fees" that LegalZoom charges for very common legal documents.

But if the role of LegalZoom is really limited to data input and some minor editing and proofing, where's the beef?

There is no doubt that this service concept has been successful, because the company has claimed to have served 500,000 customers. LegalZoom's customers may believe that they are getting a service that is equivalent to the service that they would get from an attorney.

As a disruptive innovation, LegalZoom is demonstrating that there is room for competition in the delivery of legal services and that there are other way's to solve people's legal problems than going to an attorney, despite the very real limitations of the LegalZoom service.

It will be interesting to see how the organized bar responds to LegalZoom as the company becomes more dominant and continues to eat away at the legal profession's dominance in helping people solve their everyday legal problems.

Trackbacks (0) Links to blogs that reference this article Trackback URL
http://www.elawyeringredux.com/admin/trackback/67480
Comments (11) Read through and enter the discussion with the form at the end
karl schieneman - June 10, 2008 11:19 AM

Richard:

Very inciteful piece. I agree most innovation for law will come from nonlawyers. Technology is too multidisciplinary. More on that soon in a post I am a drafting for my blog.
http://www.makinglaweasy.com/pressroom

Deepak - July 29, 2008 1:39 AM

I love legalzoom and its technology from non lawyers that makes it easier.

regards
Deepak

http://www.couponsdealspromos.com/coupons/legalzoom.asp

Sheri - August 29, 2008 7:23 PM

Good read. thanks.

As a lawyer here in CA I use service companies like this to take care of filing the paperwork for my clients. I'll take care of the operating agreements or bylaws myself.this works great for me. I actually partnered up with a company called myllc.com and they send me business when a client needs legal advice and in turn I incorporate the client using them.

Kenan Nuer - September 22, 2008 3:03 PM

What you are getting is the convenience and guaruntee of document preparation at a lower cost up front. No billable hours to think of. How many people are going to do the research and price comparisons to find a comparable law firm. This is the market that legalzoom has tapped albeit succesfully.
http://www.legaldocumentfinder.com

Liz Roz - October 20, 2008 12:47 AM

It is true that with a bit of searching, you will find quality document preparation at prices far lower than legalzoom's. Vcorp Services charges only $90 plus state fees for Inc./LLC preparation and filing, and they will even obtain the company's Federal Tax ID # (EIN) for free. Vcorp is a service company and offers benefits to professional clients such as attorneys, accountants and paralegals.

MICHAEL R. LOVERIDGE - October 22, 2008 10:50 AM

I've practiced estate planning law for 35 years and can unequivocally state that most clients would be ill-served by services like LegalZoom. Simple trusts and wills are easy to prepare, but the "devil is in the details," such as tax issues, second-marriage problems, and, most important, PROPER TITLING OF ASSETS. Failure to accomplish the latter can completely derail an effective estate plan and the client's true planning objectives. Finally, as a solo practitioner in Salt Lake City, I prepare most estate plans (even those with customized provisions) for less than $1,000. The client pays a reasonable fee AND gets the peace of mind from having personal contact with a licensed attorney.

Jason - November 14, 2008 1:33 PM

Just wanted to add that I’ve used The Company Corporation (www.incorporate.com) in the past, and they’ve been a big help. I wasn’t sure of a lot of the steps, and they do a pretty good job of guiding you. I’ve gotten help with my Inc, business license, EIN, Web site, business credit, you name it. Prices are reasonable too. Hope this helps anyone who’s researching their options.

-Jason

Tim Conroy - April 23, 2009 10:46 PM

I just used LegalZoom to file a provisional patent. Not good support at all! I should have saved my money and done it myself. I even paid for a patent attorney which I never had more than one sentence written on an email correspondence and which she farmed the work out to a lesser rank and that person writes really poor legal !

NOT SATISFIED AT ALL... WHAT A SCAM ! TOOK MY MONEY LIKE WITH A SMILE !

Mary L Groner - June 20, 2009 5:03 AM

State laws seem to be quick to outlaw the unauthorized practice of law but incompetent at defining it. If a state can't define it, they certainly are not in a position to outlaw it. Furthermore, it seems that the only legal definition should include whether one represents oneself as an attorney and collects attorney fees in an unauthorized practice of law. If someone does not represent themselves as practicing law, how can they be charged with it? For example, if I tell you I am not a doctor and charge you for the medical device you ask to purchase and I give you advice on it, am I practicing medicine? No. I am telling you what I know. The legal profession should be the same.

Tyler Brooks - August 25, 2009 9:35 PM

I would like to join.

Eric Blazak - August 29, 2009 1:32 PM

Legal zoom has the right idea in providing wills to people in need...but they're simply not safe.

I speak with other parents of the classmates of my son who attend 1st grade with him at a private grade-school. While the topics we discuss are vast, one topic which seems to come up with relative frequency is that of setting up college funds for our six year old treasures. I agree that our children’s futures and their educations are of extreme importance, not just to them and their children, but on a broader scheme to our nation’s future as well. However, it troubles me that while it seems the majority of these parents have indeed already set up college funds for their children, the majority of this majority also have yet to write a will. This simply doesn’t make any logical sense.

Without a valid will, if you and your spouse die in an accident, even if there are life insurance policies in place, your children’s futures are in jeopardy. For starters, a will is the instrument in which you name your child’s guardian. If you do not have a will, the guardian of your children is appointed by the state, usually based on a next of kin philosophy. Therefore, even if you had intended, upon your unexpected departure, for your children to live with your dear friends and neighbors, who know your children well and would love them as their own, keeping them in the same schools, teams and clubs, the court would not place your children in their care. As long as you have family, it is with them that your children will be placed. So, in an already impossibly difficult time, your children would have to adjust to a new environment with people, albeit family, whom your children may barely know.

Additionally, without a will your children would have access to their entire inheritance upon their 18th birthdays. I’m sure most of us can appreciate the danger in this. In your will, you can create what is called a testamentary trust, which dictates to the court and then a designated trustee, how and when your children will receive their inheritance, be it in pieces or in its entirety. You may also direct your trustee to use the principal and accumulated income in the trust is used prior to distribution, in example, for education, general welfare and the like.

Obtaining a will is easy. You need only go online and fill out a simple form. However, it is also dangerous to create a will without the keen eye of an attorney reviewing the document and bringing you through the execution of the instrument. If the will is not created and executed properly, the will may be seen as invalid by the court and essentially, it will be as if you had died without a will. This is happening more and more frequently with the emergence of online legal sites.

It is my personal opinion that legal affairs should be handled by lawyers, especially when the futures of our children are at stake. There is one service which I found useful, in Austin, Texas at http://www.mywillpros.com. Mywillpros.com incorporates the ease, affordability and convenience which on-line will sites offer while also pairing you with a qualified local attorney who will ensure that your will is valid. The site is also a terrific resource for educating yourself on estate planning.


Post A Comment / Question Use this form to add a comment to this entry.







Remember personal info?
Send To A Friend Use this form to send this entry to a friend via email.