DIY Legal: The Hidden Costs for Businesses
Updated: May 22
Information is instantaneously available due to the rise of the internet. Additionally, many services that were not available in the past, including do-it-yourself (DIY) legal forms also exist. As a result, it is tempting to think that the forms provided by these DIY services can be a low-cost substitute for the services of an attorney. The reality is business owners need to be aware that using these one-size-fits-all forms may end up costing your business much more than they save. It may seem self-serving for an attorney to warn of the dangers of using DIY legal forms, but the risks are genuine, and Summa Business Law wants you to make an informed decision when weighing your options.
Several years ago, Consumer Report® magazine evaluated the services offered by these DIY legal sites. They first created several types of legal documents using their online forms and then asked three law professors specializing in business, consumer, and estate planning law, to evaluate the documents created. The professors found that the documents were inadequate to meet the needs of most individuals. Furthermore, they were frequently not specific enough to address each user’s unique circumstances and needs or contained language that could lead to unintended results. The results should act as a wake-up call for anyone considering using these services.
Each business is different, and each business owner has different goals and legal needs that should be carefully considered and addressed to enable a business to function optimally and to avoid unnecessary legal trouble. The failure to obtain counsel from a well-qualified business law attorney could lead to several unanticipated costs:
Unnecessary legal costs. Although it may initially save money to form your business or draft your contracts using online forms, these forms are unlikely to meet the unique needs of your company. They represent the least common denominator across business types and jurisdictions, and as a result, they may not include provisions or protections that are essential for your specific business, which would have been identified and addressed by an experienced and knowledgeable business law attorney. This could result in unnecessary legal disputes representing thousands of dollars in legal fees that far outweigh the “savings” provided by the DIY legal forms.
Wasted time. Business owners know the truth underlying the adage that “time is money.” Every minute spent on unnecessary disputes and lawsuits is one not spent on activities that further the success of your business. Most business owners invest substantial time in building and operating their businesses, and don’t have time to spare for avoidable disputes. The high opportunity cost generated by legal problems that could have been avoided is something that should be taken into account in deciding whether to use DIY legal forms.
Damage to reputation. If you fail to use individually tailored and well-drafted legal documents and procedures that are designed to proactively avoid disputes, the reputation of your business could suffer over time. Using well-drafted contracts not only saves your business from potential legal troubles, but it also protects your vendors and customers from encountering legal problems in their transactions with your business. It makes sense for businesses to make it easier, not harder, for customers and business partners to continue to engage with them. Otherwise, they may decide it just isn’t worth the hassle. This is a situation that will reflect poorly on your business and your brand and is likely to affect your business’s profitability.
Business Risk Level. Each business owner has his or her own level of risk aversion. This plays out in many aspects of the business. Legal documents is one of those aspects. Some business owners are more particular and would prefer more details in the contract. Other business owners prefer oral contracts or handshake deals. Both come with risks. However, each business owner can choose the level of risk that fits their personality and the risk level of the business. By using a DIY legal form, you might increase you liability by not adhering to the legal form in how you manage your business. A custom tailored legal form should fit how you operate the business with the associated risk-level taken into account.
Summa Business Law can help
Although using inexpensive DIY legal services may appear to make sense at first glance, a more in-depth look reveals that they could cost your business dearly. In effect, the fees you pay for the DIY legal forms may simply buy you thousands of dollars in legal expenses down the road. Summa Business Law can help ensure that your business is established on a solid legal foundation and uses well-thought-out processes and contracts designed to facilitate smooth business operations by providing legal services that address the specific needs of your unique business. Please contact Summa Business Law today to set up a meeting.