Most business owners need professional legal services at some point, and many entrepreneurs are curious about frequently advertised online options. After all, using websites such as LegalZoom and Rocket Lawyer for basic legal services, like filing for an LLC, is much less expensive than working with traditional lawyers at law firms.
While lower prices are enticing, the decision to use an online legal service rather than an attorney in a law firm is a big one since the consequences of improperly filed contracts and other inaccuracies can be severe for the business owner. This guide isn’t intended to condemn or recommend online legal services or law firms for specific business uses but rather to illuminate the differences between these legal options so business owners can make an informed decision.
Leading online legal services and what they offer
The major players in the online legal services field include LegalZoom, Rocket Lawyer, LegalShield and LawDepot. You’ve likely seen advertisements for websites like these on television, where the commercials explain that, in minutes, you can discuss your legal needs with a qualified attorney. When you peruse these websites, you’ll see they offer many business-centric legal services, such as:
- Sole proprietorship or partnership registration
- LLC filing via articles of organization
- Corporation registration via articles of incorporation
- Copyright registration
- Patent filing
- Trademark registration
- Doing-business-as (DBA) registration
- Business licensure
- Annual reporting
- Registered Agent services
Most online legal services operate on either a subscription basis, where you pay a certain amount per month in exchange for an outlined list of services, or a pay-per-service basis, where you purchase one-time legal services as needed.
Tip: Debt collection lawsuits are typically not within the breadth of online legal service offerings. For that, you’ll need to hire a debt collection attorney.
How online legal services are different from traditional legal help
Using online legal services is inexpensive compared to working with typical brick-and-mortar law firms, making most small business owners immediately wonder why and how these sites can charge so much less than other attorneys. The answer is simple: They aren’t law firms.
When you look at the disclaimers on websites such as LegalZoom, you’ll see it plainly written in black and white: “LegalZoom is not a law firm and may not perform services performed by an attorney. LegalZoom, its Services, and its forms or templates are not a substitute for the advice or services of an attorney.”
Now, none of this is to say you shouldn’t use services like LegalZoom at all — only that you should understand what they really offer. LegalZoom and those like it are legitimate operations, but you aren’t getting a client-attorney relationship when you hire them. Contrary to what many people assume, you’re not hiring a remote law firm to advise your business and act as your legal counsel. Rather, LegalZoom and enterprises like it are resources for people who want to prepare their own legal documents.
In other words, these online legal services are sort of like an aisle in an office supply store that stocks products like renters agreements or generic prepared contracts. But instead of having a physical location for your needs, these online legal destinations provide digital assistance through customer service, more specialized filing templates and a nicer user interface. An office supply store can’t actually build your office for you, just like an online legal service can’t handle your lawsuit. They can only offer help with certain things.
For basic legal needs, especially those involving paperwork, online legal services can save you time and money. For actual lawsuits or legal consulting, they won’t fit the bill.
Pros and cons of using online legal services
Below are some of the advantages and disadvantages of using online legal services.
Pros of using online legal services
- They’re cost-effective. Online legal services are a frugal alternative for businesses looking to save money on legal fees. They are not an exact replacement for established firms but can provide certain necessary services at a much lower price. They are well suited for small businesses and independent entrepreneurs who need legal help but aren’t willing or able to pay $200 per hour for formal help from a law firm.
- They’re becoming more common and thus more reliable. According to a report published by industry research firm Grand View Research, the online legal services market has been steadily growing, with a projected compound annual growth rate of 3.0 percent from 2022 through 2030. As more people begin using these services, providers will refine and improve them, resulting in a more reliable legal resource for small business owners.
Cons of using online legal services
- They’re not exactly the same as actual lawyers or law firms. Online services may well be the future of the legal industry. However, currently they are not a perfect replacement. They can’t compare to the hands-on guidance and attention you’ll receive from a traditional firm. Established legal teams are also more effective if you need to go to court or settle a complex legal matter.
- They’re not a fit for every company. Online legal services fall into the same category as other recent tech trends, like virtual offices: Certain businesses will benefit from the lean pricing and flexibility they provide, while others are better suited for the traditional model. It all depends on your company’s budget for legal matters and whether investing in that area fuels your growth or cuts into your profit margins. Large corporations and businesses with complicated legal needs are still better off with a big law firm, but online legal services are a great alternative for smaller companies that don’t need as much hands-on legal work.
The future of legal work is likely to be a hybrid of online and traditional models, so anyone looking to save money on legal help should at least look into online service offerings.
Should your business use online legal services?
If you want the benefit of a law firm or attorney filing items on your behalf, and you need individualized business guidance in a legal and strategic sense, an online legal service provider will not meet your needs. Even the most successful online legal service companies state in their disclaimers that some information (including forms) on their sites may be outdated and that they cannot be held responsible for improperly filed forms.
On the other hand, a small business owner who is knowledgeable about the law and confident in their ability to file legal documents may find online legal services helpful. The low cost of these services compared to full-service law firms and the limited guidance online services provide may well suit the needs of such an entrepreneur. And if upon trying one option, you aren’t satisfied, you can always try the other.
Max Freedman contributed to the writing and reporting in this article.