- Online legal services are an affordable alternative for entrepreneurs and business leaders looking to save money on legal costs.
- These companies provide some of the essential services law firms traditionally handle at a much lower cost to business owners.
- Online legal services are a great alternative for companies that don't need extensive legal teams, but they can't provide all the support and professional advice of a traditional attorney.
Most business owners need professional legal services at some point, and many entrepreneurs are curious about their online options. After all, websites such as LegalZoom and Rocket Lawyer are much less expensive for basic legal services, like filing for an LLC, than traditional lawyers in law firms.
While lower prices are enticing, the decision to use an online legal filing service rather than an attorney in a law firm is a big one, since the implication of improperly filed contracts 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 like you can make an informed decision.
Types of online legal services
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 they explain that, in minutes, you can discuss your legal needs with a qualified attorney. When you peruse these websites, you'll see that they offer business-centric legal services, such as LLC filing, copyright registration and patent filing.
Most online legal services operate on either a subscription basis, where the client pays a certain amount per month in exchange for an outlined list of services, or a pay-per-service basis, where the client purchases one-time legal services.
What online legal services offer
Online legal services are inexpensive compared to what typical brick-and-mortar law firms charge, which makes 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 the employees of LegalZoom are not acting as your attorney. LegalZoom's legal document service is not a substitute for the advice of an attorney. LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction. LegalZoom is not permitted to engage in the practice of law. It 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."
Now, none of this is to say you shouldn't use such services as LegalZoom, only that you should understand what they really offer.
LegalZoom and those like it are legitimate operations, but when you hire them, you aren't getting a client-attorney relationship. You are not, as many people assume, hiring a remote law firm to advise your business and act as your legal counsel. Rather, LegalZoom and services 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 renter's agreements or generic prepared contracts; it's just that the online legal destinations provide guidance in the form of customer service, more specialized filing templates, and a nicer interface.
Pros and cons of using online legal services
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 they 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.
According to a report published by industry research firm IBISWorld, the online legal services market has been steadily growing and is expected to increase about 6% in 2020. Legal software company Lexicata reported that there was virtually no increase in demand in traditional legal services, due in large part to the increase in viable online alternatives.
Online services may well be the future of the legal industry. However, as of today, 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.
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, 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 these two models, so anyone looking to save money on legal help should at least look into online service offerings.
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 services compared to full-service law firms and the limited guidance online services provide may well suit the needs of such an entrepreneur.