With a few simple keystrokes in a Google search, new entrepreneurs and startups can gain access to a wealth of resources, tools and information online regarding new business matters.
It’s understandable that many new entrepreneurs and startups will be budget-conscious with the mindset of minimizing startup costs wherever possible.
It’s also no surprise that new business owners are allured by the convenience and cost-friendly options of online DIY legal templates.
“It’s cheap and I can draft them myself quickly without a lawyer!”
Which reminds us of the Iron Triangle…
Fast, good, and cheap. Pick two.
These online legal template websites’ proposition is to have your legal documents done “cheap” and “fast”.
But are they “good” for YOUR business?
As a new business owner, you should be cautious when drafting your own online legal documents. The vast majority of entrepreneurs and startups are much better served by having an experienced business lawyer assist them with their legal documents. The same is true for other legal matters, like incorporation..
Importantly, the costs of getting proper legal assistance for your business can be very reasonable.
Templates Can’t Replace Good Legal Counsel
In general, online legal templates only cover the standard issues common to a particular type of agreement and not much else. These cookie-cutter forms tend to miss all the finer details that can be addressed by an experienced business lawyer.
Good legal counsel can also bring your attention to other important issues relevant to your business, that you may not have considered.
Many businesses and companies have unique concerns, which may require particular legal documents to be custom-tailored accordingly.
If you anticipate having ongoing legal needs or require drafting of several types of documents that are more complex in nature, an experienced business lawyer can help provide you with the necessary guidance to help you set up and grow your business.
New startups and small businesses should seek professional legal counsel when looking to draft legal documents in these areas:
Business Property Transactions
Selecting the Wrong Document
This happens often.
Individuals and businesses may inadvertently use an incorrect form that does not reflect each party or parties’ original intentions.
These kind of errors can result in unforeseen legal consequences that may require more time and money to fix than if such matters were addressed properly by a lawyer from the beginning.
Common mistakes include but are not limited to individuals using forms from the wrong national, provincial, or municipal jurisdiction. E.g. A Canadian business owner downloading employment contracts from a US-based legal site. On a similar note, sometimes individuals use an online form of a purchase agreement that does not properly reflect the actual transaction contemplated by the buyer and the seller. For example: using an asset purchase agreement when a share purchase agreement is required.
Of course, by using an online template agreement, you lose the ability to discuss the transaction with an experienced lawyer and add custom provisions that a lawyer may recommend to better protect your interests.
Small Errors Can Result in Big Consequences
Many times, one modification in a clause, provision, amendment, etc. can lead to multiple changes across a document, potentially affecting its validity or how the document is interpreted.
Some changes to contract provisions may even force litigation between
parties if they lead to confusion, contradiction or if the revised provisions are otherwise unenforceable.
Furthermore, be aware of other common contract mistakes that can also cost your business money.
Whether you create your legal document online or on paper, have a lawyer review the document before you sign it.
Documents May Be Outdated Or Inaccurate
Individuals and businesses should be aware that online legal documents can be out of date, inaccurate or downright wrong.
As summarized by The Best Company about LawDepot – an online source for legal documents:
“As with many of the other online legal services, LawDepot does not mention whether their documents are fully reviewed by lawyers for up-to-date accuracy,…This means that it may be difficult to ensure that the documents that you receive from LawDepot are accurate and high quality.”
Why take that chance and put your business at financial risk with legal forms that may not be current?
Ran Into a Problem With Your Document? Good Luck!
For example, LawDepot’s disclaimer: states the following:
“Any guarantee on the Site is subject to our Terms and Conditions. For the most part, our Terms and Conditions specify that there is no guarantee or warranty and that we are not responsible for any loss, injury, claim, liability, or damage (“damages”) related to your use of the Site, whether from errors or omissions in the content of the Site or any other linked sites. We are not responsible for any damages from the Site being inaccessible to the user and use of the Site is at your own risk. Refer to our Terms and Conditions regarding details of any exceptions such as our Quality Guarantee.”
In other words, LawDepot does NOT take responsibility for errors in its documents. All of the risk is on you.
For your reference, LawDepot’s terms and conditions include the following
language regarding “Limited Warranties” and “Other Guarantees and Refunds”:
Limited Warranties (Section 8)
“Except as expressly provided in these Terms, to the maximum extent permitted
under applicable law, LawDepot® Material and LawDepot® Services are
provided "as is" without any kind of warranty…
…LawDepot® does not represent or warrant that LawDepot® Material, the Site or any linked sites are free of any harmful materials.”
Other Guarantees and Refunds (Section 10 D)
“Our maximum liability for any Quality Guarantees specified on the Site is $120 USD. Other guarantees and refund commitments specified in LawDepot® Material are subject to a maximum of the amount paid by the customer and are subject to a claim being submitted within 30 days of purchase.”
You can review LawDepot’s Terms and Conditions and decide if the risk of using their services is acceptable to you.
Online Legal Template Sites Don’t Offer Legal Advice
As written in the disclaimer of most, if not all, online legal document sites, these entities are not law firms and do not provide any legal advice to users.
To continue with LawDepot as an example, LawDepot states that following in its disclaimer:
“LawDepot® DOES NOT provide any legal advice and users of this web site should consult with their own lawyer for legal advice. This web site (the “Site”) is a general service that provides legal information over the Internet. We are not a law firm and our employees are not acting as your attorney. The information contained in the Site is general legal information and should not be construed as legal advice to be applied to any specific factual situation. If you are unsure whether your particular situation requires that a document be changed, you should consult a lawyer.
Any use of the Site DOES NOT create or constitute a solicitor-client relationship between LawDepot® or any employee of or other person associated with LawDepot® and a user of the Site. As the law differs in each legal jurisdiction and may be interpreted or applied differently depending on your location or situation, the information or use of documents on the Site is not a substitute for the advice of a lawyer.”
Some of these legal sites may refer you to a lawyer, but they do not qualify nor guarantee the lawyer’s experience or competence.
It’s beneficial to do your own research on who is and isn’t an experienced and reputable lawyer, and select a lawyer of your own choice.
Conclusion: Simply Not Worth the Risk
As you can see, there are many drawbacks to preparing your own legal documents through cookie-cutter style templates.
When you have legal documents properly drafted by an experienced business lawyer, those documents are more likely to protect your business interests, and not jeopardize them, compared to online template agreements.
Disclaimer: Any information published by Patrola Law is not legal advice and is not intended to address the circumstances of any particular individual or entity. Patrola Law recommends seeking professional legal counsel for your unique business situation.
Last updated on July 11th, 2023 at 12:08 pm