How A $12 Contract Can Cost You $80,000 Or More, An Introduction

How A $12 Contract Can Cost You $80,000 Or More, An Introduction

With the advent of legal document services such as LegalZoom, LegalACE, and Legal Arrow, entrepreneurs like you are under the impression that there are cheap services out there that will take care of all your legal needs—from entity formation to intellectual property registration to “general” contracts—without the need of an attorney.  The catch: If these forms and contracts are not completed correctly the first time, they will be more expensive to fix in the future and may lead to costly litigation.

When I was working as a business and entertainment litigator, I advocated extensively on behalf of shareholders, officers and directors, entities, and professionals in a variety of matters—copyright and trademark law, insurance issues, entertainment law, and business matters.  For these areas of practice, the common denominator is (for the most part)—CONTRACTS—lots and lots of contracts.  Now that I’m a solo practitioner, my entire focus is on making sure that you have the right legal support to help achieve success and live your dream!

Given the number of contracts that I’ve litigated and drafted over the years, I found myself thinking…how can a company like LegalZoom offer a general agreement (the “General Agreement”) that supposedly “can be adapted to suit almost any agreement”?[1]  So, I decided to put LegalZoom to the test: Using the tools that LegalZoom provided for its $12 contract, was I able to recreate a simple service agreement that I had previously drafted for a client using the information and materials LegalZoom gave me?[2]  The simple answer: no.  Not even close.

The inability to recreate my contract means that had my client used LegalZoom as her base, she would have had large holes throughout her contract.  Any litigator could exploit these holes to her detriment.  And you run the same risks!  In order to explore some of these holes, I’ve organized this series of articles according into five basic themes:

  1. Identifying LegalZoom’s $12 building blocks that its customers receive;
  2. Laying out how LegalZoom’s poorly constructed General Agreement affects you;
  3. Explaining your options when it all goes wrong;
  4. Criticizing how LegalZoom cannot get its own contract with its customers right; and,
  5. Clearing up how LegalZoom’s forms will NOT protect you from you.

When addressing these categories, I promise to keep the legalese to a bare minimum and profusely apologize when I do.  But, by the end of this article, I will feel accomplished if you are able to weigh the pros and cons of a service like LegalZoom and decide if a $12 General Agreement is really worth it to you.

~ Up Next: How A $12 Contract Can Cost You $80,000 Or More, Part 1 ~


[1] LegalZoom Legal Forms Glossary, at http://www.legalzoom.com/legalforms-glossary/general-agreement.html.

[2] This series of articles is based upon information I obtained from LegalZoom on May 10, 2012.  If LegalZoom modified the General Agreement after this date, that material is not being reviewed in this article.

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