WHY YOU SHOULD AVOID LEGAL FORM AND LEGAL SERVICE PROVIDERS
YOU ARE PROBABLY ASKING FOR HEADACHES OR PROBLEMS DOWN THE ROAD
Why Commoditized Legal Services Are A Bad Idea
We could go on all day about why commoditized legal form and legal service providers like LegalZoom don't make sense for anyone - let alone someone starting a business. Sure it sounds great at a high level - do-it-yourself and low fees. What could be wrong with that? Unfortunately it's like the old axiom says - you get what you pay for. In reality even sophisticated individuals can run into issues trying to file thier own legal work. The biggest problem is that most of the time business owners and entrepreneurs don't realize there's a problem until it's too late.
We've had many clients come in after realizing they were in over their head. Just two examples that can serve as reminders of why planning ahead and using the right team can make a big difference.
Example 1 - One client applied for trademark through a standard DIY trademark application website. They filled out the form paid the fee and clicked submit. When office actions and correspondence from the USPTO started rolling in they went back to the service provider for help. Of course the provider wanted to charge more for the work and refer it out even though some of the problems were basic upfront matters that any lawyer would've handled as routine matter. The biggest problem - the client not only was applying for a trademark over an already protected name, they'd spent tens of thousands of dollars on branding and products thinking that after they submitted the application they'd be good to go. So not only were they going to lose tens of thousands of dollars they were actually opening themselves up to potential liability at multiples of that based on the fact that they had already started using the brand and likely infringing the other parties trademark. Of course the service provider buries everything in the fine print and the client was left holding the bag. Amplify was able to step in and make the best of a bad situation but all of that could've been avoided for not much more than the original fee by just going to Amplify or another legal advisor from the get-go.
Example 2 - Another client set up an entity with a commoditized legal service provider and paid for a flat fee for basic incorporation. The problem was that a basic incorporation didn't nearly give the client the structure necessary or appropriate for its business. Founders ran into significant tax issues, core intellectual property of the company was not protected, there were competing claims to ownership and equity distribution in many issues that flowed from these. These are all matters it would be handled easily and upfront by talking a strategic startup advisor like Amplify from the beginning.
Many Potential Problems
There are so many potential problems with not getting sophisticated advisors on board early. It's just not worth the time or trouble to do things yourself. If you don't have an extra $1000 or $2000 (or whatever your baseline need is) to engage an experienced attorney to help you with legal matters, it's wise to think twice about whether you should go into business and have the ability to bootstrap a company. The reality is any business will incur substantial costs and these are relatively minor compared to other costs of doing business and yet are almost as critical as any core product or service issue that you run into when starting a company or growing it.
While this advice may sound self-serving it can be backed up by client upon client who comes to us thanking us for helping them deal with their problems and wishing it found us from the start. If you are here consider yourself lucky that you have always been exposed to some of the potential issues and can make an informed decision!