In 2013, a survey of small business owners by marketing research firm DecisionAnalyst revealed that nearly 60% of all small businesses had experienced a significant legal event in the last two years. Sites like LegalZoom and Rocket Lawyer make addressing some of these needs as easy as browsing the Internet, while others require the expert advice of a licensed attorney.
But how can a business owner know in advance which legal needs are “significant” and which aren’t? Short of the insight from a crystal ball, business owners don’t always foresee when complex issues between themselves and a customer, employee, or vendor will arise. For 22% of businesses surveyed, debt collection was their biggest need; contract and document review also ranked high with 20% of respondents, with contractor and supplier disputes third at 10%. Other needs exposed by the survey were Internet security breaches, employee theft or confidentiality issues, and protection against liability.1 If you’re turning to the Internet to address these or any other legal issues, review this list of dos-and-don’ts before deciding that online legal resources will be sufficient for your business’s needs.
Do: Read Contract and Document Templates Online
Of those business owners who told DecisionAnalyst they’d experienced a significant legal event in the last two years, 60% said they didn’t hire an attorney because they believed they could handle the issue better on their own.2 When it comes to something as straightforward as an employment contract or power of attorney, that may even be true. But remember: The more complicated the agreement, the greater the margin for error. If you’re considering downloading an employment or vendor contract from the Internet, look over multiple versions to see how they vary and get a sense of what yours needs to include.
Don’t: Assume Templates Alone Will Do the Job
A quick Google search will reveal the stories of many individuals and business owners who have used online templates for contracts or documents only to find that critical nuances have gone unaddressed. These one-size-fits-all agreements might omit essential clauses about liability, or the non-compete clause for your employees might be too broad and therefore unenforceable when you need it.3 Even when you find a template that seems to fit the bill, paying an attorney for a few hours of work to look over it will mean you can use it confidently for years to come.
Do: Set a Budget
When your parents told you they wanted you to be a lawyer, it’s because they knew that all the hard work can bring in big money. The cost of legal help can be a barrier to small business owners who need it. Three million small business owners have cited cost as the main reason they don’t immediately turn to a lawyer when they need advice.4
Whether you’re planning to seek help in person or online, it’s important to know the maximum amount you’re willing to spend to resolve an issue.
Even online resources have options to pay for lawyers to review documents or perform other services. One-fifth of business owners with fewer than 250 employees spend more than $10,000 a year on legal help,5 but when that cost is protecting you from serious issues of liability, employee breach of confidentiality, or tax issues, it’s probably worth it.
Don’t: Pay for Things That Are Free
Some sites charge users for documents that can be found for free elsewhere, specifically forms required to set up an LLC, S-Corp, or other business entity. They may offer other resources in addition to these documents—one popular service charges $359 for an LLC Formation Package, which includes a 30-day free trial of on-demand attorney advice and expedited turnaround times for inquiries. Power of attorney forms are another common legal document that states often standardize, meaning if you file anything other than the state-approved form with a court, it may not be admissible.6
Do: Assess Your Needs
Is the situation driving you to seek legal help a quick fix, or one that will be ongoing? Do you have time to do the research needed to ensure your action is the right one under the law? If it isn’t, will you be prepared to react? The answers to these questions might reveal a need for ongoing legal service. That doesn’t mean you must hire a local lawyer—many online legal help sites offer monthly subscription plans that guarantee members access to legal advice. You schedule a phone call with an attorney who knows your state’s laws. However, before committing to an online legal consultation, make sure you’re comfortable working with someone remote and sharing your information with them. If you aren’t, or if you think your legal issue is complex and might take a long time to conclude, you may prefer a physical person you can talk through the finer details with.
Don’t: Let Online Sites File Court Documents
One critical rule business owners should follow is filing all court documents themselves, or through a local attorney. Sure, we all love e-filing our personal taxes, but when it comes to a lawsuit, it’s better to be safe than sorry. Tax filing websites often agree to take responsibility if they make a mistake, but online legal help sites often don’t.
Online legal company revenues have doubled since 2006 and continue to grow.7 When basic legal advice or agreements are needed, they can provide a great starting place for small business owners. However, just as your business is unique, so are your needs, from contracts to copyright. Don’t sell yourself short today to save money just to find it costs more in the long run. Ultimately, if you suspect you need a lawyer’s help, you probably do.