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Caveat emptor: Going it alone with online legal document services

There is no substitute for a competent lawyer's advice, or is there?

Since 2000, LegalZoom.com has been transforming the $225 billion legal market, helping small businesses, families and individuals prepare important legal documents online at a fraction of the cost of an attorney.

The company was the brainchild of two UCLA law grads who decided to leave their high-profile jobs to begin their own online business. When lawyer Robert Shapiro, who represented O.J. Simpson in the double murder trial, jumped on board, the service suddenly had a following.

LegalZoom.com Inc. makes the claim that it is the nation's No. 1 online self-help legal document service. The service lets consumers and small business owners take care of common legal matters online without needing a costly attorney. Legal documents available through LegalZoom include: wills, living wills, incorporation, LLC formation, living trusts, powers of attorney, divorces, prenuptial agreements, small claims, trademarks, copyrights and more. Legalzoom.com is not a law firm and does not provide legal advice or counsel, although it offers an online referral service, with an added bonus: Clients may type in a one-paragraph description of the problem, and the company will forward it to a number of lawyers, who essentially bid on the job.

According to LegalZoom, the average American can't afford a lawyer and the self-help legal industry is experiencing a 20 percent annual growth. In March, LegalZoom.com Inc. announced that it secured financing from Polaris Venture Partners, a national venture capital firm with over $3 billion under management.

Although it seems simple enough, legal software and Web sites aren't for everyone. John Timmins, an Escondido-based attorney, suggests that most people should seek the advice of a real live attorney to "ask questions and have someone with experience in the real world."

"It may seem simple to type in some numbers and be done with it," Timmins said. "But when you die, your loved ones might find that there was a mistake and there isn't anyone around who can fix it."

LegalZoom claims to offer straightforward legal services for basic needs, most of which things involve forms that haven't changed in ages, it says. The "clients" type in the necessary information into their computer to complete the forms and LegalZoom charges reasonable fees, plus fees associated with the procedure to file it properly. The company also guarantees a 48-hour delivery and can do it more quickly if necessary.

"There are so many circumstances in which a sensible, practical, reasonably priced solution to a client's problem needn't involve a lawyer, or needn't involve a lawyer for long," said Kerry Daniels, a spokeswoman for LegalZoom. "Why on earth should acknowledging that be so antithetical to so many lawyers? It's silly." LegalZoom recently conducted a national survey measuring the number of people who have prepared a last will and testament. The survey, conducted by InsightExpress and sampled 1,000 individuals with a +/- 3.09 percent margin of error, showed little change from previous results. According to the survey, seven out of 10 Americans, or 70.2 percent, lacked a last will and testament. This number is nearly identical to returns from previous years, showing that Americans remain largely unprotected today. The survey also found that 20 percent of all respondents had not updated their will for half a decade or more. While most respondents noted the importance of having a last will (73.8 percent), they also cited common barriers for not preparing one. Cost and time ranked among the top reasons. The popularity of homemade wills worries some in the legal profession. Estate laws are complicated and vary among states. If someone challenges your will, you won't be around to explain your intentions, said Terry Ferguson, a Rancho Bernardo attorney specializing in estate planning who said she isn't so sure about the online service.

"Mistakes can nullify a will," she said. "In actuality, if any provisions of the will are changed by handwriting, if it's an important part of that document, then it could invalidate the will. While wills carry out your wishes after you pass on, living trusts keep your assets out of a lengthy probate court."

Ferguson said that if you think you'll have to pay estate taxes or need to set up a trust for a disabled family member, you should consult a lawyer.

Tracy Volker of Del Mar used LegalZoom to file for divorce in January.

"It was easy, everything went smoothly and we were both happy not to give what little we had to an attorney," Volker said. "It was like, type it up, send it off, sign it and we were done. I've spent more time in line at the DMV."

Tandra Burke, a La Jolla attorney, said she is very happy with LegalZoom because many of her clients formerly used the online service.

"I've fixed a lot of LegalZoom messes," she said. "They are not a law firm, and the employees of LegalZoom are not acting as your attorney. Basically you are representing yourself in any legal matter you undertake through LegalZoom's legal document service, and everyone knows how well that works out."

To date, more than 400,000 people have used LegalZoom.com to write wills, incorporate a business, file a trademark and take care of other common legal matters, but Burke isn't impressed.

"Those people will eventually need an attorney," she said. "They don't worry me, and my business has actually increased because of their screw-ups. We go to school for a reason."

Reed is a San Diego-based freelance writer.

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