Why Giving Away Free Legal Forms Is Good Business

Not only are there providers that think businesses can take advantage of the LegalZoom model, but some Biglaw players actually see advantages in helping more sophisticated clients tackle higher-level legal work with the help of a model. For free.

The first time I saw Robert Shapiro pop onto my TV screen to hock LegalZoom, I remember thinking the legal form business was going to be a game changer. Every couple with a newborn was going to flock to the online provider to write a simple will without shelling out hundreds of dollars on a paper-pushing lawyer recycling the same document from his or her last 300 clients.

I also figured bar associations would try to shut it down. So looks like I was right on all counts.

Not everything is as simple as a writing a will for twenty-somethings or setting up a power of attorney to put grandma in a home. Businesses have more complex problems and can’t get by with a legal form and a prayer. Or can they? Not only are there providers that think businesses can take advantage of the LegalZoom model, but some Biglaw players actually see advantages in helping more sophisticated clients tackle higher-level legal work with the help of a model. For free.

Daniel Doktori of WilmerHale highlights this trend in a new article over on TechCrunch:

Over the past five years, law firms in Silicon Valley, New York and Boston have put online – for free – the documents that startups need to execute basic legal transactions.

New sites, Cooley GO and WHLaunch, join first-movers Founders’ Workbench and Start-Up Forms Library, to enable entrepreneurs to incorporate their company, secure early-stage financing, hire employees and compensate them with stock options. SeriesSeed.com has emerged as an industry standard for documenting seed investments, and StartupCompanyLawyer.com offers answers to over 100 frequently asked questions, along with a term-sheet generator.

Why give away the milk for free? Because these firms think they just might entice a client to buy the cow. Recognizing that startups need legal work but often balk at paying for it, firms are starting to play with the idea of offering free legal forms to build reputation and demonstrate expertise. Hopefully it converts a struggling company into a prospective client:

Putting legal documents online allows law firms to maximize potential deal flow at minimal cost. “It’s a scalable marketing move,” explains one attorney responsible for one of the popular sites. “If you have a question [about the documents] you’re probably going to contact us.”

Another emphasizes the branding value of the site, saying “It’s not like we’re trying to push our version of a non-disclosure agreement. The site is intended to position ourselves as an A to Z resource for startup companies.”

The sites also convey a message about the scale and quality of the sponsoring law firm: It has the scale to afford giving away the once-“secret sauce” and the quality to bet doing so won’t cannibalize business. That message is founded upon the idea that law is a service, not a product. As one lawyer explained, “what I’m telling you is that my documents are not what makes me special – it’s the advice behind the documents.”

Sponsored

But while some firms are offering documents in hopes of converting startups into clients, other companies are following the LegalZoom path and trying to disrupt the market for startup legal services from outside the firm model.

One company, Shake, provides a mobile platform to access and sign simple legal agreements like freelance consulting contracts, with users downloading native Shake templates or uploading their own. Clerky provides form documents for incorporations, convertible notes and employee agreements along with document-generator and progress-tracking tools. Docracy applies the Git-Hub treatment to legal documents, allowing users to tag and up-vote individual documents. Rocket Lawyer provides subscribers with documents and attendant instructions plus the ability to consult remotely with an actual lawyer.

Whether these companies can effectively drink an established firm’s milkshake is the question at hand. Some lawyers Doktori interviewed remain convinced that the eventual need for a professional’s judgment will bring startups to the firm’s door. Another pointed out that startups are run by some smart cookies easily capable of getting the job done when armed with a form. Perhaps the biggest threat to a law firm is in-house competition:

Startups may take different tacks, too. With more tools available for free, startup companies may recruit legal talent earlier. Typically, startups have waited until hitting a certain threshold of company size or legal costs before hiring an in-house lawyer. With more documents online for free, startups may “hire a really smart person with some experience” earlier and let them maximize the available resources.

It all comes back to in-house competition.

Sponsored

Still, despite challenges from third-parties and in-house lawyers, offering legal forms seems like the best option for firms looking to establish a long-term relationship with a fresh-faced company. The mere existence of this market reaffirms what everyone already knew: startups can’t afford full-priced billable hours. And firms can set up alternative fee arrangements all they want, but unless a startup feels comfortable going to the firm for advice in the first place, they aren’t going to call. Until then, firms have to market themselves by showing the client the quality of work they can provide.

Hopefully they’ll buy the cow.

What It Means When Law Firms And Startups Give Away Legal Documents [TechCrunch]

Earlier: New Survey Of In-House Counsel Provides A Ray Of Sunshine For Law Firms

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