Is Your Legal Foundation Like Microwave Pizza?
A colleague of mine once wrote a blog post that really resonated with me. Melissa Cassera asked if your PR efforts were like microwave pizza.
In her own words:
“Ok, sometimes microwave pizza can be mildly satisfying. But, more often than not, it tastes like a hot pile of garbage.
So what does microwave pizza have going for it? Well, it's cheap. It's quick. It's easy.
These three words echo the PR efforts of many entrepreneurs. What is the cheapest, quickest, and easiest way we can promote our businesses?
But, the problem with microwaving PR is that it loses its quality.”
Boy, that is exactly the problem I see when entrepreneurs seek legal help for their business.
What do I mean?
Okay, it is time for some tough love, my friends: I suspect that many of you reading this look for quick and dirt cheap when it comes to legal help. And I also suspect that if you can get it for free (like “borrowing” a template from someone else or “picking” a lawyer’s brain during lunch or via email), all the better. So many entrepreneurs seem convinced that good legal guidance or a solid contract is a fungible commodity and if you have seen one contract, you have seen them all.
What do I mean by "fungible"? It means that the contract (or trademark, or legal advice, etc...) would be exactly the same quality no matter where you got it. That is would apply equally to your business, even if not created for your specific business. In essence, it is the idea that the value of the legal work you get is equivalent to the time spent on it and nothing more, so even a monkey could do the work and you would get the same level of protection.
I assure you that good legal work is not fungible and is not a commodity. An experienced and excellent attorney's brain and years of experience are irreplaceable when you are building a business. Treating what they do as something that has the same value as contract templates or dirt-cheap sites like Legal Zoom is flat wrong. And allowing yourself to believe that it is puts your business in harm's way.
What kind of harm's way? The kind of harm that results in lawsuits, tens of thousands of dollars in legal fees, a lost trademark or company name, or even dissolution or bankruptcy.
I’m not being dramatic. As a business litigator since 1995, I assure you that disastrous results are common from poorly crafted contracts (or not having one at all), not having a proper legal entity set up, or not having a trademark properly secured (among other things).
Of course, dirt-cheap sites like Legal Zoom would like to convince you that you don’t need specific legal guidance (don’t be fooled – they are in the business of making money, so since they are a party that stands to gain from you kicking lawyers to the curb, you can be sure their focus is grabbing as much market share as possible). How do they convince you that good legal help isn't necessary?
· They use testimonials from customers who have “peace of mind.”
· They have an active Twitter feed showing happy customers who just got a template or applied for a trademark. In fact, they claim to have a 100% Satisfaction Guarantee, but if you read the fine print, it says:
"Please note that we cannot guarantee the results or outcome of your particular procedure. For instance, the government may reject a trademark application for legal reasons beyond the scope of LegalZoom's service. In some cases, a government backlog can lead to long delays before your process is complete. Problems like these are beyond our control and are not covered by this guarantee.
Since we're dedicating time and effort to your legal document preparation, our guarantee only covers satisfaction issues caused by LegalZoom - not changes to your situation or your state of mind."
· They state that their document preparation services are not a substitute for the advice of an attorney, but everything on their site is designed to convince you that you don’t need the advice of an attorney.
· In fact, they state, ”[o]ur documents have been accepted by courts and government agencies in all 50 states.” Do you even know what that means?
· A quick google of “legal zoom problems” will show you plenty of examples of cases where templates like those sold on Legal Zoom failed to protect their customers in court. So when they say “accepted by courts and government agencies,” I can only assume it means that the were received by them or were part of a lawsuit. Accepted does NOT mean "approved."
· And have you read their disclaimer? If not, I would.
I assure you that the protection of your business and assets is NOT a priority to sites like that (Legal Zoom is merely an example, but there are other sites just as guilty of these things).
And please understand, none of the template sites or $150 trademark sites are actually giving you legal assistance or guidance at all. They are blessing you with the privilege of paying them to do what you could do yourself: merely fill out the forms to form an LLC or set up a trademark. You are paying for an automated scribe. Nothing more. In other words, you might as well set fire to that $150 - because you are literally getting no value for it beyond what you could do for yourself.
Since they don’t give you any guidance, they just fill in the forms the way you tell them to, and they don’t tell you if you are doing it right. In fact, they can’t. But they are happy to take your money and assure you that it is being done by a company with dozens of years of “legal experience.” And they have a multi-million dollar PR machine convincing you that you shouldn’t have to pay more than $20 for a good contract or $150 to get an LLC set up.
This makes any experienced business attorney shutter. Not because it is competition, but because it is irresponsible.
In fact, I just read an article once about a lawsuit between Legal Zoom and the State of North Carolina (the state is claiming that they are engaging in the unauthorized practice of law). To defend itself and make it clear that it in fact is NOT giving any advice or guidance to customers, a spokesperson for the company said that “the company does not prepare legal documents but offers an automated process allowing customers to choose to create the documents. If two customers completed an online questionnaire using the same answers and the same form, they would generate identical documents.” http://lincolntribune.com/?p=23445
But hey, you too can have this one-size-fits-all result for the cheap, flat-rate of $19.99.
But why is this okay for your business?
Look, if you are taking the time to build a business – the time, money, lost sleep, stress, grey hair – why in the world would you risk the viability or longevity of that endeavor by not getting an excellent, solid legal foundation?
I’ve seen many entrepreneurs spend $10,000-25,000 a year on business coaching, but balk at paying $2500 for a trademark by an experienced trademark attorney.
I’ve seen many, many entrepreneurs not bat an eye at paying to travel to a live event for women entrepreneurs, incurring the plane fare, hotel, food, transportation charges, as well as the cost of the event….to the tune of $2000-4000 on average. And yet, they refuse to pay $1000 to an experienced business lawyer to get their legal entity set up the right way and have an Operating Agreement that protects them.
I bet many of you reading this have happily spent $2500-5000 on a website design for your business, but you likely haven’t paid even a fraction of that for an attorney to do what is necessary to protect the business that is housed on that website.
If you want your business to be the real deal, you don’t have the luxury of skipping the step of getting your legal foundation in order by an attorney. It is time to shift your priorities for 2017. You may not love lawyers, but what a good one can do for your business is priceless.
And aren’t you and your business worth it?
I know the answer to that is a resounding YES.
If you are ready to walk, talk and live like a real CEO, reach out to me and set up a free consultation call. It will be the best thing you can ever do for your brand, business and bank account.