Why LegalZoom? Three reasons:

1. Cost
2. Convenience
3. Risk

I’ve posted before about the issue of cost and convenience in using online legal form services (here and here), but I’ve not yet mentioned risk as a factor in why a consumer makes a decision about what legal (or non-legal) service to use. My dad, a well-educated retired college professor, summed it up this way: “No one in the family is going to raise a stink.” Which is true. I couldn’t imagine anyone in my family challenging his Will, fighting over assets, or bickering about how dad wants to distribute those assets. It’s just not our style.

He saw himself as an older model Ford F150 with a basic engine and some pretty basic needs. Whether it is true or not, he did not see himself as a more complicated car with a fuel-injected engine and electronic stabilization control.Sure, the attorney in you is thinking “But, . . .” and coming up with all the scenarios that challenge my (and my dad’s) ideal of a functional family. And I acknowledge that any number of things can happen to divide our family or my siblings, now or in the future. But, here’s the deal: in considering what to do and who to hire for drafting a Will, my dad considered the possibilities and, for whatever reason, discounted the risk associated with an online non-lawyer form service. He went with a low-cost non-legal service because, despite the risk that it wasn’t likely as good as a Will from an attorney, he felt it was “good enough.”

I think of risk this way: I used to own a rusty Ford F150, which I loved. When I took it into the mechanic after it broke down, I asked the mechanic to look at it and let me know what I have to do. I knew I had a good mechanic when he would tell me three things: 1) what was immediately wrong with the truck; and 2) what risks I had of it breaking down if I only fixed some of what was wrong; and 3) whether it was worth it to fix everything or just fix what was immediately wrong to make it functional again.  I then made an informed decision, one influenced by risk and by my cash flow at the time. If I opted to do the minimum and fix only what was immediately a problem, I made my decision knowing that  I took the risk of it breaking down or even becoming worthless if one of the unaddressed problems suddenly became the problem. If I wanted to try to assure that my truck kept going another 100,000 miles, I could spend a lot more money and have all of the problems fixed. But I rarely did that. It wasn’t worth it.

My dad did roughly the same thing. He looked at what he perceived to be the cost for hiring an attorney who would look at the entirety of his situation and provide a comprehensive approach to his estate plan. Or he could realistically “take a chance” and assume that a LegalZoom Will was “good enough.” He knew that a LegalZoom Will, like the Ford F150, could break down and could possibly cause problems for his family later if it did not take into account certain scenarios or if it got the distribution of assets wrong. But he took that into consideration, used his personal knowledge of his assets and the context of his own family, and made the choice to go with what many believe is a riskier solution. Why? Cost, convenience, and because he perceived it to be good enough. He saw himself as an older model Ford F150 with a basic engine and some pretty basic needs. Whether it is true or not, he did not see himself as a more complicated car with a fuel-injected engine and electronic stabilization control.  (Or, as Andrea pointed out to me in our discussions here in the office, he also wasn’t a Ford F150 who wanted to change into a convertible and leave his worldly goods to the family cat, something the LegalZooms of the world are not well-situated to address).

I’m not saying that my dad made the right decision or that it’s right for people to go LegalZoom and discount the value of an attorney– I’m just saying that consumers less and less frequently recognize the value of hiring an attorney to consider a comprehensive and more complicated solution, but at a potentially greater cost. It’s part perception, part reality. A common perception, whether right or wrong, is that attorneys complicate things. And it’s reality because, well, attorneys do complicate things. Or, more accurately, attorneys outline potential complications so that clients can make well-informed decisions. Can attorneys go overboard? Yes, and that’s the challenge. How do you convince a consumer that what you offer is better because it has the added value of an attorney’s involvement? How do you get across to me that, even though I just want to fix the steering column on my Ford F150, I actually need to look at all the interrelated parts of an engine that stand a good chance of breaking down tomorrow?

Update on my own quest for a Will. My wife and I have retained an attorney to draft estate planning documents and have met with that attorney already to begin the process. I’ll get more details out as I can, though I do want to respect the attorney’s work product and any concerns about confidentiality and privacy. Suffice it to say, though, that two Wills (one for me, one for my wife) along with appropriate powers of attorney and health care directives will cost us $500, which includes a slight discount for the attorney’s “friend or family” rate (a nice touch, I might add).

© Gregory Luce for Practice Blawg, 2010. | Permalink | No comments yet | Add to del.icio.us
Post tags: LegalZoom, Risk

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• Class Claims LegalZoom Is Unfair & Misleading (Courthouse News Service)
• LegalZoom Class Action Lawsuit (Wills, Trusts & Estates Prof Blawg)
• LegalZoom Class Action Lawsuit (Elia Ellexson) and LegalZoom Responds

At practicelaw we’re debating the likelihood they will win (and we’ve also been hotly debating the merits and demerits of the service, with a point-counterpoint post coming soon). But LegalZoom has been sued before. Is anything different this time?

• They are being sued by the executor of an estate  in California who claims there were problems with the will and trust, and is primarily claiming unfair and deceptive business practices.
• Other class action lawsuits against LegalZoom focus on the unauthorized practice of law.

On the UPL side, they are a big company that has no doubt spent lots of time and money thinking about the UPL issue.  Plus, a UPL claim sort of feels like lawyers trying to control their market.  But allegations of unfair and deceptive business practices might hold more weight, especially in an economy where we are increasingly trying to protect consumer rights.

What do you think of the merits of the suit? Or about how LegalZoom changes our businesses? We know Greg’s position that LegalZoom might be good for a market under-served by attorneys.  As the estate planning attorney in the group, I’ll admit that it’s probably good for people who truly can’t afford attorneys, but I would guess that this isn’t most of their market. (In fact, if you add up Legal Zoom’s Premium services for the standard set of estate planning documents, I know many attorneys who charge about the same, if not less.)

Rather, I see three main takeaway points from this discussion: 1) Estate planning attorneys do a bad job of marketing to people who are used to buying things online, have busy schedules, and think attorneys are all really expensive (or just can’t figure out how much we cost). We can’t compete on price, but we can compete on value. 2) LegalZoom’s “customer satisfaction” is really just a false sense of security in documents that the client don’t really understand (and have no way of testing until they die). Many may turn out fine, but they are taking a risk — and might not appreciate how big of a risk it is — just with a slight changes in circumstances. 3) Even people who might be well-served by a LegalZoom document might not pick the appropriate documents or the best options within them (e.g., making a will but no power of attorney or health care directive; making a will but no trust or other provisions for minor children besides naming a guardian).

We’ve had many interesting discussions in the office on this topic, and Greg and I will post a Point/Counterpoint discussion as part of this series.

I doubt we can truly solve this debate without surveying the people who purchase on LegalZoom, finding out why they did or didn’t hire an attorney, and seeing how many more DIY wills and trusts end up in litigation.

If you’re also grappling with this issue, consider this food for thought:

• To Win the Hearts and Minds of Consumers, Lawyers Need to Sell, Not Sue (MyShingle) (discussing the unauthorized practice of law class action lawsuit)
• LegalZoom Sued, Is Legal Zoom My Competitor? and 3 Things Attorneys Can Learn from LegalZoom (Oregon Estate Planning Blog)
• Suit Claims LegalZoom’s Document Prep Is Unauthorized Practice of Law (ABA Journal).  This article is about the UPL suit, but if you’re interested in this topic I highly encourage you to skim through the comments.  The discussion we’ve been having at practicelaw hits many of the same issues.
• The Dangers of Do It Yourself: A Cautionary Tale (Massachusetts Estate Planning and Elder Law blog)
• In a U.S. News and World Report Article, Kimberly Palmer Writes about Dangers of DIY Estate Planning (Future of the Federal Estate Tax blog)
• LegalZoom and the Dangers of DIY Estate Planning (Future of the Federal Estate Tax blog)

© Andrea for Practice Blawg, 2010. | Permalink | 4 comments | Add to del.icio.us
Post tags: LegalZoom

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• Asked me for the name of an attorney;
• Sent an e-mail around to colleagues at her work for the name of an attorney;
• Do nothing else and give up.

As you can tell, she’s not exactly excited about the prospect of finding and hiring an attorney. I asked her about the option to pay for a Will online, without the need to find an attorney, and she enthusiastically agreed it was a better deal and Given I could get a Will for less than $100 or pay five times that amount, LegalZoom makes a compelling case for its services.easier to complete. She stated flatly that she’d rather do that instead of look for an attorney. It’s a hassle to find an attorney, she said, adding that there are also issues of trust in hiring someone you do not know and that convenient and “anonymous” nature of the online process made it more appealing. She’s also not convinced we need a Will and also thinks that, given the options of either 1) purchasing one online or 2) taking the time to make an appointment, meet with an attorney, and follow through with possible additional appointments with the attorney, she’d take the online option any day. Who wants the hassle of taking time off from work or making multiple appointments?

I also have to admit that I’m a bit nervous about cost. Our online Will, though certainly far from perfect, was $79.00. In making informal inquiries myself, I’ve heard of costs from around $500 to “thousands” for an estate plan, and these costs are greater because most attorneys do more than just “draft a Will.” But it’s the unspecified cost and the potential unknown “upsell” that may scare a lot of people away from considering an attorney. Given I could get a Will for less than $100 or potentially pay five times that amount for a broader (and, admittedly, more refined product), LegalZoom makes a compelling case for its services. Combined with the inability to get a fairly quick and solid answer online from nearly any attorney about cost, LegalZoom’s specific and quickly available fixed cost is also compelling. I know within five minutes a simple Will costs $79.00 and any other “upsold” products cost $35 to $100 or more. Getting the answer of “depends” from an attorney about cost is not terribly responsive to those consumers concerned with, well, cost.

What’s the lesson so far? To me, the LegalZooms of the world are the innovators, filling a specific and growing market niche, or as LegalZoom’s counsel indicated in a letter to me: “LegalZoom provides this service within the financial reach of many individuals who could otherwise not afford to hire an attorney, or who would prefer to spend limited income elsewhere.” Attorneys watching LegalZoom and others can certainly lament the fact that they may be losing some business to non-lawyer online services, but I’m not so sure that business was coming your way in the first place. But maybe it should. Ultimately, what can an attorney do to compete with LegalZoom or LawDepot, or attract more clients that otherwise do not consider hiring an attorney?

The questions are about cost and efficiency, from both the consumer and attorney’s perspective.  A consumer wants the cost upfront, or at least a package of  costs from which to choose.  A transactional process such as estate planning also needs to be easily identified and understood, as in “I pay this, you do that, and it will take this long.” For an attorney, technology is critical to bring down the cost and time to handle a matter, whether that technology involves document assembly, online appointments, or the delivery of services electronically. It will also involve innovation in the delivery of services on an a la carte basis, allowing the consumer to choose from a wide range of services, with the obvious option for the attorney to offer premium services beyond the basics of drafting a Will. In other words, despite the gnashing of teeth about LegalZoom, we actually need to be more like LegalZoom to attract clients.

All that said, we’re still looking for an attorney. It’s a slow road, but I hope to have another update soon.

© Gregory Luce for Practice Blawg, 2010. | Permalink | 4 comments | Add to del.icio.us
Post tags: LegalZoom, Will

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• A thirteen-page booklet entitled “Guide to Your Last Will and Testament,” with information about self-executing Wills, debts, probate, changing a Will, Living Trusts, amending and revoking a Will, estate taxes, credit shelter trusts, and a toll-free phone number to call if I have additional questions;
• A nine-page “Property Worksheet” that allows me to list all of my property in one place and also list information about my family and beneficiaries;
• One-page instructional sheets entitled “Notarizing Your Documents,” “Executor’s Guide” and “Guardian’s Guide”;
• A brochure with a listing of additional services LegalZoom can provide (what some folks would call the “upsell” or “suggestive sale” of its products).

The issues that online legal document services raise are more complicated than at first glance, with issues concerning the unauthorized practice of law, the unmet legal needs of the public, overall perceptions of the legal profession, and efficiencies required to compete with so-called non-legal specialists such as LegalZoom.I’m not an estate planning attorney nor do I play one on the web. From my limited point of view, however, the Will does what it should and does what I think I need: 1) it provides for an orderly process of distributing my assets upon my death; and 2) it designates a guardian for my children. It also provides a “guardian” for my pet, which I joked about in my prior post, but in retrospect the simple clause really just provides direction to my wife to take care of Smokey (or any other pet I have) after I die. As you will also see, it creates both a testamentary trust for my kids if my wife predeceases me and also provides for a credit shelter trust if Nancy (my wife) wishes to “disclaim” any estate property and place it into trust. I don’t much about testamentary or credit shelter trusts, so if you see an issue here with those, I’d like to hear from you.

Here’s my Will for your review.  Update: LegalZoom’s counsel has requested that I remove the link to the full copy of my will, citing LegalZoom’s online terms of use. I have removed the link temporarily as I review and consider the request.

One change I need to make is simply adding my younger son to a testamentary trust, as the online session was confusing as to who should be the beneficiary under that trust. Right now, if my wife predeceased me, my older son’s portion of any inheritance would be held in trust until he reaches age 25, but my younger son’s portion would not. That’s obviously a mistake that I made, but a mistake that was allowed by a limited online question and answer process. Under the package I purchased from LegalZoom, however, I can make changes in the Will for up to three months.

What’s next? A few things:

• I’ll make the change to the LegalZoom Will to include my other son as part of a testamentary trust, and report back how easy or hard it was to do and how quickly I then get a revised draft;
• I’m asking for feedback from you on the Will I’ve posted here. Tear into it, take it apart, point out what may be problematic;
• If I can drag my wife into this even further, I’m going to ask her (a non-lawyer) to find a lawyer for us to hire and complete a Will.  I think that’s only fair for this experiment, as one of the major issues potential clients face is who to choose for an attorney and how to determine what an attorney-drafted Will or estate plan would cost. I’m not a good choice to find the attorney, as I know lots of talented estate planning attorneys out there, including practicelaw’s own Andrea Hable. I’ve already received offers to do my Will for free, which is nice, but is not the focus of this experiment. Rather, I’m hoping to explore with my wife how easy or hard it is to find an attorney and whether the service and product we ultimately receive is markedly different than that of online legal document services, such as LegalZoom.

A quick note on this post and the overall series. So far, I’ve refrained from making final conclusions about the process, as I remain skeptical, curious, and initially impressed. As Carolyn Elefant outlined recently on MyShingle, the issues that online legal document services raise are more complicated than at first glance, with issues concerning the unauthorized practice of law, unmet legal needs of the public, overall perceptions of the legal profession, and efficiencies required to compete with these non-legal specialists. I’m not forgetting those issues and will return to them once this experiment is further down the road. In other words, my honest initial impression of LegalZoom may be misplaced. Or perhaps even lawyers have a thing or two to learn about delivering services along the lines of LegalZoom. We’ll see.

© Gregory Luce for Practice Blawg, 2010. | Permalink | 12 comments | Add to del.icio.us
Post tags: Drafting, LegalZoom, Unauthorized Practice of Law

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The video is somewhat lengthy (18 minutes), but I find it interesting and at times fascinating, not so much for what it does but for what it does not do – advise me on my choices (other than to highlight, for example, that 85% of respondents on other LegalZoom Wills answered a question a certain way).

(...)
Read the rest of Purchasing A $69.00 Will (341 words)

© Gregory Luce for Practice Blawg, 2010. | Permalink | One comment | Add to del.icio.us
Post tags: Do It Yourself, Drafting, LegalZoom, Pro Se

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