Startups · Entrepreneurship

What has been your experience using LegalZoom?

Satvinder Singh Web and Graphic Designer at Designer ios

October 1st, 2016

I am looking at using their site for some simple contracts for a startup project at a very early stage. Should I use LegalZoom or should I just go directly with a law firm? Anyone with experience using this service? Thanks!
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Tobin Trevarthen Chief Narrative Officer, Spark

October 1st, 2016

I have launched two LLC's with Legal Zoom.  Simple. Easy. 

John Currie ITERATE Ventures - Accelerating Science & Technology Ventures www.iterateventures.com

October 2nd, 2016

I was shocked and amazed how simple and easy the process was. I used it 6 years ago to set up a C-Corp.

Brett (and others) make great points as it is always ideal to work with a lawyer. And many lawyers will warn you of how complex it is.

It's not rocket science if you are a true entrepreneur. There's plenty of material to research whether you do LLC, S-Corp. C-Corp.? LegalZoom's online I/F  asks you all the questions your lawyer would about your structure - which is the input for the Operating Agreement, Equity Agreement, and Articles of Inc.  A package of straightforward documents arrive which contains the legal language, and they are easy to understand and you can then change those in your Board Meetings.

btw - there are several new services that I've heard are just as good as LegalZoom.  I recommend this DIY route for pre-revenue co.'s who have a long runway to revenue.  they ahv a lot more to worry about than legal fees.

Ashley Titus Founder at RAGS Solutions

October 1st, 2016

I have done both a trademark and provisional patent using Legal Zoom. All went to plan.

Arthur Lipper Chairman of British Far East Holdings Ltd.

October 1st, 2016

The degree of value versus risk in using legal templates depends entirely on the user’s experience. The greater the experience the better the value of templates.

Brett Cenkus Owner at Cenkus Law

October 2nd, 2016

If it's just you (you're a solo founder) and you don't have the money or see the value yet in establishing a relationship with an attorney that can give you real advice (more than just filling in form documents), LegalZoom and Clerky (my preference) are great for forming a company. Simple and inexpensive. 

They are also great for certain contracts that are little more than fill-in-the-blanks in most contexts, e.g., a non-disclosure agreement. They may be fine for trademark applications, as well, if the mark is very unique. 

Have I seen founders mess certain things up by going the DIY route? Yes. Is that likely? Not in these contexts, IMO. And, BTW, I have seen lawyers mess these things up, too. So, don't give in to fear mongering when it comes to making a decision here.

Where the DIY services don't get the job done is with true founder agreements (e.g., an LLC Operating Agreement, a Shareholders Agreement). The only way to properly get that job done is with a lot of discussion and, almost always, custom contract drafting. You can use off-the-shelf solutions here, although, having done this many, many times with founders, they usually don't want the off-the-shelf solution when we actually talk through what those documents say. We may modify the buy-sell provisions, the vesting schedules (the standard Silicon Valley vesting schedules that you will see in the market often don't work for founders -- they make it extremely tough to part ways with a dead weight founder) or the way you make decisions as a team. It's very rare I cut and paste documents like this and, in case it isn't abundantly clear, LegalZoom is basically a cut and paste exercise. The contract template systems have limited Q&A and aren't built for anything that doesn't neatly fit into a certain box. Again, they can absolutely work for Certificates of Formation/Articles of Incorporation and NDAs -- very simple documents. 

The same goes for form customer contracts -- those usually require custom drafting that LegalZoom isn't built to provide. Of course, you can use an off-the-shelf template for these documents, as well, and if your budget doesn't allow for a real attorney, it's almost certainly better than nothing. 

At some point, you want to invest a few dollars in a strong business attorney who can create documents that are custom for your company and your cofounders in the contexts where it matters most. And, you ought to ultimately find value in your attorney as someone who can talk intelligently with about other documents you might consider (or that you can do without), legal risks generally and navigating all the legal and business issues that are in front of you, including raising capital and scaling an operation. They ought to be willing to tell you when you need them and when you don't.

If you are interested in a different take on why you even go through the process of creating a "strong" (well-vetted) founders agreement, you may enjoy this article I wrote - http://cenkus.com/business-contracts-for-business-relationships/.

Davida Shensky We help small to medium size companies put together a strategy for success and hold you accountable to follow through

October 2nd, 2016

I found it real easy to use andaffordable

Michael Burack

October 2nd, 2016

I have a pre rev startup and need to incorporate asap....I also want to sell stock to friends and potential collaborators who I have been cultivating over the last year...I need cash now for the next year and am not greedy about stock ownership,,,What online legal service would be best for a pre-organization stock subscription agreement and what are the laws regulating this practice that I have used many decade ago...

Anurag Verma Senior Associate at Allens

October 1st, 2016

Satvinder get in touch with me directly if you'd like someone to help draft legal contracts or review existing ones. 

Arthur Lipper Chairman of British Far East Holdings Ltd.

October 2nd, 2016

You should consider selling a royalty as betting on revenues as opposed to profits is an easier way of attracting investors. See Royalties.Website

Vivienne Lee Founder at YouMeWho

October 2nd, 2016

Satvinder, if your startup gets to a stage where you'll need to incorporate, I've heard really great things about clerky.com. It's a YC startup and I heard a lot of startups use them for beginning legal work. They were even recommended to a founder friend by a Wilson Sonsini lawyer (my friend ended up going that route and used the referring lawyer for more complicated legal work later on). I plan to use clerky really soon myself. Happy to let you know how things go.