Category Archives: Seeking Free Advice

Why Online Business Documents Could Be The Choice That Destroys Your Company

There are a number of do-it-yourself online legal document services that have popped up over the past few years.  The appeal is obvious – they are cheap.  Most folks who start or run a business know they need governing documents, contracts, and a number of other legal documents.  Lawyers are expensive and these document services have popped up to compete purely on price.  They offer the “same” documents as experienced lawyers for much cheaper prices.  Right?

So is it possible to avoid spending the money on an attorney and use one of these cheap online legal document services? Sure, but you get what you pay for.  While you might save a little money now you may very well end up destroying your company in the future.  You should understand that the services aren’t the same.  The value isn’t the same.  As you will see below, there is a reason an attorney’s services are more expensive.

So why is it that these online document services have been relatively successful?  The answer is that these online legal document services have successfully positioned themselves in such a way that their customers don’t realize what they are and are not buying.   Its just like a long cell phone contract in that business owners are not reading the fine print, at least, not until a problem arises.  That’s when they get bit in the ass.  Or perhaps they just don’t care.

I would bet that most of their customers think they are buying legal advice on drafting a proper legal document that meets their needs, achieves their objectives, and contains all of the legally required information for their situation.  But that isn’t what they get.

Let’s take a look at some of the typical Terms of Use for these services and you will see what I mean.  These are not actual quotes but if you look at the Terms of Use for any of these services you will find something similar to the following buried in there.

The Service provides a general understanding of the law and online legal document drafting software to individuals who choose to prepare their own legal documents.  These are self-help fill in the blank forms based on the information you provide.

Key thing to note here:  they provide forms and a general understanding of the law and you prepare a document for your specific situation using their forms.  Why are these services limited? Because….

The service does not review your answers for legal sufficiency, draw legal conclusions, provide legal advice, provide opinions or recommendations about your legal rights, provide counsel about your legal options, provide advice on the selection of forms, or apply the law to the facts of your particular situation.

Why not? Because it would be illegal for them to do so.  It’s called the unauthorized practice of law and you can read the statute here.

But more importantly, this single statement tells you all you need to know about what you don’t get: legal advice; assurance you are creating the appropriate document for your needs; assurance the document is legally sufficient; assurance the document is legally enforceable; advice on whether or not it is the best alternative for your situation; or any legal advice whatsoever for your specific situation.

In fact you could prepare a legally insufficient document using their services, the service could know it, but the service could not warn you about it.  That would be illegal.  So they don’t.

Each form document and any applicable instructions or guidance is not customized to your particular needs.

Once again, because that would be illegal.  But more importantly, that document isn’t drafted for your business or your needs.  Other than the information you fill in, it’s drafted with the same terms as every other person or business who used that form.  If that doesn’t make you nervous, maybe this will.

The legal information contained on this website and in the form documents is not guaranteed to be correct, complete or up-to-date.

You aren’t getting legal advice.  And even better, the information and forms you do get may or may not be correct.  They may or may not be complete.  And they may or may not be up-to-date.  But go ahead, give them your money.

Now it’s too late.  You didn’t pay attention to these terms.  You used their services and just realized the documents you received are worthless.  Now you are facing liability to the tune of tens or hundreds of thousands of dollars.  Don’t worry, there is a quote for that too:

Any liability on the part of the service will be limited to the amount paid for the products and/or services.

So your recourse may be limited to the amount you paid for those online fill-in-the blank documents.  I know they are cheap, but perhaps you should just save that cash and draft something from scratch yourself.  You’ll have the same guarantees.  Or perhaps you should rely on another section of the Terms of Use which provides:

If you need legal advice for your specific problem, you should consult a licensed attorney in your area.

In sum, here is what you receive from an online legal document service:

  1. Spell check.
  2. A general understanding of the law which may or may not be correct, up to date, or complete.
  3. Self help fill in the blank forms which may or may not be correct, up to date, or complete.

Now compare that with the value that you receive from an attorney:

  1. Advice on the appropriate documents for your business’s needs and objectives.
  2. Counsel on alternative options and solutions to your specific situation.
  3. Assurance of the legal sufficiency of any documents provided.
  4. Opinions and recommendations about your legal rights.
  5. Analysis and application of the law to your specific situation.
  6. Representation of an attorney.
  7. Actual legal advice.

There are very good reasons why an attorney’s services are more expensive.  I hope that the next time you see an advertisement comparing the services of an online legal document service versus the price of an attorney you will understand the true value of what you receive from each, and more importantly, what you don’t receive.

 

 

 

Can I Form a Company Under One Name But Operate Under Another?

Can I Form a Company Under One Name But Operate Under Another?

As always when it comes to seeking free advice, make sure you read this post about free advice.

The other day I received a question similar to the one below.

The questioner wanted to name his company AB but the Secretary of State rejected his Certificate of Formation for that name based upon confusion with an already registered company.  So the questioner wanted to know if he could name his company ABC and then just operate under the name AB.

The answer is simple, yes, but in the case of the questioner it is risky.

You can form a company under one name and operate under another name.  The legal name of the company must meet the statutory rules on naming a company.  In this case, ABC would work.

A company (just like an individual) can also file an assumed name certificate and operate under a name other than the one on its legal charter.  These certificates are filed at the state or county level.  Unlike a Certificate of Formation or Articles of Incorporation, “Chapter 71 of the Texas Business & Commerce Code does not authorize rejection of an assumed name certificate on the basis of a name conflict. Therefore, there may be multiple assumed name certificates on file with the secretary of state for the exact same name. An assumed name certificate provides information about the underlying business’s identity and location.”

This means that he could file an assumed name certificate to operate as AB.  So why might this be a bad idea?  Well let’s read the rest of the paragraph, “It [the Assumed Name Certificate] does not give the registrant any right to use the assumed name in a way that violates the law, infringes on the rightful use of the name by others, and it does not prevent anyone else from filing the same assumed name or using the name to form a new entity with the secretary of state. It is up to each business entity to protect its name and good will.”

Hello trademark infringement.  Hello deceptive trade practices.  Hello unfair competition.  Hello fraud?  I don’t even have to answer this question as the information is available on the Secretary of State’s website.

How would you like to spend tens of thousands of dollars marketing your company, labeling its equipment, its products, and its people only to be hit with a cease and desist order?  Worse yet, a law suit seeking damages?

This is why you would pay a lawyer.

People Seeking Free Legal Advice And A New Section On The Texas Business Law Blog

People Seeking Free Legal Advice And A New Section On The Texas Business Law Blog

I know that a lot of attorneys across a variety of practice areas have to deal with the same issue: people who call and want free advice.

First let me state that I understand.  You have a simple question.  It will only take a minute of my time. Hell, I often feel that way when I go to the doctor.

Your question is important to you but not so important that you want to go through the hassle of retaining and then paying an attorney.  Why should you pay an attorney hundreds or thousands of dollars to answer a question that will require very little time for the attorney?  Certainly the attorney  won’t mind just taking a few minutes out of his or her time to answer your question, right?  WRONG!

Now the obvious reason an attorney wouldn’t want to do this is simple.  We worked hard and paid a lot of money to get an undergraduate degree and then go to law school.  We spent countless unpaid hours studying our craft and perfecting our skills. So why in the world would we give that knowledge and education away for free?

Another reason is more practical: no matter how simple a question may seem I assure you there are many more complexities than you realize.  If we give you a simple off the cuff answer it could be wrong, and then guess what?  You blame us.  Why would an attorney take that risk for nothing?

So why should you pay an attorney?  The same reason I pay my doctor, because they are trained professionals.  Because they provide a service that you are not qualified to provide.  Sure, maybe you can figure it out.  But if you can figure it out, why are you bothering to call in the first place?

So what are we going to do about this?

My solution is to provide a new category for this blog: “seeking free advice.”

I make no promises that the posts in that section will serve you well.  As always, this blog is not legal advice and you should not rely on it as such.  However, these posts will be my attempts to answer questions based loosely upon inquiries I have received for free advice.  Buyer beware, you get what you pay for.