Rees Morrison, prolific blogger on all things law-department-related, posted this item about free legal forms available online. Here’s what it says:
As the online world inexorably proves that information wants to be free, in-house counsel will increasingly have more forms of agreements available online, and at no cost. One example of the genre is YourFreeLegalForms.com.
According to an email exchange I had with a business developer for the JACI Group, firstname.lastname@example.org YourFreeLegalForms currently has over 500 forms uploaded and is steadily adding more. No one will claim that sophisticated legal agreements will become a dime a dozen on the Web, but pieces of them and indeed entire agreements that are simpler and will suffice for many purposes are sure to proliferate.
The writing is on the Internet wall.
I think not.
YourFreeLegalForms.com is another docstoc. See this November 2007 post for my critique of docstoc. The problem isn’t a shortage of free legal forms online. Instead, it’s that there’s available online for free a vast and ever-growing supply of contract models, most of them crappy, and separating what’s OK, in terms of language and substance, from what’s not OK is a gruesome task. Free online forms are hardly a panacea.
Furthermore, if I ever need to consult examples of a given kind of business contract, I’m going to go to the motherlode, the SEC’s EDGAR system. (See this post and this post.) By comparison, YourFreeLegalForms offers a puny assortment, and I wouldn’t bet on its getting much more plausible over time.
11 thoughts on “With Free Online Forms, You Get What You Pay For”
On a related note, I understand that surgical instruments are now widely available on the Internet.
I want to invite you to check out docstoc again. We have been online for over 2 years since you originally reviewed the site and in that time the quantity and quality of the documents have vastly increased.
Contracts are like suits. You have your Armani contracts that are perfectly tailored to the man, but are expensive and out of reach for most people. You have your JC Penny’s contracts. These are normally a little loose in the shoulders or the waist, but do the trick and are within the price range of the average man. Then you have your Salvation Army contracts. You have to rummage through a lot of bad suits before you find something that passes. Every now and then you might find a discarded Armani.
I think Docstoc and YourFreeLegalForms are like the Salvation Army. You just have to look a little harder and sometimes you get lucky. I don’t have a problem with these services, just like I don’t have a problem with the Salvation Army. It serves a purpose. It’s a whole lot better than going naked.
A few years ago, a company came to me with a contract calling for arbitration before a non-existent arbitral body in Geneva. We did a lot of research and determined what we thought was the arbitral body the parties intended and then filed our claim there. Needless to say, the other side claimed the arbitration clause was completely void and if not void, the arbitration should not be in Geneva, and if in Geneva, not before the arbitration body we had chosen. We ended up winning, but not before we had spent a large amount of the client’s money. The client had taken a contract from another deal and simply used it and changed Seattle to Geneva, figuring it would make no difference.
A few years earlier, I had a client (a subsidiary of a Fortune 250 company) contact us to try to force its supplier to pay for a recall. But the contract between my client and the supplier made clear my client was wholly responsible for recall costs, pretty much no matter what. Since my client was huge and the supplier was so small, I asked how it was that the contract was so unfavorable for my client. The response was they just assumed it was a great contract because a huge supplier company had used it. I had to tell them it was a great contract, but only for everyone else.
These two events convinced me (and I have only been proven right ever since) that two businesspeople writing terms on a napkin (and then a court adding the rest of the provisions based on industry standards, etc.) is likely to be better than simply pulling down a form.
Forms are dangerous unless reviewed by a qualified lawyer and that is not usually how they are used.
Andrew: I’m not crazy about your suit analogy. The shortcomings of a cheap suit are evident the moment you try it on. By contrast, what’s particularly problematic about a mystery contract obtained online is the potential for hidden shortcomings that turn into serious problems. Ken
And you won’t face mult-million dollar lawsuits for wearing a cheap suit.
If you can have a lawyer start with an on-line form and then amend it appropriately, it might work – but if you have a lawyer involved, they are likely to have their own (better) precedents in any case.
We created yourfreelegalforms.com because business managers and other individuals frequently use template business forms- or reuse forms from other sources- to save money, educate themselves about legal matters or to compare terms and clauses in agreements drafted by their own or a counter-party’s attorney.
Our site allows lawyers and other professionals to donate legal and business forms, articles, checklists and other content as a way of connecting with prospective clients and to educate the public about legal documentation and related matters. As you probably know, education of the public about the law is a professional requirement mandated by many State Bar Associations.
Lawyers can donate forms related to their area of practice and network with prospective clients for higher value-added legal services. We encourage everyone who downloads a form from the site to contact the contributing lawyer via the donor’s YFLF’s profile, or by linking directly to the lawyer’s website- if they need the form modified or for additional legal services. We also caution users about the potential risk of using template forms and suggest they contact the contributor or their own lawyer before using a template form if they are uncertain about legal issues or state specific legal requirements, etc.
While I agree with your concerns about uneducated usage of template legal forms, in our experience, Yourfreelegalforms is a great way for consumers of legal services to better evaluate lawyers based upon the quality of their documents and user profiles on the site, and for lawyers to build expand their practices through qualified client inquires. It also allows lawyers to drive traffic to their firm’s websites and potentially can increase their sites page-rank and SEO.
Thanks for your comments.
I’ve learned a little (just a little) about the online forms business at EchoSign, broadly speaking they break into two camps — attorney “reviewed”, which are almost always paid, and non-attorney reviewed. Obviously, neither is a substitute for genuine corporate counsel, cost not being an issue. However products like RocketLawyer, Nolo or others that are attorney-reviewed serve a valuable, cost-effective role for lower-risk transactions and commodity agreements that you aren’t going to find on EDGAR (e.g., a state-specific bill of sale).
I am a big fan of DocStoc as well, but think the real value of the “attorney reviewed” sites may be less that they are actually attorney reviewed per se, but that they’ve gone through some sort of quality filter vs. crowd sourcing … I am not 100% sure Wikipedia is the model for legal contracts, and if it is, it probably at least requires quite a bit of scale and attorney involvement.
I see the problem as being not that the documents are inherently incorrect in themselves – I’m sure the good sites produce very sound documents – but that they are drafted in the abstract. If a person pulls a document from any standard database – whether one of these sites or their own firm’s standards – it will be blind luck if it actually works for the agreement they are trying to draft for without amendment.
Then there seem to be three options:
(i) The document as just used as-is – the document is unlikely to fit the deal.
(ii) A non-lawyer makes some changes. The problem here is the risk of unintended legal consequences of a change.
(iii) A lawyer reviews it. Clearly the issue here is cost.
I suppose people just need to balance those factors, but for any deal worth anything significant, it is likely to be worth having a lawyer have a look, at which point it is more cost-effective for them to use their own standards.
I suppose document sites might be most helpful as starting points for in-house legal teams.
Thanks for the warning. I was considering using their forms but as usual, you get what you pay for.