Getting Agreements from the Internet: Problems and Potential

Posted on February 10, 2012

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Article Highlights:
– Internet forms are getting better and becoming more sophisticated.
– When it comes to the Internet, the layperson does not always know which is a good form and which is a bad form.
– Internet document prep sites are binary in nature, and as result, do not contain the nuances typical in a business arrangement.
– Lawyers and lay people can use the Internet for knowledge, forms, and document preparation about general subject matter, but lawyers are vital to grasping the individual needs and unique circumstances of their clients.

A word about the Internet1:

While it is common for lawyers (including myself) to bad mouth Internet lawyering, the dirty truth of the matter is that the Internet is becoming a better and more sophisticated place to find forms. For years, lawyers themselves have been using the Internet for forms. All of the lawyer services – Lexis, Westlaw, etc. – are on the Internet. Additionally, lawyers routinely pull from filings from public companies.2 All material agreements are required to be attached as exhibits to regulatory filings. These filings provide a ready source of forms for lawyers, and they allow lawyers to keep tabs on what other lawyers are doing with their documents. However, an asset purchase agreement filed for General Electric to make a major million or billion dollar purchase is not the same document you want to use for the purchase of a mom and pop store.

Legalzoom.com and similar services are trying to fill this small business gap. By answering online questions, documents are generated that are tailored to you. While most lawyers will deny this, relative to other documents you find on the Internet, the documents on Legalzoom.com are pretty good. (Other Internet sites, particularly free ones, are definitely buyer beware.)

However, the difference between lawyers and Legalzoom.com, as well as other similar sites, is crystallized in Legalzoom.com’s disclaimer:

The information provided in this site is not legal advice, but general information on legal issues commonly encountered. LegalZoom is not a law firm and is not a substitute for an attorney or law firm.

The Internet and document generation is a binary proposition — enter yes and you get one answer; enter no and you get another. The problem with this method is two-fold: first, the Internet user does not always know for sure what the right answer is for him or her; second, the Internet cannot detect the nuances of an agreement and plan accordingly. Often, when I meet with a client, we have to work through questions about what they want in an agreement; more often still, they do not know the answer. While you can get sound information working through the answers in a back-and-forth with an experienced professional, such exchange is not possible with an Internet generation website.

The Internet and automatic document generation do have some benefits. First, the automated questions are good prompts for business people. Beyond just the routine prompts of name, address, social security number, prompts on substantive questions, such as how many shareholders does it take to sell the company, force clients to reflect on what is important to them. Second, standardization of forms, which is occurring because of Internet sites, is a good thing. Businesses do not need different variations in a right of first refusal. Over time, as the Internet develops, hopefully these benefits will increase.

Personally, I wish lawyers as a profession would focus more on the value lawyers offer over the Internet as opposed to pursuing Internet sites for the unauthorized practice of law. A lawyer can offer an opinion about how a court might interpret an agreement; a lawyer can encapsulate in written format complicated business transactions; a lawyer can tell you which form to use; a lawyer can help parties bridge their differences.

As long as people are human, machines will not replace lawyers. By embracing technology, lawyers can be more efficient and deliver better and more relevant advice. The Internet can provide resources – knowledge, form, and document preparation – that will allow lawyers to focus on those things that the Internet cannot provide.

Mike Goodrich
Goodrich Law Firm, LLC

1 This article touches on issues addressed on the Birmingham Business Blog in this entry: https://redmountainlawblog.com/2011/09/07/the-internet-lawyer/

2 Public company filings can be found on the sec edgar website (go to http://www.sec.gov and then search the filings) or numerous free and premium sites that index and provide more features around the filings.

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