Mar 7, 2009

I have spent a lot of time thinking about how to best approach this subject.  No matter how I do, or what I say, it is likely to sound like a self-protection, “rant” by someone who is looking over his shoulder at the up-and-coming competition.

So let me start by saying that I am not in the least concerned about “competitors.” I have been blessed  with my share of loyal clients and valuable and respected relationships with trusted advisors who refer to me.  I am confident that by doing my best to focus on quality, personal service to my clients, I will continue to have sufficient work load.  My purpose here is to express the real concern that I have for the welfare of all the clients out there--whether mine or not.

In the past several years, I have acquired some new clients who have brought to me Business setups and Estate Planning documents which were acquired on one or more of the “” sites that seem to be ubiquitous lately.  These sites purport to provide a complete package of the documents clients need to create their own Will, or incorporate their business, at a fraction of the cost of using experienced professional advisors.  They universally disclaim any suggestion that they are lawyers or are giving any legal advice (though they are quick to note that they are set up by lawyers).

There’s the rub.  It is fallacy to think that the primary function of lawyers is to provide legal documents.  That great American President, Abraham Lincoln is famed for saying “a lawyer’s time and advice are his stock and trade.”  Documents are just paper.  Even lawyers use third party sources and form banks.  The real value we give to clients is our experience, analysis of their circumstances and needs -- in short, our advice.

Good lawyers do not charge clients for documents themselves.  What we charge for is our time and our counseling which comes from knowledge of the law, experience, continuing education in our specialties, and counseling and advice.  The problem with documents in and of themselves is that they are dangerous.  Unless they are knowledgeably applied to the particular needs and circumstances of the client, they can either create in the client a false sense of security, or alternatively create disastrous consequences.

I have visited some of these sites.  And I have seen a number of their products.  Some of them are nothing more than scams.  Others provide some pretty adequate packages of documents.

But that is not really the important question.  A much more important question than how to incorporate is whether incorporation is appropriate in the first place!  Most states offer multiple business form choices and the form that works well for one person may not be right for the next (even in identical businesses).  Determining a client’s goals and appropriate business enterprise setup can only be property done by a face-to-face, detailed discussion between counsel and client.

Two years ago, I took in, incidentally (by advising someone who was considering doing business with them), a new client who had a Limited Liability Company set up by a “” provider.  The documents were so hopelessly intermixed with corporation terminology that they were essentially untenable documents.  It probably cost this client more in fees to clean up the mess than it would have to have me do the job in the first place.

Last year, I had an new estate planning client come in with a D-I-Y Revocable Trust.  The clients had formed many ideas of how the trust concept worked that not only were incorrect, but were hopelessly intermingled with probate concepts.  The irony is that the primary function of the Revocable Trust Agreement is to avoid Probate!  The old saying, “the devil is in the details” is never more well illustrated that in the revocable trust context.  These sites do not explain to the client the importance of funding the trust (getting assets properly titled) as the basis for the trust to work at all.

Last week (prompting this writing), an Estate Planning client gave me information about a business entity she owned.  Curious, I did a quick on-line check at our state offices and discovered not only that the entity she thought she had was inactive, but the “” she hired to set it up had set up two other entities for her.  I cannot think of a reason why she needed the two other entities.  I do not know all the circumstances under which the two entities were set up, or what communications she had with the “”  What I can say with certainty, though, is that she didn’t know and was conducting business under an entity name that probably did not do for her what she assumed it was.

If we are doing our job correctly, we can give clients significant “value-added” to the mere acquisition or preparation of legal documents.  Most lawyers today are willing to give prospective clients a reasonable amount of time (perhaps an hour) to discuss the process and document involved in their legal services, in the form of a free initial consultation.  Why not take advantage of that?  If you are not sure who to go see, you can get some help from my earlier article here, on how to choose and attorney.


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