Trick or Treat? The Pros and Cons of DIY Contracts for Your California Business

Posted by: kevensteinberg
Category: Blog, Business Law, Employment Law, Real Estate Law
DIY legal documents and template business contracts

A quick Google search for DIY legal documents or template business contracts brings up hundreds of links to websites that sell every type of contract, agreement, document, and form you can think of. Advertised as a time-saving and inexpensive way to meet your legal needs, these sites seem almost too good to be true and as you’ll come to see, can result in some scary and frightening surprises for you and your business down the road.

With Halloween right around the corner, it is the perfect time to examine these online offerings more closely. Are they sweet treats that can help your business? Or sour tricks that may do more harm than good? Here are the pros and cons of template legal forms to help you discover how to get strong, enforceable contracts for your business. 

What Are Some Common Temptations for Using Template Contracts?

Template contracts and DIY legal forms are available for everything from divorce agreements, powers of attorney, and wills to lease agreements and real estate contracts to business formation documents and employee contracts. Chances are you will need a legal agreement at some point in your life, and you may be tempted by a “free” form or a relatively inexpensive “cookie cutter” form. And if you run a business or plan on creating a new business, contracts and legal documents will be essential to your success—but using DIY contracts and documents may have horrifying effects later on. Some of the most common types of contracts you may need include: 

  • Business formation documents such as articles of incorporation, partnership agreements, shareholder agreements, terms and conditions for your website, and more. 
  • Employment contracts including employment agreements, offer letters, termination letters, non-disclosure agreements, non-compete agreements, and the employee handbook.
  • Waivers such as release forms and liability waivers.
  • Real estate agreements such as lease agreements, rental contracts, residential sale contracts, disclosure statements, and more. 

Treats: The Pros of Using Template Contract Services

It’s clear from the large number of sites offering template legal documents for both business and personal use that there is a market for these forms. Being able to create do-it-yourself legal forms and download them straight to your computer is an attractive business shortcut. But online legal templates are no replacement for a lawyer and are certaianly not like garlic to a vampire or kryptonite to Superman. So, why do people search for and use these stock legal forms? 

  1. They are easily accessible. The convenience of online, DIY legal forms is undeniable. You don’t have to worry about finding an attorney near you or scheduling a consultation. Instead, you can simply open up your computer, do a quick Google search, and fill out a contract template without leaving your desk. 
  2. It’s fast. One of the major reasons for using online legal sites is to save time. With an online template, business owners and individuals can create contracts and other necessary documents in less than an hour
  3. They may cost less upfront. Perhaps the most prevalent reason to go the do-it-yourself route for legal documents is to save money. Websites offering contract and legal templates often charge a nominal fee for templates and forms, with some offering subscription services that provide access to various types of business documents. Some even provide free legal form templates. 

Tricks: The Cons of Using Online Legal Template

The reasons for using online and DIY business documents are compelling—everyone wants to save time and money. And if your needs are relatively simple, these fill-in-the-blank template-style legal forms might work but will most likely leave you exposed to ghastly outcomes. Even for basic documents, there are significant risks that come with using online templates for your company’s legal needs. Why should you avoid DIY online legal forms? 

  1. Online forms are generic. Template legal documents are designed for the masses as a one-size-fits-all solution, without your specific business and needs in mind. In an attempt to cover everyone, these forms are usually vague and may omit essential language for your business. They may include clauses that are overly broad and unenforceable or omit essential provisions or company-, industry-, or deal-specific terms, thereby leaving holes and paving the way for costly mistakes. Moreover, because these forms are generic, they cannot and do not contemplate changes in the law or different laws in different states and jurisdictions. This can often result in embarrassing and costly consequences 
  2. They can’t grow with your company. Because DIY online legal documents are generally one-size-fits-all, they don’t take into account how your company may change over time or how an agreement might go sour. With valuable experience working with companies behind them, a business attorney can help identify potential conflicts and future circumstances, such as dissolving a partnership, resolving disputes, or planning for growth. They can create a contract specific to your needs that will provide clear, enforceable steps for dealing with any eventuality. Certain laws only apply to small businesses and certain laws only apply to middle- to large-sized businesses. Thus, if and when your company grows, it may also grow out of the DIY form, leaving a large hole and gap of protection and coverage for your now much larger company or business.
  3. It’s easy to choose the wrong template. Many online services fail to describe key differences between business documents, making it easy to select the wrong form for your purposes. Without sufficient legal knowledge, you may end up signing a partnership agreement when you actually have a joint venture or experience a similar mix-up. Legal document names can be misleading, so merely selecting an agreement based on the title of the form may result in unintended legal consequences. This is indeed the most common mistake that DIYers make. Since they obviously lack the education, training, and experience of a qualified lawyer, these DIYers are literally shooting in the dark.
  4. They may not apply to your jurisdiction. Template contracts and documents are usually not tailored to your specific jurisdiction. California’s labor laws, real estate laws, and business laws are specific to the state. If your DIY document uses provisions from a jurisdiction other than your local city’s and California’s, your local court may not honor the document. What works in one location may not work in another; it is vital that all of your legal documents are in line with local requirements and regulations. 
  5. It’s hard to know when DIY templates were created. Another significant issue with online legal forms is that it can be difficult to know when they were created. There isn’t a guarantee that online templates were created with current laws, technology, and business practices in mind. Out-of-date forms may not address new laws or consider the impact of new technologies like social media. Old language that is no longer applicable and missing language addressing current issues can both lead to serious voids in your legal documents and future legal issues. 
  6. It’s likely that online templates will cost more in the long run. While DIY legal documents may seem like the cheaper option upfront, common holes and weaknesses in these easy-to-get forms can—and almost always do—expose your company to liability and costly litigation. The ultimate cost of poorly drafted or generic legal documents can easily exceed the cost of hiring an attorney up front to draft the agreements for your business. 

DIY Documents Will Cause Horrifying Experiences Later and Cannot Replace Experienced Legal Counsel

With DIY legal documents and template contracts, you won’t know if the agreement will hold up in court until you have to actually use or enforce the agreement. By then it will be too late, and you’ll have already dug your grave. And with the majority of template agreements, the risk of loopholes, enforceability issues, and other problems is high. That risk is eliminated when you choose to work with an attorney to create your business documents.

In the words of experienced California attorney Keven Steinberg, the number one benefit of having a lawyer create custom contracts for your business is “certainty.” The experienced lawyers at Steinberg Law will work with you to ensure every contract and legal document you need is specific to your business. They will ensure that your agreements hold up under California law and take steps to protect your rights and the rights of your business partners, employees, and customers. With decades of experience behind them, the attorneys at Steinberg Law can also represent you and defend your rights in the case of a contract dispute. 

Experience the peace of mind and confidence of legal agreements created specifically for you and contact Steinberg Law today. 

Author: kevensteinberg