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Amy M. Cohen: Why doing it yourself could cost you more

It's The Law

Posted: October 1, 2009 8:55 p.m.
Updated: October 2, 2009 4:55 a.m.
 

With the explosion of Al Gore's Internet and the digital world, everyone has the ability to become a "do-it-yourself-er" even in areas of business or law traditionally reserved for the educated professional.

For example: Charles Schwab might promise the average Joe the ability to invest without the hassle (or fees) of a broker.

At home software kits, like Turbo Tax, allow anyone to attempt to prepare their own tax returns.

Other Web sites offer services such as insurance, banking, job recruiting and even legal work - all at the click of a mouse.

But what are you really getting when you use these services?

Many of these sites state that they merely prepare documents or provide a limited service, and include disclaimers that they are not providing "advice" or instruction of any kind.

In the legal world, the Internet has brought us "document preparation assistance" companies such as www.LegalZoom.com, which offer assistance to prepare wills and trusts, create an entity such as a corporation or LLC and even assist you in filing a trademark application.

Some of these sites advertise that they could save you hundreds or thousands of dollars as compared to an average law firms' fees for similar services. But as with anything, you get what you pay for.

While an online document preparation assistance site might be able to incorporate your company for pennies on the dollar compared to a law firm, that site will likely not tell you if a corporation is the right entity for your business or whether to elect "S" status (something your tax professional would assist with).

The site (and its customer service department) will also likely not tell you if a limited liability company (LLC) might be a better choice or even what state you should file in.

The site also will not walk you through the actual set up of your corporation (such as appointing directors and officers and issuing stock) and will not advise you should something go wrong.

Similarly, a document preparation assistance site might give you the tools to prepare a will or a trust, but the site will not assist you in deciding what estate planning tool is right for your particular needs or the needs of your family.

In today's economy, everyone is looking for ways to save money.

However, in business, and particularly in the legal field, trying to save a few pennies today could end up costing you a lot of dollars tomorrow.

Although a visit to a local attorney to discuss and prepare your estate plan, set up your business entity or register your intellectual property (trademark or copyright) might be more costly in the short term, you could avoid potential problems in the long run by having it done correctly the first time.

A business associate discussing this very topic recently said it best: While he might be able to take his car apart and rebuild the transmission with the help of a guidebook or Web site, would he trust his own work enough to put his family in the car and drive across the desert?

Or, knowing that his family would be in the car, would he instead trust the transmission in the hands of a professional?

This is not to downplay the potential value of a "document preparation assistance" site, if you have done all of the research, investigated all of your options and understand that utilizing the site is only half of the entire process.

That being said, who has that kind of time and more importantly, how well do you trust that you have examined every angle?

It is a growing problem that we see almost daily. In the end, it is more cost effective to have the work handled correctly the first time, by a licensed professional, then to find out at the worst possible moment (such as in the middle of an IRS audit or litigation) that it was done wrong.

Amy M. Cohen's column represents her own views and not necessarily those of the Signal. "It's The Law" appears Fridays and rotates between members of the Santa Clarita Valley Bar Association (www.SCVbar.org). Nothing contained herein shall be or is intended to be construed as providing legal advice.

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