There is a lot of talk about LegalZoom and other DIY software in the Estate Planning world. I, and many attorneys, have spent time discussing and writing about how dangerous DIY estate planning can be, and I know a few attorneys who generated documents using the software and documented their critiques of the various programs.
There are some attorneys who say that companies like LegalZoom are direct competitors of Estate Planning attorneys. There are also attorneys who don't believe those companies are competitors at all.
I have been trying to determine whether I think LegalZoom is my competitor, and my first inclination was to look at the clients I have worked with. I can't think of any clients that I have who needed to be convinced that they should work with an attorney instead of doing it themselves. And, maybe it's because I live in the DIY capital of the world (Portland, Oregon), but I have a ton of clients who are DIY-ers for most things. Most people who come to see me have either already decided that they are going to work with me, or they want to get to know me better to decide whether they want to work with me.
The clients I work with have a goal: They want to make things as easy as possible for their families if something happens to them. So they seek out a lawyer's advice on how to make that happen.
Most of the time, the way it goes down is that the client calls and says that they need to set up a will or "get something in place." Most people find out at the first meeting that based on their particular situation, they need a lot more than a will. They usually leave the meeting saying, "Wow, we had no idea!" They realize that they're paying for a lawyer's advice, not so much for the paperwork that follows.
Based on my current clientele, I could say that LegalZoom is not a competitor.
But I don't know about the people out there who didn't call me or another attorney. I don't know if the marketing for LegalZoom or Suze Orman or any other company convinced them that estate planning is something they can do themselves.
I decided to get over to YouTube and have a look at some of the commercials that are out there. LegalZoom has its own YouTube page, where they not only have their commercials, but they also have video testimonials generated from a contest for people who have used LegalZoom's services. (Everyone knows that testimonials are a great marketing tool, and yet, I can't exactly hold a contest to get people to submit videos about how great I am.)
In the commercials, the overarching theme is "peace of mind." That's the overarching theme for estate planning attorneys as well, and so it appears that LegalZoom may be my competitor after all. But there's a difference between the peace of mind that LegalZoom offers and the peace of mind that Estate Planning attorneys offer.
Before I saw the testimonials, I only suspected that a lot of people might have a false sense of security with these LegalZoom documents. I hadn't personally gone over a LegalZoom plan, but I just couldn't imagine how software could do everything that an Estate Planning attorney can do. Commercial after commercial doesn't really give me a sense of who these people in the commercials are. Do they own a house? Do they have life insurance, retirement, investments, businesses? What kinds of jobs do they have? What is the family situation?
The difference between LegalZoom and an Estate Planning Attorney is that LegalZoom's job is to deliver a product that a customer requests, and an Estate Planning Attorney's job is to assess a client's circumstances, make recommendations based on those circumstances, and create a plan according to what the fully informed client decides upon. If a person calls me and tells me that they want to set up a will, I set up an appointment, send them our Family Information Packet, and have them fill out a worksheet that tells me about their family, assets, and financial situation. At our meeting, I go through their information with them and show them what things would look like if they died with their current plan (or lack of a plan) in place. We identify areas of concern, such as the cost, time delay, and privacy issues associated with probate, or the expense of estate taxes. We discuss ways to avoid any of these areas of concern. Then the client chooses a plan that best fits their family's needs. (We also address issues such as incapacity - what will happen with a client's kids and assets if the client is unconscious but still living - and asset protection.)
I watched several of LegalZoom's videos, and I heard a lot of people saying that they had peace of mind, but thought to myself, "Well, we won't know if there are any mistakes until after you're gone."
Then I saw Jane's testimonial. You can watch it here. Jane set up a will through LegalZoom and now she has peace of mind. But Jane says that the reason she decided to set up a will is because she experienced the death of a friend whose estate had to go through probate. She decided that she didn't want her estate to have to go through probate, and so she went to LegalZoom and set up a will. The problem? Having a will doesn't mean you avoid probate. This peace of mind that Jane paid for is worthless. If Jane went to see an Estate Planning attorney, she would know this.
There are other slightly disturbing testimonials in addition to Jane's. There's a couple with two kids, and the wife is a medical student soon starting her residency. That's all I know about them, but I can all but guarantee that 1) they didn't get a comprehensive plan to care for their kids if they die or are incapacitated, and 2) they don't have any asset protection if the wife is sued for malpractice. I hope that they will be the kind of folks who revisit their estate plan with an attorney when they're feeling a bit more like they can afford it.
There are numerous parents who gave testimonials about their peace of mind, who probably don't have a comprehensive plan for the care of their kids during incapacity or after death.
There's a guy who invented some sort of parachute/skateboard thing who I assume did his patenting and possibly set up an LLC through LegalZoom. I have no idea what state he is in, but in most states, simply filing as an LLC doesn't protect you from every possibility of liability.If someone gets hurt using his invention, he's probably not protected.
My conclusion is that I am undecided on whether LegalZoom is my competitor, but I will keep having the discussion about DIY estate planning, because I think it's dangerous, and because I think that people are paying money for a false sense of security.
I'd love to hear your comments on this topic!
To your family's health & prosperity,
P.S. If you're in Oregon, and you want to make sure that you've made everything as easy as possible for your family, call my office at (503) 235-5150 to set up your Family Treasures Information Session, valued at $750, but FREE for blog readers!