You Get What You Pay For

07/21/2010

Did you ever see the television commercial for LegalZoom?  It usually has Robert Shapiro whose claim to fame was for being one of the O.J. Simpson attorneys, and more recently Lindsay Lohan.  In the commercial, Shapiro touts LegalZoom as providing do it yourself legal forms, including Wills, Trusts and other estate planning documents. The implication is if you use LegalZoom, you don't need a lawyer.

Well, LegalZoom was recently named in a class action lawsuit charging that the company engages in deceptive business practices and is practicing law without a license.

The suit was filed on behalf of the estate of Anthony Ferrantino.  With the assistance of his niece, Mr. Ferrantino used LegalZoom to create a Will and Revocable Living Trust.  Based on the LegalZoom advertising, Mr. Ferrantino and his niece believed that the documents created would be legally binding.  They further believed that if they encountered any problems, LegalZoom would assist them in resolving those problems.

After the documents were signed, Mr. Ferrantino and his niece were not able to transfer any property to the Revocable Living Trust.  This was important because one of the main reasons to have a Revocable Living Trust is to avoid probate and avoiding probate can only be accomplished if assets are actually transferred to the trust.

The niece went to LegalZoom for help with no success.  Ultimately Mr. Ferrantino died with an unfunded trust.  The estate had to hire an attorney to attempt to fund the trust post mortem.  At that time the attorney discovered that the Will LegalZoom created had not been properly executed.  All of this cost Mr. Ferrantino’s estate thousands of dollars.

The class action suit against LegalZoom claims that Mr. Ferrantino and others relied on misleading statements by LegalZoom, including that the company carefully reviews customer documents, that it guarantees satisfaction, that its documents are the same quality as those prepared by an attorney, and that the documents are effective and dependable.

The truth of the matter is that using LegalZoom is not the same as using a “live” attorney.  The documents are not tailored to a specific client’s needs, goals and objectives.  Improperly prepared estate planning documents are a ticking time bomb that can result in adverse tax consequences and other expenses that cost the estate and heirs huge sums.  Further, and perhaps more importantly, when an estate plan is needed, a “live” lawyer can provide counseling and expertise.  This is something LegalZoom is not capable of offering.

Although LegalZoom and companies like it are probably cheaper than a “live” attorney, sometimes you get what you pay for.