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Top Ten Topics in 2024: What’s Wrong with Legal Documents Downloaded from the Internet?

Posted by Jonathan Krems | Feb 22, 2024 | 0 Comments

In this week's Freedom Friday blog and email newsletter, we're continuing in the series on the Top Ten Topics in 2024.  Today's topic is a topic that I wish was asked about more often, but it does come up quite a bit.  So many small business owners start their LLC online or get a contract online.  Unfortunately, that online LLC operating agreement or contract gets them in trouble later on.  Now they have a business dispute or a lawsuit, all of which could have been avoided if they didn't use an online legal document.  In today's Freedom Friday blog and email newsletter, I'm answering the question, “What's wrong with legal documents downloaded from the Internet?”

There are several reasons why small business owners like to use legal documents obtained online, and why these documents may not be satisfactory.  One reason why small business owners use legal documents downloaded from the Internet is to save money.  The problem with this reason is that it's not a real reason to use online documents.  While you may save money in the short term by downloading a free or discounted document online, you may incur legal fees later on down the road when you need to restructure your small business, or if litigation is necessary to move forward in your business.  For example, I've seen many LLC operating agreements that hold LLC members hostage (they can't leave the LLC or allow a member to leave, even by agreement), and I've seen many loan agreements that are supposed to be secured by some kind of collateral, but they are in fact, unsecured loans.  I've also seen strange clauses in various legal documents that hinder a lender as a creditor or hinder a business partner in an LLC or other business relationship.

Another reason why some small business owners use legal documents downloaded from the Internet is because they want a “standard” document, or a template.  They think that the “cookie cutter” approach to legal documents is good enough for their small business.  Unfortunately, there are also problems with this approach because there is no such thing as a “standard” business document, or a “standard” business.  Most small business owners start a small business because they want something unique and wish to somehow challenge the status quo.  That's why they've started their business.  Why should a business owner use “standard” legal documents when they're starting a non-standard business?  I don't know, but that's the problem with the “cookie cutter” approach and legal documents downloaded from the Internet.

A third reason why some small business owners use legal documents downloaded from the Internet is because they want to avoid using an attorney.  Sometimes this is related to the first reason, because many small business owners think attorneys are too expensive.  For instance, I charge my clients $500.00 to help form a single-member LLC, and included is the articles of organization, operating agreement, and their EIN number.  This does not include registered agent service, which is $150.00 annually.  Some people don't want to pay this much because its not in their budget, and they're looking for a budget-friendly solution.  However, in some circumstances, the issue with attorneys has nothing to do with what the attorney is charging.  If there's more than one business owner, sometimes they don't want to use a certain attorney because one of the co-owners knows the attorney personally, and the other(s) do not.  Also, there might be a concern with who or what the attorney is representing, i.e. one of the owners or the business itself.  A business lawyer must decide whether he or she represents an owner in the business or the business as a whole.  This is a critical decision at the start of a business venture.  If the attorney represents the business, the attorney cannot represent one owner against another, even in the case of a partnership dispute or LLC dissolution matter.  However, the attorney may represent the business against threats to the business, including issues arising from departing business partners who seek to harm the business by taking valuable intellectual property, client information, or financial information concerning the business.

Thinking about starting a small business?  Or maybe your business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...


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