10 Tech Startups that Disrupted the Legal Fees for Small Businesses and Startups
Startups that are disrupting the Legal Fees for Small Businesses
Starting a startup or small business costs a ton of money, and the majority of the fees go to attorneys to establish a corporation or LLC and to drafting legal documents to ensure that the business is compliant with the law and that it's legally protected.
Startups and small business often spend tens of thousands of dollars on attorneys to create routine legal documents, which is absurd considering that many of the same documents already exist. According to AttorneyFee, an organization that studies and promote fee transparency in the legal industry, the tasks that small businesses and startups pay big law firms to perform are often repetitive and require little time to perform. However, law firms and attorneys still charge small business exorbitant amounts to perform them.
The problem of having to pay high legal fees to start a small business or startup has caught the eye of many entrepreneurs. To address this issue, entrepreneurs are using technology to reduce legal fees to establish and run a business. By reducing the high cost of legal fees, the premise is that more companies will succeed since they will have more cash on hand to spend on the business itself, rather than spending the money on legal fees.
In the past decade, there has been a lot of innovation that uses technology to reduce the cost of services; unfortunately, the legal sector has not used technology to streamline its services and reduce its costs. However, that's changing as many entrepreneurs are using technology to reduce the cost of legal services and make them accessible to more people.
One of the startups that is disrupting the legal industry is Legal Hero. Legal Hero wants to reduce legal fees for businesses by having flat fee legal services where a business pays a preset for a single service regardless of the time an attorney has to spend working on a client's legal project. This is possible because attorneys know how long it usually takes to prepare a legal task, and so they're able to create set fees for services. Having this model protects legal businesses from being overcharged for services by attorneys for certain services since they'll know the cost of legal services upfront.
"I have used Legal Hero multiple times," -Carlos Herrera, CEO of Marine Carburetors. "The only times I need legal assistance is for preparing legal documents for my business, and I love knowing ahead of time how much it will cost me."
Another startup that caught our attention is Precisely, which is contract automation software that allows users to create contracts, obtain electronic signatures from the parties involved, and archive them so that they're easily accessible to the user. This reduces the cost associated with preparing legal documents because everything is automated, an attorney does not need to prepare the contract, nor does he have to get it signed by the other party and the archive it. Everything is done by software, reducing the amount of time an attorney has to spent on a contract, thereby reducing the cost of attorney fees.
InCloudCounsel has reduced fees for startups and small businesses by offering a network of cloud attorneys. In cloud counsel has reduced legal fees by creating a network of freelance attorneys who prepare NDAs and other legal contracts from the comfort of their own homes. The company also uses AI and proprietary software to create and manage contracts for its clients.
A fourth startup that has reduced the fees associated with starting and running a small business is Farillio. Farillio minimizes legal costs for startups and small businesses by providing them with easy to use templates, infographics, and videos on how to create routine legal documents. It also offers expert help at discounted prices to those who still need help with their legal issue.
Another startup that caught our eye was LegalPad. Legal pad reduces the cost for small businesses, and startups seeking to create immigration documents for its employees is Legal Pad. They take care of work visas and immigration documents for startups and small businesses seeking talent from abroad. The employer fills out a questionnaire with information about the applicant, and Legal Pad takes care of the rest in exchange for an affordable fee.
iDisclose was created by a legal startup that aims to reduce the legal costs for startups and small businesses by offering a turbo-tax like approach to creating legal documents. iDisclose does this by asking the user a series of questions to create a contract. iDisclose advertises that it's able to complete 80% of the work that's required to create a contract, reducing the legal fees for small businesses and startups. That said, iDisclose states that a user still needs an attorney to review the document before using it. We believe this is just a precaution so that they don't get sued if there is something wrong with the document. Nevertheless, it offers a less expensive way for small businesses and startups to create legally binding contracts.
"I create contracts for my towing business using iDisclouse"-said Floyd Smith, CEO of Mission Valley Towing."The ability to create a contract on the fly when a customer needs one is priceless for me."
There are many other startups that offer contract automation whereby users answer a series of questions or use software or online services to create contracts from commonly used contract terms. They are very similar, with some having more features than others. These startups offer a place where users can create contracts and have them archived in case they ever need to access them again. Some go further than others and give users the ability to have an attorney review the contract for an extra fee.
Having said that, the legal industry has lagged behind, but many startups are leading the way, creating new legal tools aimed at reducing the legal costs associated with creating legal documents and performing routine legal tasks. More complex legal matters still require small businesses and startups to seek the help of an attorney, but the legal landscape as we know it is changing and for the better.
If a small business or startup does not find a legal service that can address its legal issue, it could hire a small law firm or solo attorney to assist it with its legal task instead of hiring a large law firm that charges huge amounts of money for performing the same task. If you have any questions or comments, please feel free to leave them in the comments section below.
About the author
My name is Alejandro Uria. I am an advocate for growing access to justice for businesses and individuals who can't afford it. I love writing about startups, legal tech, and intellectual property.