Do It Yourself Law
Douglas Clark, a veteran inventor, is the do-it-yourself type. When his garage door stuck, he made an opener from spare parts. When he dreamed up a musical clock for the blind, he made a prototype in his basement. And when he wanted to get patents on his inventions, he picked up a book called Patent It Yourself (Nolo Press) and did what the title advises. Well, almost. Careful scientist that he is, he also hired its author, former carpooling buddy David Pressman, to review his work--and Pressman usually sent him back to the drawing board. "Each one took a couple of drafts to get right," says Clark. But he's not complaining. By limiting a lawyer's involvement to a few hours on each of his 11 patents, Clark has saved $50,000 to $60,000 over a 20-year career.
From Clark's perspective, Pressman, an intellectual-property lawyer, has been acting as a coach. As Pressman sees it, he has been "unbundling" his services--that is, selling them a la carte. Either way, it's a cost-cutting trend that both small-business owners and small-firm lawyers are embracing.
Can you really act as your own lawyer? As an attorney might say, it depends on what you mean by "lawyer"--and by "act." No, you can't litigate in federal court. But you can go to small claims court (story, page F.28) and collect bad debts. You can read up on self-help law and draft routine documents (box, page F.25). And you can find lawyers who unbundle their services and treat you as a partner. It's a buyer's market. Just ask.
It works like this: At an initial meeting, the lawyer breaks down the tasks involved in a particular job--say, forming a limited-liability company--and tells clients what they can probably do on their own. Then they divide the work. In theory, the lawyer gets a client who otherwise couldn't afford professional help, while the client gets "to pick a Chevy instead of choosing between a Cadillac and riding the bus," says Forrest S. Mosten, a Los Angeles lawyer-mediator who pioneered unbundled services in the 1980s.
In practice, self-help can demand a lot of time as well as willingness to hit the books. Clark's patent applications each took him about 40 hours. "Often, clients get a taste and just decide, `I'd rather let my lawyer do the whole thing,"' says Mosten, who maintains an on-site self-help law library. While just 15% of law clients request unbundled services, he says, about 50% of clients involved in mediation want to do some of their own work. "People who seek mediation ordinarily expect to do it themselves and only later realize that they'd benefit from having a lawyer examine their arguments," says Mosten. Oddly enough, unbundled services have become more profitable. "People are much happier and more willing to pay when they control their own destiny," observes Mosten.
Hands-on. Surely that's what appeals to a lot of entrepreneurs about self-help law. They don't want to be buffaloed. They want to sound knowledgeable when talking to lawyers and resent paying $250 an hour for an explanation of business law basics. Self-help attracts people who are "very hands-on," who "want to know everything about every aspect of the business," says Ralph "Jake" Warner, the Berkeley (Calif.) lawyer-entrepreneur whose Nolo Press began the legal self-help revolution (story, page F.24).
Of course, no one--not even Nolo--suggests that sweat equity can trump a lawyer's skill on complicated problems. Fred S. Steingold, an Ann Arbor (Mich.) attorney, has written three books on business law for Nolo and is careful to tell readers how far they can go on their own.
The general rule, much like home rehabbing, is that complexity and customization require a professional's touch. The simplest partnership deal or incorporation is pretty much a fill-in-the-blanks affair. But if you want specialized features, such as a stock-option plan, indemnifications for your directors, or a buy-sell agreement, you're well advised to see a lawyer. Same thing with leasing: You can negotiate a lease yourself and use boilerplate if you're making a modest investment, but longer leases for larger amounts of space require extensive customization, says Warner. And always get a lawyer if litigation is possible, such as when firing a worker in a protected category or fighting over a contract.
The smartest do-it-yourselfer knows when he's in over his head. Take David Landau, 34, a former teacher who armed himself with $200 worth of self-help titles when he launched his Chicago marketing firm seven months ago. It wasn't long before he needed to draft a complicated--and critical--contract not covered by IDG Books Worldwide's Business Contract Kit for Dummies. He also decided he was too busy to handle his own incorporation. When lawyers quoted fees for both tasks ranging from $800 to $5,000, Landau felt "totally helpless." So he kept looking until he found Northwestern University School of Law's Small Business Opportunity Clinic, where law students provide services at bargain rates. Landau expects to pay $200. Still, he has no regrets about his attempts at lawyering. "Knowing the law really helps in business negotiations," he says, regardless of who writes the contract.
What if your self-help project goes awry? Ironically, you can sue the lawyer who reviewed your work. Courts have held lawyers liable for clients' mistakes if they failed to spell out in advance--and in writing--the scope of their counsel. That's the beauty of unbundling: You have guidance to get the job done right and recourse if something goes wrong. Even a lawyer couldn't do better.
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