In my previous post about Legal Zoom, I noted that Legal Zoom primarily creates legal documents for consumers for which attorneys do not charge significant fees. One such document is a power of attorney ("POA"). As it so happens, a friend in New York City recently obtained a Legal Zoom POA on behalf of an elderly relative. Legal Zoom had been recommended by her local bank. I decided to compare what she obtained versus what could otherwise be obtained on the internet using a simple Google search. This was partly done to test the interesting hypotheses made in the comments to the previous post that Legal Zoom greatly reduces search costs and price uncertainty.
What I found is that one can easily obtain a POA from the New York State Bar website for $20. Another website provided the same POA for free. Legal Zoom charged $44 for a very similar document. To be fair, there were some differences between the sample NYSBA POA that I downloaded and the Legal Zoom POA, including but not limited to:
1. The Legal Zoom POA specifically authorizes the agent of the principal to engage in "Pet and animal care" but limits the agent to this and other enumerated activities in the POA whereas the NYSBA POA makes no mention of "pet and animal care" and permits the agent to carry out "all other matters."
2. The NYSBA POA indemnifies third parties that rely on the POA but does not specifically indemnify the agent whereas the Legal Zoom POA does.
3. The Legal Zoom POA also permits the agent to "personally benefit or profit from transactions taken on [the principal's] behalf."
4. The Legal Zoom POA includes a provision regarding record-keeping that is not in the NYSBA POA but appears to be imposed on the agent in any event via NY General Obligations Law.
[The foregoing comparison was provided for informational purposes only and was not intended as a legal analysis of the merits of the POAs in question. Anyone seeking advice on a particular POA should consider consulting with a qualified attorney].
Assuming that the two POAs are roughly of equivalent quality, why would anyone choose to pay far more for a Legal Zoom POA? One possible answer is that my friend and others like her do not appreciate how easily some important legal documents can be obtained and do not even really attempt to look beyond consulting Legal Zoom. The legal profession could help in this regard by doing a better job of publicizing that many legal forms are available on state bar and local court websites (the existence of state bar not-for-profit attorney referral services should also be more publicized).
The POA example may be atypical, but it is at least worth considering that Legal Zoom and its competitors are succeeding because there is a great deal of misinformation about the cost of basic legal services. Unfortunately, far more legal scholarship is concerned with reforming the legal market than determining what basic services actually cost.