When forming a non-profit corporation, can an online service such as LegalZoom cover all the bases...is it a good idea?

I know this sounds self-serving, but Legalzoom goes out of it's way to disclaim that it provides no legal advice, and presumably "advice" is one of the bases when doing legal work. Legalzoom doesn't ask any questions about a client's situation and doesn't do an analysis of that situation - it just responds to the client's requests and assumes the client knows what they're doing with a ready made document. For the same reason, Avvo's shortcut questions and answers only provide preliminary information, because the lawyer is responding to an anonymous and often crypic or convoluted question that may leave out crucial facts that change the answer dramatically. There's just no substitute for a one-to-one consultation with a lawyer who's been to law school and practiced for many years, with full disclosure o the client's part and comprehensive advice from the lawyer who knows what to ask and what to recommend and why.

I've had had many clients come to me only after using Legalzoom to screw up their legal affairs, such as one client who used Legalzoom to apply for a trademark, under the mistaken impression that he needed a trademark for wine products when what he really needed was a service mark for wine distribution for someone else's products. That's a costly mistake, because the USPTO fees are nonrefundable, and an application can't add classes once it's submitted, and this client was basically committing trademark infringement of his own customer.

Same with corporate formations. If the client picks the wrong entity, there are conversion fee costs, not to mention the time and effort to figure this out the right way to do things, if it takes one try to get it right or multiple tries. Some clients use Legalzoom to form their corporations and think they're done. They're not done, because corporations require ongoing maintenance or you can lose the benefits of having them.

See a lawyer. Then after you've considered all the angles of what's involved in what you want to do, decide if this is something you and Legalzoom can handle.

Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

LegalZoon is a pretty cool concept, but all you're going to get is the plain-vanilla basics. My experience is that you are sent along your way with a generic set of organizational documents. When a client comes in after forming their entity through LegalZoom, we often need to make some changes to suit their specialized needs. Frankly, this involves the same interview that would have taken place to form the entity (no savings there) and then I have to rework the organizational documents. That often is not much more than the amount of time it would have taken for me to do them from my forms originally! Whatever "savings" resulted from LegalZoom in the first place, just went away! Also, LegalZoom is not there for any extras like first meetings, additional necessary filings, coordination with tax consultant, etc. and they can't provide legal recommendations. If I matched LegalZoom's price for what they provide and then added what it would cost for the non-generics, it would be a little higher than LegalZoom; however, if you need the attorney to make any "tweaks" or need assistance with other services (e.g. initial docs and filings beyond formation), I would estimate that LegalZoom plus attorney later is higher than just going to the attorney in the first place. Also, I hate seeing new business clients that didn't get a little basic legal education when they first formed their business because they make avoidable mistakes totally unrelated to formation that cost big dollars. Bottom line: If you're possibly going to need more than bare bones or you're not experienced, negotiate a great deal with an attorney instead!

LegalZoom has been accused of unlawfully practicing law: < http://tr.im/v0bb >, < http://tr.im/v0bX >, < http://tr.im/v0cL >.

Whether LegalZoom is unlawfully practicing law or not, I believe that anyone who offers do-it-yourself legal services does a VERY great disservice to consumers. In my field of intellectual property law I can think of no type of transaction, strategic plan, or dispute resolution approach that does not require an analysis of the law that is far beyond the skill set of savvy business persons -- let alone those with limited business experience.

The end product of a legal analysis may be a short and understandable document or a very focused course of action -- which for all appearances look simple -- but what is not apparent is the contract language, strategic approaches, and legal considerations that were evaluated but NOT presented to the legal services consumer. The work product left out of the final product is nearly always more considerable than what is presented to the client (which is why trust is so important in an attorney-client relationship).

Rodin famously said that his sculptures were already present in the rough marble slabs that he worked from -- his role was to chip away all the extraneous material to "simply" reveal the art within. Those who purchase do-it-yourself legal documents are trying to grab the art within without having to pay a sculpture to "simply" create the artfully drafted documents unique to the person's raw circumstances and goals.

From what I've seen, online incorporation services are not a good choice.

If you must minimize costs, you will be better off using a book from Nolo Press (link below). Please see my blog post (link below) on this issue.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.