How AI Legal Services Are Making Legal Help Affordable for Small Businesses
We saw during COVID-19 that businesses that had legal
counsel were first in line to receive Paycheck Protection Program (PPP) funds
and have them forgiven in the wake of many gray areas, potential audits, and
fraud liability. Now, new online tools are democratizing legal services, making
it possible for businesses of all sizes, from the startup to the solopreneur to
the small-town retailer, to get the legal help they need.
When do you need legal advice? There are many times when you
should seek legal counsel, but certainly when starting a business. If you are
forming an LLC with partners, for example, what will the LLC agreement spell
out regarding ownership interests, voting rights, liability concerns, and what
happens in bankruptcy or the dissolution of the business? Similarly, what type
of corporate entity should you have for tax consequences and liability, among
other concerns, an S Corp, C Corp, or LLC? Do you have intellectual possessions
that need protection? There is a long list.
How AI is enhancing online legal services for small businesses
Online legal services have existed since the first dot-com
era in the late 1990s, mainly providing small business owners with educational
materials and forms to handle their basic legal needs and databases for finding
lawyers. Just like in many other industries, online legal providers are turning
to AI to enhance and simplify their offerings and make them more accessible. AI
allows users, no matter where they are, to download forms, read pertinent
information, and connect with a lawyer.
Rocket Lawyer, one of the leading providers of online legal
services, recently announced a new tool called Rocket Copilot to help business
owners establish a business name, incorporate it, and protect it. Rocket
Copilot asks a series of questions about the business and then generates names from
which business owners can choose until they find one that fits.
"The first thing we ask before the incorporation
process is what you are going to call your business, and many folks don't know
how to name one," explains Rocket Lawyer CEO Charley Moore. In the future,
Moore says, the new AI tool will be an assistant for most of the services
Rocket Lawyer provides.
To be clear, the AI tool does not provide legal advice,
something Moore reiterates. Rocket Copilot still falls into the education
category, prompting business owners to find an appropriate name and move them
through the incorporation process. While this tool is helpful and
well-designed, I would not recommend going through any legal process without
consulting a lawyer. Rocket Lawyer and other legal tech companies provide
matchmaking services to find the right attorney near you.
Regulatory oversight of AI legal tools
AI is moving at warp speed compared to internet access,
e-commerce, and mobile, and it is the proverbial genie that will not go back
into the bottle. That is why regulators globally are looking at where and when
it should be employed. The growing industry around online legal services is
also getting more scrutiny from a regulatory standpoint.
Historically, lawyers were not permitted to have a joint
business with non-lawyers. Lawyers need to be bar certified, are usually
required to take current legal education (CLE) courses, and are subject to
ethical standards and malpractice liability, all with much higher standards
than those for essential entrepreneurs. Certain states, notably Arizona and
Utah, are starting to look at accepting alternative business structures (ABS)
that permit lawyers and non-lawyers to provide certain services. In 2020, the
Utah Supreme Court created a "regulatory sandbox" to oversee and
regulate ABS companies issuing innovations to offer affordable legal services.
One such company is Salt Lake City-based SimpleCitizen,
which provides online immigration legal services for individuals seeking
permanent residency & citizenship in the United States. SimpleCitizen's
interface allows filers to upload the information and documents necessary to
complete their applications. It has lawyers review final applications before
shipping them to the clients for final submission to U.S. Citizenship and
Immigration Services.
Simple Citizen's president and counsel, Chase Hertel,
states, "In the family-based immigration space, specifically, so much time
is spent summarizing intended immigrants' backgrounds and drafting simple
explanations based on various inputs. In our view, leveraging generative AI
alongside lawyers can automate this work and free them up to focus on complex
legal analyses, ultimately providing lower cost legal services to the client."
The future of online and AI legal services
One thing is for sure: the use of AI in the legal profession
is here to stay. Lawyers use AI tools to draft documents, using the correct
legal precedents and regulations. This will make tools like Rocket Lawyer,
SimpleCitizen, LegalZoom, and UpCounsel more valuable and affordable in the
future. Making legal services more available and at lower cost for all
Americans is undoubtedly good if done right. But meeting face-to-face with your
lawyer or via online video and thoroughly checking their background is still
advisable.
Skimping when a lawyer is needed creates unnecessary risk
when starting and running a business. A poorly drafted contract, lease, or
employment agreement could lead to costly litigation. The old saying goes, "An
ounce of deterrence is worth a pound of cure."