Looking to use Legal Automation Software? Read This First

When I entered the 500 Startups Accelerator Program, one of the top accelerators in the world, I couldn't believe how many entrepreneurs were struggling with legal fees. To "properly" get incorporated, get an investment, and allocate options, the fees can quickly rack up. And being that this was one of the top accelerators in the world, I figured if these companies were having this problem, it must be something most startups were going through.

As I dug deeper in the subject, I found that more and more founders have started turning to legal automation software to save their businesses. While having a lawyer take care of your legal work is always the best option, for money strapped entrepreneurs $10,000 lawyer fees are just no an option.

So if you're going to try the legal automation route, follow these tips before you get started. Doing some planning in the beginning will help save you tons of headaches and legal fees down the road, after you've built a solid foundation right from incorporating.

1. Use The Right Software

It's important that you use established software systems that are user friendly if you're going to try and create your own legal documents. When we were starting out, we used LegalZoom, and because so many people are familiar with their user interface it was easy to ask around for help when we didn't know anything. The nicest thing I like about the software is once you learn how to use it; you can easily keep using the software for both business and personal documents.

Another alternative is Rocket Lawyer, however, the software is much less known than others even though I'm a big fan of its ease to use.

2. Don't guess if you don't know

I can't tell you how many times I've made a mistake on legal documents. Figuring our employee stock options, creating a convertible note, or even making a privacy policy can get overly confusing.

One of the greatest lessons I learned during my time in 500 Startups is how important it is not to take chances on your legal documents. If you don't know the answer to something, find someone who does. Even if you have to pay a few dollars to get an expert legal opinion, in most cases it'll be worth it.

3. Switch to a lawyer as soon as you can

While legal automation software is nice, it is not a long-term solution. Once you raise your first round of capital, you should immediately find a lawyer. In San Francisco, there are many law firms who will defer fees to startups they like. If you have this option, I definitely recommend taking it. Legal software is a backup plan, and should never be your primary path to getting your legal docs taken care of.