DIY Legal: When Templates Work (and When They Don't)

The DIY Legal Spectrum

Legal work exists on a spectrum from "completely safe to DIY" to "absolutely requires a lawyer." Understanding where each task falls on this spectrum helps you allocate your legal budget effectively. The goal isn't to avoid lawyers entirely—it's to use lawyers strategically for situations where their expertise actually matters, and handle routine matters yourself with quality templates.

When Templates Work Well

Standard, Routine Documents

Templates work best for standard documents where the situation is common and the terms are well-established. NDAs, employment contracts for junior employees, contractor agreements, and standard terms of service fall into this category. These documents have been used thousands of times, the legal issues are well-understood, and the stakes are relatively low.

Low-Stakes Situations

If the potential downside is small, templates are fine. A $60K employee contract has limited downside—worst case, you pay a few months of severance if you get the termination clause wrong. That's a $10K-$20K risk, which doesn't justify spending $3K on legal fees. Use a $59 template and accept the small risk.

When You Understand the Issues

Templates work when you understand what you're signing and can spot obvious problems. If you've read articles about employment law, understand the key issues (IP assignment, non-solicitation, termination), and can review a template intelligently, you can use templates safely. If you have no idea what you're looking at, hire a lawyer.

When You Need a Lawyer

High-Stakes Situations

If the potential downside is large, hire a lawyer. Fundraising documents, executive employment agreements, and shareholder disputes have huge potential downsides. Getting a term sheet wrong can cost you millions in dilution or loss of control. Getting an executive contract wrong can lead to a $500K wrongful dismissal claim. These situations justify spending $10K-$50K on legal fees.

Complex or Unusual Situations

If your situation is complex or unusual, templates won't work. Negotiating investment terms, structuring complex transactions, dealing with regulatory issues, or resolving disputes require custom legal work. Templates assume standard situations—if yours isn't standard, you need a lawyer.

When the Other Side Has a Lawyer

If the other party has a lawyer, you should too. Negotiating investment terms with a VC's lawyer when you don't have your own lawyer is a bad idea. The power imbalance is too great, and you'll miss issues that will hurt you later. If the other side is paying for legal advice, you should too.

The Hybrid Approach

The smartest approach is hybrid: use templates for routine documents, hire lawyers for complex situations. This allocates your legal budget to situations where expertise actually matters. A typical Canadian startup's first-year legal spend might look like this:

• Templates ($300-$500 total): NDAs, employment contracts for first 3-5 employees, contractor agreements, basic terms of service
• Lawyers ($10K-$30K total): Incorporation and initial setup, shareholder agreement among founders, first fundraising round, one complex negotiation or dispute

This approach saves $10K-$20K compared to using lawyers for everything, while still getting expert help for situations that actually require it.

How to Use Templates Safely

1. Use Quality Templates

Not all templates are equal. Free templates from random websites are often outdated, incorrect, or copied from American sources. Use templates from reputable Canadian sources that are updated regularly and designed for your province.

2. Read and Understand

Don't just fill in blanks—read the entire document and understand what it says. If you don't understand a clause, research it or ask a lawyer. Signing documents you don't understand is how founders get into trouble.

3. Customize Appropriately

Templates are starting points, not final documents. Customize them for your situation. If you're hiring a senior employee with equity, add appropriate vesting and acceleration clauses. If you're in a regulated industry, add compliance provisions. Don't just use the template as-is.

4. Know When to Escalate

If a situation becomes complex or high-stakes, escalate to a lawyer. If an employee is negotiating hard on their contract terms, if a contractor is demanding unusual provisions, or if you're uncertain about any aspect, spend $500-$1,000 for a lawyer to review. It's better to escalate early than to fix problems later.

Common DIY Legal Mistakes

Using American Templates in Canada

American legal templates don't work in Canada. Employment law, corporate law, and contract law differ significantly. An American employment contract with an at-will employment clause is unenforceable in Canada. An American shareholder agreement with Delaware law provisions doesn't work for Canadian corporations. Always use Canadian templates.

Not Customizing Templates

Using a template without customization is almost as bad as not having a contract at all. If your employment contract doesn't address equity compensation, IP assignment, or non-solicitation, it's not protecting you. Take the time to customize templates for your situation.

DIY-ing High-Stakes Situations

The biggest DIY mistake is using templates for high-stakes situations. Founders who use template shareholder agreements for complex co-founder situations, or template term sheets for fundraising, end up with expensive problems later. Know your limits and hire a lawyer when the stakes are high.

The Bottom Line

Templates work well for standard, low-stakes documents like NDAs, junior employee contracts, and contractor agreements. Lawyers are required for high-stakes, complex, or unusual situations like fundraising, executive employment, and disputes. The smartest approach is hybrid: use templates for routine matters, hire lawyers for situations where expertise actually matters. This allocates your legal budget effectively and avoids both overspending on routine documents and underspending on critical situations.