Do you have any concrete evidence why using a service like LegalZoom is so bad? It seem like all they do is fill out some standard forms for you and issue boilerplate paperwork.
What value would an attorney offer beyond this?
I've started a profitable business like this and never had any trouble.
If you ever want to take VC/angel money, you will most probably need to spend more to restructure and re-incorporate. The boilerplate that services like LegalZoom are not made for startups. They may be fine for other types of businesses, but not for startups. If you're one or two people running a small business, you should be fine.
Even YC advises against incorporating using generic paperwork (I would imagine the YC paperwork is pretty similar to what other Silicon Valley startup attorneys would use):
"Don't incorporate, though, if you can avoid it. It's easier to start with our paperwork than to transfer an existing LLC or S-Corp to a C-Corp."[1]
"Don't incorporate, though, if you can avoid it. It's easier to start with [YC's] paperwork than to transfer an existing LLC or S-Corp to a C-Corp."
YC uses Goodwin Procter for their startup formations [1]. Goodwin Procter not only makes their startup formation documents freely available, they give you an automated service for customizing their boilerplate: http://www.goodwinfoundersworkbench.com/document-driver/
You can create a C Corp with legalzoom. That said, at my last company we incorporated in delaware with the Company Corporation and had to spend about $10k when we raised our series a on restructuring all that and documenting things.
LegalZoom's forms are almost always just the Secretary of State's forms with LZ's logos plastered on them. This means you can save yourself the cost of LZ and just go straight to your SoS's website and download the forms yourself.
The value of an attorney:
- Structuring your business entity to best handle your management preferences and to minimize investor concerns (i.e. VCs).
- Pitfalls to avoid, and how to avoid them
- What to do, and when, and why.
Basically, an attorney will draft customized documents that fit your situation rather than just the limited subset of situations that the LZ/SoS forms can handle.
What value would an attorney offer beyond this?
I've started a profitable business like this and never had any trouble.