Legal Paperwork: Time for a 50-State Standard

Each of our 50 states requires different legal forms to accomplish the same routine, often-repeated tasks such as uncontested divorces, name changes, and stepparent adoptions. This bureaucratic balkanization makes about as much economic sense as it would for every state to require a different width for its railroad tracks. The American legal system’s failure to agree on a national standard for routine forms results in hundreds of millions of consumer dollars down the courthouse drain.

Why does it cost us so much to have 50 jurisdictions producing 50 different forms for dozens of routine legal tasks? Three big reasons. First, there is the cost of each state maintaining a separate judicial bureaucracy to create and update what can amount to thousands of pages of forms and instructions. Not surprisingly, in this age of electronic filing, a considerable part of this administrative cost involves creating and maintaining the software for 50 computer systems.

A second reason why the existence of 50 separate form-creation systems is so expensive to consumers is that it results in private Internet-based legal providers deciding that it doesn’t make economic sense to enter the forms creation market in less populous states, where low-filing volume for many legal tasks doesn’t justify creating the needed forms. For example, while California may produce enough stepparent adoptions each year to interest an Internet forms provider, Nebraska never will.

The third significant driver of needlessly high costs is that even for high volume legal tasks, such as uncontested divorce, in populous states such as California, New York, Texas and Florida, where Internet legal providers do find it economic to compete, they must prepare and maintain 50 state-specific paperwork systems. For example, creating software in every state to file a corporation or handle a divorce is lots more expensive than doing it once. To get an idea of the big dollars involved, consider that LegalZoom charges $299 for an uncontested divorce, a task where the paperwork is different in every state. Then consider that LegalZoom charges $69.95 for an online will (Nolo charges $59.95). Internet legal providers can charge less for a will because with minor tweaks, a last testament and will is the same in all states. In short, if standardized divorce paperwork could be filed in all states, prices for a divorce would likely fall by half. And the same thing would be true for the dozens of other basic tasks where a one-size-fits-all form would work for every state — these forms would produce huge cost savings for consumers.

So if creating uniform forms is such a great idea, why has progress been slow to the point of being non-existent? The simplest explanation is that like the Italian city states of 200 years ago, where having your own little fiefdom was a great deal for the Duke, courtiers, and generals in charge, every state has an inward-looking court centered bureaucracy with no national vision or incentive to push for a uniform legal filing system.

What to Do

For over a century, America has had a movement to create uniform state laws, especially in commercial areas such as partnerships or securities regulation, where it’s key that states mandate the same basic rules. Led by the Uniform Law Commission of the National Conference of Commissioners on Uniform State Laws, progress on creating one-size-fits-all laws for all 50 states has been slow but steady. So why not have the Uniform Law Commission broaden its mandate to include the standardization of forms? It’s also possible that the National Center for State Courts could take the lead in creating uniform paperwork, although up to now this organization has played an essentially coordinative role, and has no history of pushing for structural reform in the consumer’s interest.

Given our state courts’ long history of insularity, another approach would be for the less populous states who are neighbors to band together to create one-size-fits-all paperwork. For example, the New England states or those in the upper Midwest could work together to standardize their forms. Or even faster and cheaper, the less populous states could simply hitchhike on to the forms simplification work already done in large states like California. In Calfornia, at least in part due to the pioneering work done by Nolo 40 years ago to publish forms and instructions for basic legal tasks, the California Judicial Council has become the national leader in creating and publishing easy-to-use forms and instructions for basic legal tasks.