Thursday, August 18, 2011

Is LegalZoom engaged in the unauthorized practice of law?

Yes, a jury could conclude that according to an order dated August 2, 2011 by a Missouri federal district court which denied LegalZoom's motion for summary judgment in a class action suit alleging the company is engaged in the authorized practice of law. Online legal service providers like LegalZoom and Rocket Lawyer threaten the livelihood of small firms and solos unless courts find they are engaged in UPL.  As we previously reported, Rocket Lawyer's business model tries to avoid the issue by employing lawyers who are licensed to practice in the states where it dispenses legal advice. 

The Missouri court first ruled that providing blank legal forms over the internet is not a problem. No surprise there.

It is uncontroverted that Defendant LegalZoom's website performs two distinct
functions. First, the website offers blank legal forms that customers may download,
print, and fill in themselves. Plaintiffs make no claim regarding these blank forms.. Indeed, this function is analogous to the "do-it-yowself" kit in Thompson containing blank forms and general instructions regarding how those forms should be completed by the customer. Such a "do-it-yourself' kit puts the legal forms into the hands of the customers, facilitating the right to pro se representation.

Where things get dicey is when LegalZoom uses a software program, created by humans, to help customers fill-out those forms. As the court explains:

It is the second function of LegalZoom's website that goes beyond mere general instmction. LegalZoom's internet portal is not like the "do-it-yourself' divorce kit in Thompson. Rather, LegalZoom's internet portal service is based on the opposite notion: we'll do it for you.

. . . .

LegalZoom's branching computer program is created by a LegalZoom employee using Missouri law. It is that human input that creates the legal document. A computer sitting at a desk in California carrnot prepare a legal document without a human programming it to fill in the document using legal principles derived from Missouri law that are selected for the customer based on the information provided by the customer. There is little or no difference between this and a lawyer in Missouri asking a client a series of questions and then preparing a legal document based on the answer s provided and applicable Missouri law. That the Missouri lawyer may also give legal advice does not undermine the analogy because legal advice and document preparation are two different ways in which a person engages in the practice.

You can read the full decision here and read commentary from the great Lawyerist blog here.


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