LegalZoom Sued in Class Action Suit for Unauthorized Practice of Law

Insights July 8, 2011

LegalZoom, as referenced in http://www.rimonlaw.com/blog/2011/05/31/e-law-firms-versus-document-mills, is an online service that allows people to economically generate their own legal documents, which are customized by a series of questions – think TurboTax for law.  Though customized, the product is still based on a limited set of templates.  LegalZoom is based in California, and was founded by Robert Shapiro, who is known for being part of O.J. Simpson’s defense team.

The suit against LegalZoom was brought in December 2009 in Missouri.  The plaintiff, Janson, accused LegalZoom of engaging in the unauthorized practice of law.  One year later, the case against LegalZoom gained class action certification by U.S. District Judge Nanette Laughrey.  Trial is currently pending for August 22, 2011 in Missouri.

The plaintiffs aren’t actually suing under a specific cause of action.  Missouri law provides that a client who has paid money to a non-lawyer for legal services (and all states prohibit a non-lawyer from practicing law) may sue the non-lawyer for a sum equal to three times what he paid.  With the class-action certification, the suit now seeks to recoup the costs of every Missouri resident who has used LegalZoom since December 17, 2004, regardless of whether there were damages or necessary corrections by a lawyer.

The underlying question of the suit is of course whether LegalZoom is practicing law by distributing such legal documents on its website in Missouri.  Missouri statutes define law practice as “the drawing or the. . . assisting in the drawing for a valuable consideration of any paper, document or instrument affecting. . . [legal] rights.”  However, this language was narrowed considerably when a 1978 Missouri Supreme Court case held that the sellers of a divorce kit with blank forms and instructions were not practicing law absent “personal advice as to legal remedies or the consequences of flowing therefrom.”

Consequently, the plaintiffs will attempt to characterize LegalZoom’s service as “personal advice as to legal remedies,” assisting with the drafting of documents affecting legal rights.  In court filings, they state that LegalZoom “prepares customized legal documents, tailored for the use of individual customers,” while LegalZoom says it merely “provides an online platform for customers to select and create their own legal documents.”

Janson v. LegalZoom will be the second court ruling ever on the legality of such services.  (The first was a 1999 Texas case which disallowed a family law software.)  Janson projects to be more significant because of the proliferation Internet-based legal services, such as lawdepot.com, nolo.com, prepaidlegal.com, and rocketlawyer.com.