Photo: Ludovic Bertron
It doesn’t come as news that the world of doing business has changed. Gone are the days of Yellow Page advertisements, and many “brick and mortar” establishments are facing the threat of extinction due to online retail stores. One facet of e-commerce that may surprise some is the growing area of eLawyering. Just as you might guess, this is the practice of offering online legal services such as advice, investigation, interviewing, drafting, negotiation and counseling. However, companies such as LegalZoom are a concern to many state bar associations, but given the company’s recent successes against lawsuits, it seems like LegalZoom is here to stay. The question is, should more people be concerned?
LegalZoom: From Online Forms to Prepaid Legal Services
The idea of do-it-yourself lawyering is not a new one. Besides the obvious (and typically unwise) option of representing oneself in court, for years there have been documents readily available for those looking to complete legal processes where there aren’t too many factors for those involved. This might include automobile bills of sale, promissory notes, divorce documents without custody concerns or last will and testaments where little assets are concerned. The truth of the matter, however, is that some people still shouldn’t be filling out their own legal documents, even if the issue at hand is relatively simple.
Enter LegalZoom, a company started in 2001 offering various legal forms online. Well, there are several companies out there providing such services, but LegalZoom seems to have come under the most fire from various state bar associations. At their website, a consumer can buy documents for anything from incorporation your business to designating who will inherit that business when you die (and many other services in between). LegalZoom has also expanded into prepaid legal services, with plans in 41 states as well as the District of Columbia, but they’re not done yet. According to LegalZoom general counsel, they want to expand their services even more, even potentially including full-fledged legal advice.
LegalZoom Fighting Their Own Battles
The practice that has raised the hackles of so many attorneys in this country hasn’t been the fact that LegalZoom is offering these forms. The question is the legality of what happens after the documents are purchased. After the customer decides what forms they need, questionnaires guide them through the process of filling out the documents, and once completed, LegalZoom employees review the answers for such things as spelling, consistency and completeness.
Some state bar associations have claimed that this practice of guidance and review constitutes more than just document providing but rather unauthorized practice of law. Eights states have attempted to shut down LegalZoom, including Alabama, Arkansas, California, Missouri, North Carolina, Ohio, South Carolina and Washington. Of all of these lawsuits, LegalZoom is only still facing challenges from Arkansas (where the case is currently in arbitration pursuant to the mandatory arbitration clause in LegalZoom’s terms of service) and North Carolina.
Where North and South Disagree
In 2012, South Carolina attorney and former state attorney general T. Travis Medlock filed a petition with the state Supreme Court asking that they declare the legal practices of LegalZoom as being unauthorized. After appointing a special referee to investigate, the Supreme Court concluded in March of this year that LegalZoom’s practices “do no constitute the unauthorized practice of law.”
According to the referee, Circuit Court Judge Clifton Newman, “LegalZoom’s software acts at the specific instruction of the customer . . . The software does not exercise any judgment or discretion.” Newman went on to compare the operation of LegalZoom software to a “mail merge program.” He also pointed out that most of the forms offered by LegalZoom in South Carolina are already available from other sources, including state and local government websites. As part of the settlement, LegalZoom agreed to only offer forms such as those mentioned which are already available to South Carolinians for a period of 24 months.
North Carolina provides a different, older case. In 2008, the North Carolina State Bar ordered LegalZoom to cease-and-desist. LegalZoom responded in 2011 with their own counterclaim that the State Bar was violating their own state constitution’s anti-monopoly and equal protection clause. Two weeks after the decision in South Carolina, North Carolina Business Court Judge James L. Gale denied LegalZoom’s motion but put off deciding on the unauthorized practice of law issue, stating that he still had many questions regarding LegalZoom’s practices.
A Question of Regulation
So far, customer response to LegalZoom has been mixed. While some sites have rated their services high, other sites such as Consumer Reports have come back with mixed reviews, stating that while LegalZoom services are better than trying to do it yourself, if your legal needs aren’t simple, it’s probably wiser to use a professional. Another customer review claimed that while the services started cheap enough on the surface, extra fees were built in for various essential elements. “Not buying them is kind of like buying a house without the windows and doors.”
Regardless of public opinion, many legal professionals are recognizing the changing tide and are willing to roll with it, including American Bar Association (ABA) eLawyering Task Force co-chair Richard Granat, who called some of the lawsuits against LegalZoom “an effort to protect lawyers’ incomes.”
However, most of them also recognize the need for regulation, especially as LegalZoom looks to expand their services to actual legal counsel. Andrew M. Perlman, director of the Institute on Law Practice Technology and Innovation at Suffolk University Law School stated, “The best approach is to recognize that these new players are providing a kind of legal service . . . We need to find a way to appropriately regulate what they do so that the public is protected.”