Internet legal documents service practiced law without license

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Case in Point

November 1, 2011

Internet legal documents service practiced law without license 

The class alleged that LegalZoom.Com, Inc., engaged in the practice of law without a license by using form templates and not having an attorney review or approve its documents. Suit also alleged deceptive trade practices, among other claims. Janson v. LegalZoom.Com, Inc.

LegalZoom.Com, Inc., operates an Internet company that produces legal documents, such as wills, powers of attorney, and contracts, for customers. It advertises itself as a cheaper alternative to hiring an attorney, says it was founded by attorneys, and customizes documents based on information its customers provide in a questionnaire.

In 2008, the North Carolina State Bar issued a cease-and-desist letter to LegalZoom, finding that it was practicing law without a state license. The bar’s investigation revealed that LegalZoom used form templates for its documents and simply input the customer’s information. Although the company represented to customers across the nation that the documents were legally sufficient, no attorney reviewed, edited, or approved them.

Two Missouri customers filed a class action against LegalZoom, claiming it was engaging in the practice of law—which includes drafting legal documents—without a license, in violation of state law. They also alleged deceptive trade practices and money had and received under the state merchandising practices act.

The trial court granted the plaintiffs partial summary judgment, holding that multiple LegalZoom documents qualify as the practice of law because they affect the consumers’ secular rights. The court dismissed the plaintiffs’ claims based on patents and trademarks because federal law allows nonlawyers to practice before the U.S. Patent and Trademark Office.

LegalZoom agreed to a $6 million settlement. Class members who bought a product between December 18, 2007, and May 20, 2011 will receive 163.2 percent of the difference between the gross amount they paid and the amount of any refund they have already received. Members who bought products between December 18, 2004 and December 17, 2007 will receive 54.4 percent of the difference between the amounts.

The company also agreed, among other things, to have an attorney review all templates; remove the language “we will take care of the rest” and “LegalZoom takes over” from advertisements, as well as any comparison to services provided by an attorney without disclosing that LegalZoom is not a law firm; and offer a free consultation to Missouri customers.

Citation: Janson v. LegalZoom.Com, Inc., No. 2:10-cv-04018 (W.D. Mo. Sept. 28, 2011).

Plaintiff counsel: AAJ members Timothy Van Ronzelen, Matthew A. Clement, and Kari A. Schulte, and Edward D. Robertson Jr., Mary Doerhoff Winter, and Randall O. Barnes, all of Jefferson City, Missouri; David T. Butsch and James J. Simeri, both of Clayton, Missouri; and Steven E. Dyer, St. Louis.

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