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LegalZoom Sues North Carolina Bar Over Right to Sell Legal Forms

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By Stephanie Rabiner, Esq. on October 10, 2011 6:44 AM

A new LegalZoom lawsuit has been filed, but this time it's being spearheaded by the company itself.

LegalZoom is seeking a declaratory judgment stating that it is entitled to sell standard legal forms in the state of North Carolina. It also wants to register with the North Carolina State Bar as a provider of prepaid legal services.

Attorney regulators believe that LegalZoom is engaging in the unauthorized practice of law.

This is not a new accusation, having first been levied in 2003. The bar opened an inquiry into the company's activities, but found nothing. A second inquiry was opened in 2007, which ended in a finding against LegalZoom.

Last year, LegalZoom applied to register a new prepaid legal plan. For a monthly fee, subscribers are entitled to over-the-phone advice provided by local attorneys.

The North Carolina State Bar denied the company's request, citing its continued engagement in the unauthorized practice of law.

The LegalZoom lawsuit is ultimately about whether a law license is necessary to fill in and review legal forms. Company attorneys argue that LegalZoom provides the same product as self-help books and software, according to the News Observer.

A quick perusal of the LegalZoom website shows that this isn't entirely the case.

Take, for example, a power of attorney. First, you fill in your personal information and that of your designee. Then the site presents you with a list of "powers." You check off which ones you want to designate, and whether authority should be transferred only when you're incapacitated. Eventually, the company conducts a "peace of mind review" to ensure that your answers are complete.

It's this last part that may be directly at issue. Software doesn't check your answers, but attorneys do.

Is this enough to kick LegalZoom out of the market? Should it be?

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