To date, we lawyers haven’t been able to effectively sell the public on the idea that document preparation services like Legal Zoom are a poor substitute for the services of a lawyer. So, being lawyers, we’ve done the next best thing to selling: suing. Last month, a Missouri law firm filed a class action lawsuit against LegalZoom on behalf of three LegalZoom customers, alleging that LegalZoom violate Missouri’s unauthorized practice of law statute. Likewise, several months back, the North Carolina Bar challenged LegalZoom for unauthorized practice of law.
What’s interesting about both actions is that neither cites specific incidents of harm to consumers, such as an individual winding up personally liable for business dealings because of an improperly formed corporation or LLC. Or a widowed spouse losing an inheritance to her deceased husband’s ex, because LegalZoom botched the will. In fact, in Estate of George Mounts v. Barrett, a Missouri Court of Appeals case from 2000 on UPL (note – I found it on GoogleLegal, haven’t shepardized it), a concurring judge expressed surprise at the relatively few complaints raised over unauthorized practice:
Even so, it appears to this writer there is an alarming increase in the unauthorized practice of law especially in the area of real estate law. Inexplicably, there does not appear to be a prevalence of complaints about this trend (if it is a trend)
So why the crackdown if apparently, there isn’t any problem?
Well, for starters, lack of complaints doesn’t mean that LegalZoom is either appropriate or adequate for consumers. Texas Wills and Trusts lawyer Rania Combs explains that LegalZoom’s description of the law is outdated or just plain wrong, while Start Up Lawyer Ryan Roberts points out that the documents provided are inadequate for the needs of many start ups. While both Combs and Roberts are one hundred percent correct, their arguments aren’t entirely persuasive to many consumers because the harm that Combs and Roberts describe is speculative. As a result, it’s easier to ignore.
Moreover, telling consumers (many of whom are already skeptical about the value of legal services) that LegalZoom documents are inadequate doesn’t make much of an impression because many consumers realize (or have experienced first hand) that lawyers can also commit malpractice or overcharge for simple paperwork. Thus, unless lawyers can show that a greater percentage of LegalZoom documents than lawyer-prepared documents are actually botched or more likely to give rise to litigation or added costs or some other horrible down the road, then consumers would just as well take their chances with the lower priced option.
Still, there are other compelling rebuttals to LegalZoom. And what’s worst about UPL actions is that in the rush to shut these companies down, those bringing the lawsuits overlook a far better remedy: cracking down on LegalZoom’s deceptive advertising practices. For example, the Ninety Five Years blog comments that LegalZoom claims that a lawyer would charge $780 for a copyright application – which is highly unlikely. Why not require LegalZoom to produce evidence of these legal fees before allowing it to state that a lawyer would charge as much?
There’s another claim at the site that seventy percent of consumers who complete their own documents make mistakes. What’s the support for those statistics? And when consumers make mistakes, are they the kinds of mistakes (e.g., spelling errors or filing at the wrong agency) that LegalZoom can cure? Or do the errors concern more substantive issues – inadvertently failing to list an LLC member – that even LegalZoom can’t correct?
Finally, Legal Zoom also cites several talk show celebrities as endorsers of the LegalZoom products. Are those celebrities paid for giving endorsements? The site doesn’t say (or I couldn’t find where it did) – but it should.
If the FTC or other body regulated LegalZoom ads as strictly as, say, cigarette advertisements or ads for pharmaceutical drugs, consumers could learn more about the potential drawbacks of these sites and make informed decisions. In some instances – for example, an incorporation for a thirteen year old’s dog walking business business or a will for a $2500 estate – a consumer might legitimately decide that a Legal Zoom document would suffice. But for more complicated matters, a consumer might realize that any promised savings from Legal Zoom (which are currently inflated by Legal Zoom) are not sufficient to justify the risk of not using a lawyer.
It seems unlikely that any of these lawsuits will prevail on UPL grounds. As a general matter, most forms and kits do not fall within the category of the practice of law (courtesy of Google, this Missouri case has a pretty good round up), though offering personal advice on how to complete the forms could cross the line into UPL. Though LegalZoom offers a customer service hot-line, the company is likely to argue that the help provided is not legal advice, but rather is more technical or administrative in nature.
The bottom line is that lawsuits aren’t likely to shut down companies like LegalZoom. Worse, these suits send the message to consumers that lawyers are so fearful of competition from computerized form companies that they need to drive them out of business.
In addition, do lawyers really want to argue that an impersonal, fill in the blank form is, in fact, “the practice of law?” Did we really go to law school three years of law school to help someone fill out a form? From Abraham Lincoln (lawyer’s advice… is his stock in trade) to Richard Susskind (who emphasizes the continuing vitality of bespoke advice even in an automated world), our currency is our judgment and ability to counsel. Why do we want to diminish that value by arguing, as these kinds of lawsuits do, that we’re nothing more than form-fillers or paper shufflers.
Rather than sue, lawyers need to sell the idea that document preparation services are a waste of money and don’t always offer the benefits (e.g., cost or time savings) that they claim. Gregory Luce of the Practice Blawg is doing a bang-up job on that front with a detailed video showing exactly what happens when you sign up for Legal Zoom and how that experience compares, in cost and quality, to a sit down meeting with a lawyer (and perhaps, also, a virtual, unbundled legal service provider).
Ultimately, even if lawyers manage to shut down LegalZoom, there’s no guarantee that clients will choose to retain a lawyer over a DIY alternative. Unless we lawyers can win over the hearts and minds of clients by showing that we can bring value to basic transactions without much added cost, then even if lawyers manage to win a UPL case, we still lose in the long run.