It seems we will find out the answer in the coming days. In Janson, et al. v. LegalZoom.com, Inc., (No. 10-CV-04018-NKL, W.D.Mo.), LegalZoom.com, Inc. faces a lawsuit alleging that it is engaging in the unauthorized practice of law, in violation of Missouri law. Originally, the case was brought in state court, but was removed to federal court, due to the diversity of the parties. Then, the federal district court certified a class action in the case, involving all those Missourians who have purchased LegalZoom products and services since December 17, 2004.
LegalZoom offers blank legal forms and document preparation services. The blank legal forms product offering is not a subject of the lawsuit. In the document preparation service, it prepares documents based upon the answers which users of their services provide to specific questions. Based on the answers to the decision-tree questions, the document is assembled by LegalZoom and sent to the user.
LegalZoom filed a motion for summary judgment in the case. Earlier this month, the district court denied the motion for summary judgment, with the narrow exception of matters relating to the preparation of items for patents and trademarks. The preparation of patent and trademark applications is a matter of federal law, which preempts state law regarding the unauthorized practice of law. However, the case is going forward as to the portion of the case concerning estate planning attorneys: The preparation of Wills, Trusts, and similar documents. Here is a link to the order on the summary judgment motion: http://www.directlaw.com/courts-order-in-LegalZoom.pdf
In denying summary judgment, the court stated, “a computer sitting at a desk in California cannot prepare a legal document without a human programming it to fill in the document using legal principles derived from Missouri law that are selected for the customer based on the information provided by the customer. There is little or no difference between this and a lawyer in Missouri asking a client a series of questions and then preparing a legal document based on the answers and applicable Missouri law.”
This seems to make quite a bit of sense. In other words, I could devise a program, using my knowledge of state and federal law, so that the end user could navigate a decision-tree to prepare a document. However, it is the construction of that decision-tree that requires knowledge of law.
Assuming that, after a trial on the matter, the court finds that LegalZoom has engaged in the unauthorized practice of law, what is the likely outcome? Of course, the court almost certainly would enjoin LegalZoom from selling its document preparation service in Missouri. However, there also is a real financial deterrent: The Missouri statute provides for treble damages. Further, it is likely that similar actions would move forward in other states, at least those with similar statutes concerning the unauthorized practice of law.
So, avoid all on-line or corporate document preparation, unless you are assured that an attorney is actually doing the work.