A recent CNN Money blog post on unauthorized practice of law addresses the issues raised by the class action lawsuit against LegalZoom pending in Missouri. The piece was the motivating force behind a thorough discussion, in the ABA’s eLawyering Task Force, of the differences between “self-help” legal sites or software and document processing services.

CNN Money says that, in Missouri, statutes define the practice of law as:

the drawing or the . . .  assisting in the drawing for a valuable consideration of any paper, document or instrument affecting . . . [legal] rights… In legal filings, the plaintiffs say LegalZoom ‘prepares customized legal documents, tailored for the use of individual customers.’…Not at all, responds LegalZoom. Rather, it ‘provides an online platform for customers to select and create their own legal documents.

Rich Granat, owner of DirectLaw and co-chair of the eLawyering Task Force, voiced his opinion on the eLawyering email list that the distinction between practicing law and simply providing completed legal documents via “self-help” software is related to whether or not there is a person involved in processing the documents. Any service that involves activities of a third-party should be defined as “… some form of paralegal document preparation process …” which would bring the enterprise within the meaning of “practicing law” and thus subject them to the regulations of their licensing. He includes LegalZoom in that definition.

Another member of the email list happens to be Chas Rampenthal, VP and General Counsel of LegalZoom, who of course had a different view. He stated: “The real issue is not the mere introduction of a human being in the process. It is what that human being DOES.”

Good point. Maybe so. But in the meantime, another UPL case was filed against LegalZoom in Alabama by the DeKalb Local Bar Association, requesting that LegalZoom be prohibited from doing business in that state. Discourse on the topic continued with Is Legal Zoom Just a Self-Help Legal Software Company? by Granat and Lawyers vs. Software by Larry Ribstein on Truth on the Market. Granat’s post outlines the conversation that took place on the email list and makes some great observations, such as:

If LegalZoom were just a legal software company, it is hard to understand why it needs over 400 employees to provide services to its customers, other than the fact that these employees are conducting professional reviews and providing real service support. For these services, LegalZoom receives a substantially higher price than if they were just selling a self-help legal form. See for example on the LegalZoom Web site, the 30-point review of wills conducted by LegalZoom’s “professional legal document assistants.”

He also includes the input of Andrea Riccio, a Canadian lawyer and eLawyering Task Force member, who very successfully counters statements made by LegalZoom in defense of their position that they are in the business of churning out documents, not providing services. He goes on to note that in California, LegalZoom is registered as a “Legal Document Assistant” as defined by the state’s Business & Professions Code.

Ribstein, on the other hand, makes the “access to justice” argument and a strong case for the availability of enterprises like LegalZoom to open doors to legal services otherwise closed by financial hardship:

Cases like the one in Missouri represent the last gasp of a dying approach to the transmission of legal information — the exclusive reliance on one-to-one customized personal communication of information in the Internet and computer age.  In the long run markets and superior technology will win this battle — they always do.

What we have here is an issue in need of clarification, as variations in models of legal document delivery systems proliferate. And if the Alternative Business Structures (ABS) provision of the Legal Services Act (LSA) has anything to do with it, creative variations of the LegalZoom business model will soon overwhelm the already beleaguered practice of law.

Disruptive, technology-based legal delivery services clearly have a place in what has been an otherwise locked-down law practice tradition. Laws and regulations that have been promulgated to provide consumer protection are unfortunately necessary to protect the many from the few. But they were not written with the many variations of legal service providers currently available in mind. Rather than determining if a legal delivery system violates UPL rules, what must evolve are new definitions of the types of legal services that should be regulated by new standards. Without that, this debate will play out in the courts and bar associations across the country to no one’s advantage, least of all LegalZoom.