Legal Services and the Unauthorized Practice of Law: No Bright Line Here

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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.

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  • Adam

    I think the most important point is your last regarding change. To me it seems that Legal Zoom is in the practice of law, and their comments about providing access to justice point in that direction. The debatable issue is whether their practice of law should be unauthorized or not. Under most states’ codes, I don’t know that there’s a place for it. But the resolution is to make that change (which I don’t think they’d lobby for, as it would open the floodgates of start-up competition), rather than pretend it fits within a paradigm that never contemplated their existence and seems to cut against it.

    • Thanks for your thoughts. LegalZoom has operated for years without confronting this issue (UPL) because they were the only game in town. But with the current proliferation of document assembly tools and virtual law platforms, UPL is one of many rules that have come front and center and snagged LegalZoom in the review. Curiously, the ABA’s Ethics 2020 Commission has declined to address defining (or redefining) the “practice of law” in its current review of whether or not the Model Rules need to be revised with respect to virtual law practices. So it seems we have a long way to go on this issue.

  • I believe the priesthood experienced much the same fear when the Bible was translated from the Latin into local languages eliminating the need for a translator. It’s time to look at providing (and communicating) real value in relation to the documents rather than relying on the legal industry’s historic self-enforced monopoly on access to information.

    Times are changing. The industry can try to burn LegalZoom at the stake, which is really a waste of resources because even if the effort obliterates LegalZoom another heretic will pop up, then another, then another. The industry will not win the battle against access to information and self-empowerment. Nobody ever has, and nobody ever should. The way to approach this is to eliminate these services from consideration because the VALUE of your advice is worth the price clients pay to work with you. If you can’t provide or communicate that difference in value, the problem is NOT LegalZoom.

    The old rigid concept of monopolistic access to legal documents has shattered.
    Lawyers now have three options:
    1. run around trying to pick up the pieces of the old model and glue them back together hoping for a different result (insanity);
    2. create another rigid insular model that will shatter as the pace of change increases exponentially (foolishness); or
    3. create new, flexible, business/service models that place the value on the advice and counsel (assuming we actually provide advice and counsel) rather than delivering documents.

    I choose #3.

    Let’s keep our eye on the ball here folks. It’s about being worth your fee, actually it’s about being worth MORE than your fee.

  • Annette

    I don’t believe LegalZoom is practicing law. They provided legal document formats and assistance in filling legal forms out for those that need assistance. It is to my understanding that the definition of illegally practicing law is that, “a third part must be giving legal advice to one party, or in some way representing one of the two parties without a license”. LegalZoom is just doing what paralegals do, prepare documents, the only exception is LegalZoom provides documents in template forms where all the customer has to do is fill in the blanks. I really don’t understand what the problem is?

  • @Annette, look at some of the aspects of wills Legal Zoom reviews in their 30 point accuracy review: http://www.legalzoom.com/legal-wills/30-point-review.html

    –Check applicable language for equal distribution of property if more than one heir is named.

    –Verify that 100% of the estate is accounted for and distributed amongst the Principal Heir(s). Principal Heir(s) receive the bulk of the estate (or residual amount) in terms of a general percentage. This helps to avoid uncertainty when distributing the estate.

    –Check and correct for appropriate language regarding joint appointments when more than one person has been chosen for specific roles (for example, Joint Executors, Joint Guardians, Joint Trustees).

    –Ensure stringent state requirements are met…

    This isn’t spell-checking or formatting help. This is a person ensuring the testator’s intent is effectuated, exactly what estate planning attorneys do, except they’re doing it without malpractice liability.

  • Adam

    In addition to what Chris said, the definition of “practicing law” varies a good bit. Legal Zoom doesn’t represent people, and (may or) may not meet Annette’s definition by giving legal advice. But in my jurisdiction, simply furnishing legal services (or advice) counts as UPL, and if Legal Zoom doesn’t provide legal services, I don’t know what they can claim to do.

    Again, this is all about whether they’re acting in accordance with existing law, and isn’t commenting on the wisdom of that law. But I think if their intention is to provide greater access to the legal system, they should pursue changes in UPL law rather than claiming they aren’t crossing the lines that have been drawn, because blurring those lines doesn’t serve anyone’s interests.

  • This is exactly the kind of conversation that is happening in many circles. (See the discussion at Toby Brown’s post in response to this one: The Blurry UPL Line (http://www.geeklawblog.com/2011/07/blurry-upl-line.html). The kind of access to the legal system that is provided by legal service providers such as LegalZoom is essential. Yet, we still need oversight such as that provided by the Model Rules and state bars to safeguard legal clients from unscrupulousness and ineffective representation. (I personally tested out the LegalZoom process of producing documents, and found numerous points along the way where they provided information that I believe constituted legal advice.)

    On the other hand, we don’t want to regulate-away the opportunities presented by tech-based legal service. To me, the real answer is to continue to emphasize the options lawyers have to integrate document assembly solutions (unbunding) into their practices that benefit both the client and lawyer. For more information on unbundling and document assembly software, visit Stephanie Kimbro’s site: VirtualLawPractice.org, and Rich Granat’s site: eLawyeringRedux.com.

  • Nick Zales

    How would doctors respond to software that let people write their own prescriptions? Or maybe some CPA software that let people do their own audits. Maybe self-help dentistry is on the way. What bothers me most professions and business folk who want into the legal world want to bar others from responding in kind. How about some self-help banks where people can borrow money from the federal reserve at 0.5%?

  • The USDC Missouri has drawn a much brighter line: http://www.directlaw.com/courts-order-in-LegalZoom.pdf

  • Michael P Harvey, Esq

    The reality is documents of all stripes are driven by the Court’s interpetations of statutes and constitutions. This requires at its core legal analysis, interpetation, integration and reasoning. Those who do not practice law see a simple will as being something any fool can “fill in” but it is far more invloved than that. Each word in a will has meaning back to a wide variety of sources that drives much of the decision making beyond names and addresses. Legal Zoom and similar sites are providing that reasoning and they are practicing law. Books in my view can also cross the line, just not as readily, unless they have access to the web or a cd. Each state and the federal system is different and we cannot let people practice law without licensure, insurance, bar passage and updated education in that jurisdiction.