Legal Zoom Faces Unauthorized Practice of Law Class Action

The Wall Street Journal Law Blog reported last month that a class action suit against legal forms provider Legal Zoom survived a motion for summary judgement and will proceed to trial in a Missouri federal court. In rejecting the defendant’s motion, Judge Laughrey allowed the plaintiffs to move forward with their complaint that consumers have been harmed by the company’s unauthorized practice of law in the state.

For an overview of the litigation and the recent order, see Venkat’s post on Eric Goldman’s Technology & Marketing Law Blog. We’ve pulled the filings on Justia Dockets, and you can follow the case there.

Interestingly, Rocket Lawyer announced a round of funding from Google Ventures just nine days later. Rocket Lawyer, which allows users to “easily create customized legal documents that can be downloaded and shared instantly,” is in a similar business. Forbes notes that LegalZoom is one of Rocket Lawyers’ main competitors, but also mentions that CEO Charley Moore “was careful to differentiate his company from LegalZoom, which has tangled with lawyers and bar officials in several states who accuse it of practicing law without a license. (A trap that people who provide legal documents can find hard to escape.) Unlike LegalZoom, Rocket Lawyer is affiliated with real lawyers who can provide advice in a pinch. Federal issues are handled nationwide, while somebody with a question about, say, New York contract law would be hitched up with a lawyer licensed in that state.”  It seems that the main difference between these companies is the availability of attorney review, which may save Rocket Lawyer from similar litigation.

UPDATE 8/16: I just realized that LegalZoom posted a comment on the Forbes story addressing the availability of attorney review: “As the co-founder of LegalZoom, I’m glad that Google and others have recognized the need to make the law more accessible and affordable through technology. However, I’d like to point out that real lawyers are available to help LegalZoom customers as well though our own legal plan. But unlike Rocket Lawyer, we administer the legal plan ourselves.”