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Missouri lawyers challenge LegalZoom's service

Missouri lawyers challenge LegalZoom's service

July 31st, 2011 by BILL DRAPER, Associated Press in News

KANSAS CITY, Mo. (AP) - A federal class-action civil suit in Missouri against a California-based vendor of online legal documents raises the question of whether even the most routine legal matters should remain the sole domain of the law community.

The lawsuit filed by Todd Janson, a Missouri resident who used LegalZoom to prepare a last will and testament, and two other men who used the service to organize a remodeling business, claims the company is not licensed to provide legal services in the state.

The $5 million suit, set for trial Aug. 22 in Jefferson City, seeks reimbursement to the plaintiffs of three times what they spent on documents through LegalZoom, and similar awards to any Missouri residents who have used the service. By all accounts, the documents purchased by the plaintiffs were not deemed ineffective or invalid, but attorneys said that's not the point.

LegalZoom was created in 2001 in Los Angeles to provide legal documents such as wills, trademarks and incorporation paperwork, tailored to each state's laws. Customers fill out online questionnaires and their documents are created with computer software.

Co-founded by celebrity defense attorney Robert Shapiro, who has appeared in advertisements nationwide pitching the company's services, LegalZoom is the most recognized of a growing number of firms offering similar online assistance.

While LegalZoom bills its products as a means for people to handle common legal matters without paying expensive attorney fees, lawyers for the Missouri plaintiffs say the documents don't address all the nuances of state law, nor are customers given any way to seek recourse in case the documents are faulty and result in future losses.

"From our standpoint, the issue is permitting people who are not licensed by the Missouri Bar, not educated in the practice of law, preparing documents that in many cases can have serious lifetime consequences," said David Butsch, a St. Louis attorney representing plaintiffs. "In the case of a will or power of attorney or trust, those consequences could go well beyond someone's lifetime."

One of the plaintiffs, C&J Remodeling LLC, is no longer in business, Butsch said, although that's not related to documents purchased from LegalZoom.

An attorney for LegalZoom compares the company's services to that of online tax preparation companies like TurboTax, which provide proper forms and customers fill out the information themselves.

The Internet has made provisions of Missouri's 70-year-old statutes governing the legal industry outdated, said LegalZoom general counsel Chas Rampenthal, with much of the information traditionally found only in law books available online. By offering certain legal documents on the Internet, the company is giving people who want to represent themselves in legal matters an important tool, he said.

"We think this case is about an individual's right to represent themselves, to use the Internet to take care of their own legal matters, and to go to a lawyer if they want," Rampenthal said.

"When dealing with tax preparation, you have a choice," he said. "You can do it on your own, go to an accountant or CPA, or go to a service like TurboTax. This is a lot like that."

Tim Van Ronzelen, a Jefferson City attorney representing the plaintiffs, said a more valid comparison would be to handling important medical issues over the Internet. Just like a person can't go to an online medical website, list symptoms and get medical treatment as prescribed by computer software, people aren't allowed to have their legal affairs handled that way, either, he said.

"The ability to prepare legal documents comes with a pretty high cost," Van Ronzelen said. "All the background, education, training, experience and accountability lawyers have through the bar to engage in the process, the Supreme Court has said it's to protect the public."

A disclaimer on the LegalZoom website says it can't guarantee that all of the information it offers is current, and that the firm isn't responsible for "any loss, injury, claim, liability, or damage related to your use of this site or any site linked to this site. ... In short, your use of the site is at your own risk."

That's why the Missouri lawyers say it's important to stop the company from doing business in the state. While critics have suggested the lawsuit is an attempt by attorneys to protect their turf - especially in a slow economy - plaintiffs' attorneys insist their efforts are geared toward protecting the public.

LegalZoom's business practices have been challenged in other states, such as Alabama, where the Dekalb County Bar is suing to bar the company from selling its legal documents there. The North Carolina Bar has sent a cease-and-desist letter to LegalZoom. Last year, the Washington State Attorney General's Office agreed to a settlement with LegalZoom in which the company was banned from comparing its costs to attorneys' fees unless the company clearly discloses that it isn't a substitute for a law firm.

The Missouri case raises interesting questions at a time when the costs of legal services are rising and many people don't have extra money to pay attorneys, said Kathleen Bird, court administrator in Clay County, Mo., northeast of Kansas City.

"This is not an easy issue to grab onto," said Bird, who frequently interacts with people who represent themselves in family court matters. "What is the practice of law and what is not has not really been nailed down specifically."

She said there has been a trend over the past decade toward allowing limited representation, in which attorneys provide some legal services but don't handle an entire case. Half of the states now have some form of limited-scope representation, she said, though the Missouri Bar initially resisted such a move.

"A person out of law school can have a $200,000 debt to pay off, but the wages of the average person have not increased," she said. "One thing lawyers can do is limited representation. The public can get access to help with a case without turning everything over to lawyers and have them handle it exclusively."