The State of Washington has just entered into an Assurance of Discontinuance with LegalZoom relating to charges that LegalZoom is engaging in the unauthorized practice of law. The Attorney General of the State of Washington initiated an investigation into the business practices of LegalZoom, who offers certain legal forms over the Internet to consumers throughout the United States and including the State of Washington. As a result of this investigation LegalZoom offered and the Attorney General accepted an Assurance of Discontinuance. The Assurance of Discontinuance is not considered a finding of fact or admission of any violation or the commission of any particular act, but the failure to comply with the Assurance of Discontinuance would constitute prima facie evidence of such violations. Notwithstanding the unauthorized practice of law charges, LegalZoom was also investigated for turning over sensitive, privately identifying personal and financial information to third parties.
LegalZoom offers a variety of legal forms and, in my opinion, crosses the line from offering a passive form to actually engaging in the practice of law. The primary difficulty, although certainly not the only difficulty, for LegalZoom is that consumers call them and their customer service people provide answers to questions asked. The questions asked sometimes, if not frequently, are legal questions and the responses constituted the provision of legal services without a license to practice law.
The investigation initiated by the State of Washington did not deal with LegalZoom’s patent or trademark service offerings (see Patent Office Disciplinary Actions and Lack Thereof), but rather focused on their wills and probabe legal services. But the most egregious charge leveled against LegalZoom is that they sold, transfered or otherwise disclosed consumer information to third parties. So not only was LegalZoom offering to provide legal services to individuals without a legal license but they seem to have been collecting private information and giving away sensitive, personally identifying information such as financial information, information relating to real or personal property and information relating to family relationships. This screams for further investigation by other State Attorneys General and the United States Patent and Trademark Office. Not only does LegalZoom’s advertising lull unsuspecting consumers to believe they are being represented, but what LegalZoom learns during such representation is given away to third parties? If an attorney did that they would lose their license. This is exactly why the unauthorized practice of law cannot be tolerated.
The other claims investigated by the Washington State Attorney General include:
- LegalZoom comparing, directly or by implication, the costs of their self-help products and clerical services with those provided by an attorney without in close proximity to each such comparison clearly and conspicuously disclosing to Washington consumers that Respondent is not a law firm and it not a substitute for an attorney or law firm.
- LegalZoom misrepresenting, directly or by implication, the costs, complexity and time required to probate an estate in Washington.
- LegalZoom misrepresenting, directly or by implication, the benefits or disadvantages of any estate distribution document as compared to any other estate distribution document in Washington.
- LegalZoom engaging in the unauthorized practice of law, specifically by providing individualized legal advice about a self-help legal form to Washington consumers.
- LegalZoom failing to offer estate planning legal forms in Washington that conform to Washington law, and to provide information about community property agreements in the education center or similar area of the website for Washington last will and testament customers.
- LegalZoom failing to have an attorney licensed to practice law in Washington review all self-help estate planning forms offered for sale to Washington consumers.
- LegalZoom failing to clearly and conspicuously disclose that communications between them and Washington consumers are not protected by the attorney-client or work product privilege.
Again, LegalZoom did not admit to any of these things, but a casual review of their website and business practices suggests that there seems to be more than prima facie evidence to support each of these allegations. In any event, the Assurance of Discontinuance becomes effective on October 1, 2010, so it will be interesting to see what changes, if any, are made to LegalZoom.com and to their business practices. If these activities continue then that would be a violation of the Assurance of Discontinuance which would be prima facie evidence of violations that could cost LegalZoom $2,000 per occurrence, which could add up quickly.