California-based LegalZoom.com has lead the way in providing low-cost transactional legal services to clients across the nation. The site assists users with basic legal functions such as creating a will, incorporating a business, filing for divorce and protecting patents.
One issue with any nationwide law practice is that of the requirement for any attorney practicing law to abide by each state’s professional responsibility code. In most states, the highest court (typically the Supreme Court) promulgates rules governing attorneys and requiring them to act or refrain from acting in certain situations. A hallmark professional responsibility rule is that attorneys shall never engage in the unlicensed practice of law within a state. This means that any attorney conducting business in any state must have passed that state’s bar exam and hold a valid attorney’s license in that state.
LegalZoom recently found itself defending a $5 million class action lawsuit filed by plaintiffs in Missouri who claim the products they purchased from the site were “defective” in that they were not legal or binding in their state. The class is seeking damages in the amount of three times what the plaintiffs paid for the products and the trial was set to begin on Monday.
LegalZoom reportedly settled with the clients this week, prior to trial, for an undisclosed amount. Details of the settlement have not been released. The crux of the suit centered around the contention that attorneys used to prepare the documents sold to Missouri residents were not licensed attorneys in Missouri and therefore violated various state laws with regard to engaging in the unlicensed practice of law.
LegalZoom was created in 2001 and founded by famed O.J. defense attorney Robert Shapiro and three other attorneys.
