Legal Zoom’s Business Model Prompts Ethical Debate

Posted by

As the legal industry evolves, attorneys and would-be clients continue to experiment with alternatives to the standard law firm model. Some websites offer do-it-yourself standardized legal forms for basic legal needs such as will preparation, lease agreements or corporate formation documents. You’ve probably seen the commercials for Legal Zoom, Nolo, RocketLawyer and others. But, what is actually for sale? Has an attorney drafted these documents? If so, are these attorneys subject to professional malpractice exposure? If not, are these sites engaged in the unauthorized practice of law? These are hot issues in many states. Notably, according to a recent opinion out of South Carolina, Legal Zoom’s practices are consistent with the rules of professional conduct.


Legal Zoom offers interactive self-help form documents for sale online in all 50 states. In the underlying dispute, the South Carolina Supreme Court asked a special referee to consider the issue of whether it engaged in the unauthorized practice of law. The referee’s opinion, which was adopted by the court, held that Legal Zoom’s practice of offering online documents was little different than similar services provided by state and local agencies. The report highlighted that Legal Zoom did not provide legal advice or legal assistance to customers who purchased and completed the online forms. The key was that Legal Zoom acts at the specific instruction of the customer and records the information verbatim without exercising judgment or discretion.


Despite this holding, legal services websites may send risk management shivers down your spine. Is there in an engagement letter? There is little direct communication between the source and the “client,” right? Isn’t there room for confusion regarding the scope and extent of the relationship or the application of particular form documents? Anyone who isn’t particularly tech-savvy may run into serious problems when preparing her will or corporate document. In the typical attorney-client scenario, the foregoing issues often lead to malpractice claims. That being the case, PL Matters was interested in Legal Zoom’s disclaimer language. Here it is – do you think it is effective?


Please note that we cannot guarantee the results or outcome of your particular procedure. For instance, the government may reject a trademark application for legal reasons beyond the scope of LegalZoom’s service. In some cases, a government backlog can lead to long delays before your process is complete. Similarly, LegalZoom does not guarantee the results or outcomes of the services rendered by our legal plan attorneys or attorney-assisted products. Problems like these are beyond our control and are not covered by this guarantee.