LEGALZOOM’S LOOMING LEGAL PROBLEMS
The Center for Nonprofit Creation (CNC) has brought suit against Legalzoom for breach of contract. Apparently, CNC entered a business relationship with Legalzoom in 2004 under which CNC developed questionnaires that Legalzoom used to help its customers establish non-profit organizations. Legalzoom clients would complete the questionnaires which CNC used to prepare tax-exempt status applications. Under the arrangement, Legalzoom was to pay CNC a fixed $350 fee for each application completed.
According to the suit, Legalzoom continued to use CNC’s proprietary information after Legalzoom stopped sending questionnaires to CNC. CNC had apparently received approximately $1.6 million in fees prior to Legalzoom’s alleged breach of contract.
In addition to CNC’s lawsuit against Legalzoom, questions remain whether in any number of states Legalzoom is in violation of the rule against the unauthorized practice of law. See, e.g., LegalZoom Continues Unauthorized Practice of Law; also compare eLawyering and the Unauthorized Practice of Law.
From personal experience, our firm has seen a number of individuals having first used Legalzoom. The result has been potential risk to their intellectual property and at times increased costs to correct issues that could have been avoided had an experienced intellectual property attorney been engaged from the start. The risks of using Legalzoom are particularly heightened when it involves patents and trademarks. Complex fact dependent issues involving priority, disclosure, offers for sale, use, and strict time deadlines are not easily addressed via canned online legal help.
Oddly, there has been a dearth of investigations by State Bars and Attorneys General. This is not for lack of merit, but rather there does not seem to be enough political pressure to start a meaningful investigation. Hopefully, having the legal spotlight on Legalzoom will bring more public awareness to the issue and encourage authorities to take a closer look.
According to the suit, Legalzoom continued to use CNC’s proprietary information after Legalzoom stopped sending questionnaires to CNC. CNC had apparently received approximately $1.6 million in fees prior to Legalzoom’s alleged breach of contract.
In addition to CNC’s lawsuit against Legalzoom, questions remain whether in any number of states Legalzoom is in violation of the rule against the unauthorized practice of law. See, e.g., LegalZoom Continues Unauthorized Practice of Law; also compare eLawyering and the Unauthorized Practice of Law.
From personal experience, our firm has seen a number of individuals having first used Legalzoom. The result has been potential risk to their intellectual property and at times increased costs to correct issues that could have been avoided had an experienced intellectual property attorney been engaged from the start. The risks of using Legalzoom are particularly heightened when it involves patents and trademarks. Complex fact dependent issues involving priority, disclosure, offers for sale, use, and strict time deadlines are not easily addressed via canned online legal help.
Oddly, there has been a dearth of investigations by State Bars and Attorneys General. This is not for lack of merit, but rather there does not seem to be enough political pressure to start a meaningful investigation. Hopefully, having the legal spotlight on Legalzoom will bring more public awareness to the issue and encourage authorities to take a closer look.
Good Article. Here is a Colorado attorney who is grateful for the extra business Legalzoom has created for him: http://www.lld-law.com/2006/10/legal-zoom-why-we-love-it.html
What is your opinion of Quicken's Willmaker software?
Reply to this
Thanks! That is a good article and I think uses appropriate tongue-in-cheek tone to make its point. No doubt many people are not getting the service they think they are and unfortunately, despite the rhetoric, are led to believe they do not need attorneys.
Reply to this
In theory, LegalZoom is a great way for people to take care of their affairs. The problem is, people don't understand how this can cause more problems in the long run. There was a recent article in the Wall Street Journal on LegalZoom and other online offerings for estate plans. The focus of the article was the ease of use rather than the completeness of the estate plans they ordered. I reviewed one from LegalZoom and it was woefully lacking in many areas. So I am trying to compete against LegalZoom and offer a more comprehensive alternative by an attorney at http://www.coloradoetrust.com/.
Reply to this
Thank you for your comments.
Reply to this