Wednesday, December 9, 2015

Legal Zoom settles case vs North Carolina Bar

The stories regarding whether LegalZoom is engaged in the unauthorized practice of law (UPL) go back many years.  I have posts on this issue on this blog from the very first year I started it.  The first story I posted on this is from 2010, here and here, when the company was sued in Missouri for allegedly violating the rules regarding UPL.  That claim was eventually settled.  See here.

Then in 2011 it was LegalZoom which took the offensive and sued the North Carolina Bar challenging its application of the rules regarding UPL.  See here

Now comes news that LegalZoom's claim against the North Carolina State Bar has been settled. (Forbes).  According to the story, under the terms of the settlement the state bar has agreed to support  legislation that would clarify the definition of “unauthorized practice of law,” which currently is open to various interpretations and was used by the bar to challenge LegalZoom. 

This is becoming one of the most important debates for the profession.  The ABA has announced a partnership with Rocket Lawyer (Legal Zoom's competition), and has created a Commission on the Future of Legal Services to study other innovative approaches to providing legal services.

The ABA has been slow to adopt meaningful change to its rules and views on innovation and it is not clear at this point what the recommendations of the Commission will be.  Also, the recommendations one similar state commission were not entirely well received (here).  But whatever happens, the ongoing and future debate on these issues (usually bundled under the catchphrase (or catch-word, rather)  "innovation") will be interesting.

Lawyer Ethics Alert Blog has more on the story here.  (10/28/15)

For more on LegalZoom go here, here and here.

UPDATE (12-9-15):  In my original post (above) I stated the case was "settled" and referred to the terms of the "settlement."  To be accurate, though, the parties agreed to a "consent judgment" in the case, the terms of which are summarized by the North Carolina State Bar here.  You can also read the full text of the consent judgment here.  One important point not mentioned before is that the consent agreement does not terminate the litigation but merely suspends it for two years or until the legislature approves the proposed legislation to amend the definition of the practice of law.  If this is not achieved within two years, the agreement states the parties can resume the litigation.  If the parties resume litigation, they will be free to pursue all claims and defenses that were available to them before the Consent Judgment was entered.

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