Janson v. LegalZoom. Com, Inc.
87 A.L.R. 6th 757, 802 F. Supp. 2d 1053, 2011 U.S. Dist. LEXIS 84939 (2011)
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Rule of Law:
A company engages in the unauthorized practice of law when it goes beyond selling blank legal forms and provides an interactive service that uses software and human employees to prepare legal documents for customers for a fee. While federal law preempts state regulation regarding practice before the U.S. Patent and Trademark Office, this exception does not apply to the preparation of other legal documents.
Facts:
- LegalZoom.com, Inc. ('LegalZoom') operates a website offering legal document services to customers.
- The service at issue involves an 'internet portal' where a customer answers questions via a 'branching intake mechanism,' or decision tree, to create a legal document like a will or business formation document.
- LegalZoom's software automatically uses the customer's answers to populate a standardized template created by attorneys.
- A LegalZoom employee reviews the customer's submitted data for spelling, grammar, and factual consistency, and may contact the customer for clarification.
- Another LegalZoom employee reviews the final, populated document for formatting before it is sent to the customer.
- For certain documents, such as trademark applications, LegalZoom files the completed form directly with the government on the customer's behalf.
- Plaintiff Todd Janson used the service to create a will, and Plaintiffs Gerald Ardrey and Chad Ferrell used it to create articles of organization for their company, C & J Remodeling.
- LegalZoom's advertisements state that after a customer answers online questions, 'we’ll prepare your legal documents' and 'LegalZoom takes over.'
Procedural Posture:
- Plaintiffs, on behalf of a class, filed suit against LegalZoom.com, Inc. in Missouri state court.
- The action was removed to the U.S. District Court for the Western District of Missouri.
- The district court denied LegalZoom's motion to dismiss for improper venue and its motion to transfer venue.
- The district court certified a class consisting of all Missouri residents who paid fees to LegalZoom for legal document preparation from December 17, 2004 to the present.
- LegalZoom filed a motion for summary judgment, and the Plaintiff class filed a motion for partial summary judgment, both of which are being decided by this opinion.
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Issue:
Does an online company's service, which uses a decision-tree questionnaire and human review to generate completed legal documents for a fee, constitute the unauthorized practice of law under Missouri law?
Opinions:
Majority - Judge Nanette K. Laughrey
Yes, a company's online service that uses a decision-tree questionnaire and human review to generate legal documents for a fee constitutes the unauthorized practice of law under Missouri law, except where preempted by federal law. The court distinguished between selling a permissible 'do-it-yourself' product, like a blank form or a book (as in In re Thompson), and providing an impermissible legal document preparation service. LegalZoom's model is a service, not a product, because it 'takes over' for the customer; its software selects applicable legal clauses based on customer answers, and its employees review customer data for errors and format the final document. This active involvement and charging a fee for document preparation aligns with conduct prohibited by Missouri precedents like Hulse and Eisel. However, the court found that federal law preempts state UPL statutes concerning patent and trademark applications, as the U.S. Patent and Trademark Office has exclusive authority to determine who may practice before it.
Analysis:
This decision is significant for applying traditional unauthorized practice of law (UPL) principles to a modern, internet-based service model. It establishes that automation and technology do not insulate a company from UPL liability if its service is functionally equivalent to document preparation by a non-lawyer. The ruling serves as a caution to legal technology companies that the distinction between a permissible 'do-it-yourself' tool and an impermissible 'do-it-for-me' service is critical. The case reinforces the judiciary's role in defining the practice of law and signals that courts will look past the medium (the internet) to the substance of the service being provided.
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