The Legality of LegalZoom

August 23rd, 2011

A Missouri class action filed in July against has settled right before heading to trial.

The suit alleged that LegalZoom’s sale of do-it-yourself wills, leases, and other contracts constitutes an illegal practice of law.  Missouri law bans non-lawyers from preparing legal documents, and many of LegalZoom’s employees are not lawyers.

Plaintiff’s counsel David Butsch made a statement last month to WSJ LawBlog:

The state licensure of attorneys was established to protect the public from those untrained and uneducated in the practice of law. [The preparation of wills and other legal documents] may seem simple to a layman, but they aren’t. There are consequences of signing a will . . .and those consequences can be great and they can’t be properly communicated by a company over the internet.

LegalZoom had made the point that by removing online contracts, acquiring basic legal forms will become much costlier for small businesses and individuals.

Does LegalZoom’s activity violate the Missouri statute?

We won’t find out from this case.  The settlement “does not involve a change or abridgement of Legal Zoom’s business practices in Missouri” but will compensate Missouri users of LegalZoom, including the 15,000 named class members.