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LegalZoom faces court battle over business

Posted November 25, 2011
Updated November 26, 2011

LegalZoom has built a business on offering legal documents via the Internet to those who need to write a will or incorporate a business. It is marketed to those who don't want to pay attorney fees, and that is a problem for the North Carolina State Bar.

The state bar, which regulates lawyers and their activities in the state, asked LegalZoom to cease and desist, claiming the company is offering legal advice without a license.

Raleigh attorney A.P. Carlton, who represents LegalZoom, defends the company and points out the disclaimer on all LegalZoom ads. On the company website, it reads, "The information provided in this site is not legal advice, but general information on legal issues commonly encountered. LegalZoom is not a law firm and is not a substitute for an attorney or law firm."

Carlton says, "This is self help. This is like over-the-counter teeth whiteners. It provides low and moderate income consumers with an alternative."

LegalZoom filed suit accusing the North Carolina State Bar of unfairly trying to weed out competition.

"We think they've gone beyond the scope of their statutory authority to regulate, which has the effect of excluding LegalZoom from its legal business," Carlton said.

Attorney Karl Knudsen is not directly involved in the case, but he can see the conflict.

"They say they're not providing legal services when they are," he said.

"It says, 'We're not giving you advice. We're not responsible. If this goes bad, it's on your head and not ours. But, oh by the way, please give us your money.'

"You can call a pig a dog a hundred times, but it's still a pig," Knudsen said.

The state bar has until Dec. 5 to respond to the company's lawsuit.


This story is closed for comments.

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  • Just the facts mam Nov 25, 2011

    Sounds like the NC Bar Association is afraid of competition. I sure hope LegalZoom wins (and therefore is a win for consumers). Shame on NC Bar Association in their attempts to quell competition - no wonder most people do not like lawyers...

  • Tax Man Nov 25, 2011

    The state bar should not have unfettered competition for routine legal matters - and any person should be able to represent themselves, if they feel competent, to handle their legal affairs. NC has long had a monopoly on anything resembling legal stuff - most other states allow self-help and allow persons with basic legal training such as paralegals and legal assistants to help folks with routine legal matters. Glad to see this - In California you can get most legal services for free or very reasonable prices compared to what attorneys charge and you cannot use an attorney in small claims court! Makes the system work much better with competition! Go LegalZoom! Looking forward to the NC State Bar becoming irrelevant in mundane legal matters such as uncontested divorces, bankruptcy, wills, trusts, taxes, small business matters etc.

  • dollibug Nov 25, 2011

    ++++Well we can add this latest shakedown attempt to the already long list of reasons people from around the country laugh at North Carolina.

    Yep....I think you are exactly correct....and the "wheels of justice keep on spinning"....whether what they do is legal and/or lawful....and I think the BRAD COOPER trial takes the cake this year.....(of course, the year is NOT OVER YET)

  • vraptor Nov 25, 2011

    The NC bar will lose this one. Just like the bar in other states. Legal zoom produces legal documents and does not practice law.

    I created my suite of legal docs and had them notarized. So was I practicing law without a law degree and not being regulated by the NC bar???

    So who created your will, living will, power of attorney doc's? I created mine. I plan on using legal zoom when I redo them.

    Legal zoom has no offices in NC.

    So what is next??? Banning NC citizens from using amazon, turbo tax online, any retailer on line where you don't have to pay NC taxes because the company has no presence in NC.

    Innovation drives companies out of business that do not adapt to modern technology.

    Did you hear about the lawyer .....

    Lawyers who can; do and make a lot of money. Lawyers who can't goto work for the gov because they cannot make it in the private sector.

  • dollibug Nov 25, 2011

    Lawyers are optional. They want us to think they are necessary.

    Actually....lawyers are the ones who make up the "network" in the NC Judicial System....and they do whatever the heck they feel like doing....whether the accused pay for them or whether the state pays them....lawyers and judges decide what to do with everything....and they FROWN on people who DO NOT TAKE PLEA DEALS AND STAY OUT OF TRIALS....these people want to get the MOST MONEY for the LEAST AMOUNT OF WORK....the legal system is CORRUPT and there are a lot of COVER UPS...as with the BRAD COOPER TRIAL...which can be viewed right here on WRAL...watch the videos taped live....it will SHOCK you....no doubt..and the VERDICT was UNREAL....yep...the NC Judicial System has got it all under "control"...."just do as I say and it will be ok"....doesn't matter if it is LEGAL AND LAWFUL, just do it...

  • BrightLight Nov 25, 2011

    Most of what LegalZoom does is "boilerplate" stuff done by paralegals in law firms. The attorney directs the paralegal to prepare the "new corporation package, etc" and little in the way of attorney legal advice is involved in the vast majority of cases.

  • trekkie13 Nov 25, 2011

    Maybe Legalzoom should file suit against the NC state bar in the United States District Court for the Middle District of North Carolina. Sounds like the state of North Carolina trying to interfere with interstate commerce.

  • walences Nov 25, 2011

    Lawyers are optional. They want us to think they are necessary.

  • john26 Nov 25, 2011

    Maybe if the bar weeded out the less-than-competent and more corrupt of the lawyers, we wouldn't dislike using them so much. Then the LegalZooms of the world wouldn't mean as much. Right now, the NC Bar does so little for so few, I'd say they should pay LegalZoom for picking up the slack.

  • LuvLivingInCary Nov 25, 2011

    you can look for legal zoom to lose on this one. you have a bunch of nc bar licensed professionals deciding on this. follow the money trial...

    the answer is to keep turning out attorneys as fast as they are today. soon supply will exceed demand and good ole free enterprise economics will prevail...lol