Settlement Allows LegalZoom to Operate

1443037942272An October 22 consent decree ended a lengthy legal dispute between, Inc. and the North Carolina State Bar. The consent decree allows LegalZoom to offer its services in North Carolina, provided that the company gives certain protections to North Carolina consumers.

The decree ended a 2011 state court action in which the bar claimed that LegalZoom’s activities constituted the unauthorized practice of law. In the consent decree, the parties agreed that North Carolina’s definition of the practice of law “does encompass LegalZoom’s operation of a website that offers consumers access to interactive software that generates a legal document based on the consumer’s answers to questions presented by the software.” Although LegalZoom may continue to operate in North Carolina, it must do the following:

  1. allow a consumer purchasing a North Carolina product to see the blank template or the final document before purchasing it;
  2. have a North Carolina lawyer review all of the templates it uses;
  3. warn North Carolina consumers that its forms or templates are not a substitute for the advice or services of a lawyer;
  4. disclose its legal name and physical address to North Carolina consumers;
  5. refrain from disclaiming any warranties or liability to North Carolina consumers; and
  6. refrain from requiring North Carolina consumers to agree to jurisdiction or venue in any state other than North Carolina for the resolution of disputes with LegalZoom.

LegalZoom’s settlement in North Carolina may eventually result in broader acceptance of its services by regulators throughout the United States.

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