In a previous post, I discussed the North Carolina’s Bar fight against an amendment to the definition of the practice of law that stated:
“(b) The phrase “practice law” does not encompass any of the following:” … (2) the design, creation, assembly, completion, publication, distribution, display, or sale, including by means of an Internet Web site, of self-help legal written materials, books, documents, templates, forms, computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney. “
The moving force behind this amendment to the definition of the practice of law is LegalZoom which is also engaged in litigation with the North Carolina Bar over the same issue
For now, the North Carolina Bar has won this battle. Mobilizing the entire lobbying energy of the North Carolina Bar, the proposed amendment was side-tracked into Committee for further discussion and will die there in this legislative session.
In a confidential communication to bar members, one of the officers of the bar stated that:
“As I am sure you know, LZ has sued the State Bar in an effort to prevent the State Bar from continuing its ongoing efforts intended to halt LZ’s efforts to engage in the unauthorized practice of law.
I think it is important to understand that not all of the products currently offered by Legal Zoom violate the existing prohibition against the unauthorized practice of law. Merely producing and selling legal forms does not violate the prohibition against UPL. Consumers have always been able to purchase legal forms from bookstores, office supply stores and other outlets. The fact that LZ, and others, offer consumers the opportunity to purchase such forms over the Internet rather than from a brick and mortar business does not place them in violation of the prohibition against the unauthorized practice of law.”
“However, LZ’s use of “decision trees” and other such algorithms to create legal documents tailor-made to the individual consumer does present significant concerns and the State Bar has endeavored to prevent LZ from engaging in these activities.”
Talk about a “luddite” mentality — now North Carolina Bar wants to prohibit interactive legal software on the theory this is same as getting as advice from a lawyer. Maybe in the fullness of time getting legal advice and legal forms will be better than getting services from a lawyer. So what is the real justification — full employment for lawyers. The Bar argues that they are protecting the interests of the consumer. But lawyers in North Carolina only serve the to 25% or so of the population with the remaining the 75% left to their devices. The argument doesn’t hold up. You can’t argue that you are protecting the safety of consumers when you are only serving a small proportion of the addressable market.
The North Carolina Bar has an answer to this. Realizing that total resistance will expose the Bar to liability (Federal Trade Commission, U.S. Department of Justice, class action suits), the Bar has proposed this amendment to the definition of the unauthorized practice of law.
Apart from the very narrow scope of this exception, the language kills innovation and access to justice for consumers who can’t afford lawyers is this language:
“The provider does not disclaim any warranties or liability and does not limit the
recovery of damages or other remedies by the consumer; “
This language would apply to any self-help legal materials including self-help law books, legal software on CD/ROM, and web-based interactive legal forms. I don’t know of any legal software publisher that would waive a disclaimer of warranties of liability.
Would TurboTax withdraw its Tax and Legal Products from retailers?
Would Nolo withdraw its self-help books from North Carolina?
Would web services such as http://www.completecase.com stop operating in North Carolina?
Would Amazon stop selling Quicken WillMaker?
Will LawHelpInteractive withdraw its interactive child custody forms?
Will ShakeLaw withdraw its products from North Carolina?
Would our company (SmartLegalForms), close down our North Carolina Divorce Web Site?
An argument can be made that self-help materials (books, software) are publications, and therefore this requirement to waive a disclaimer of liability is a prior restraint on speech and also an attempt to restriction competition. This requirement is a law suit waiting to happen.
Another requirement of the proposed legislation is that:
“The provider does not provide any individualized legal advice to or exercise any legal judgment for the consumer; provided, however, that publishing general information about the law and describing the products offered, when not done to address the consumer’s particular legal situation and when the general information published to every consumer is identical, does not constitute legal advice or the exercise of legal judgment.”
What does this mean? If the North Carolina Bar thinks that interactive software is a form of legal advice, as it appears to be the case, then can’t this language to be interpreted to mean that all interactive legal software that generates a set of legal forms in response to a consumer’s particular set of facts is this practice of law?
The proposed amendment at the beginning of this post is almost identical to the exception to the definition of the practice law passed by the Texas legislature almost 20 years ago. There has been apparently no harmful effect to consumers from this exception to the practice of law. The burden is on the North Carolina Bar to demonstrate with empirical evidence that consumers are harmed by these practices and publications. The real justification is protecting the incomes of North Carolina lawyers afraid of losing market share to alternative providers.