You probably know that there is a fight afoot between the
North Carolina State Bar and the do-it-yourself vendor of legal documents,
LegalZoom. The simmering dispute has been covered in the Wall
Street Journal, the ABA
Journal, and the case is now in the Business Court over Legalzooom's
vitriolic objections. The issue is whether LegalZoom's offerings
constitute the unauthorized practice of law.
bills itself as "transform[ing] the way people think about and fulfill
common legal needs." It says that it has made its mission "to simplify the
process and to set new standards for convenience and service in an industry not
typically known for great customer care." The company basically sells legal
forms to non-lawyers (and helps its customers to fill them out by computer)
which enable them to form their own corporations, write their own wills, and
get their own divorces, while at the same time avoiding what LegalZoom condemns
as the high cost of attorneys' fees.
It's said pretty often that "you get what you pay for,"
so it's not surprising that LegalZoom has taken some heat (like from
Consumer Reports) for the quality of its services, even though it
advertises that 94% of its customers "recommend LegalZoom to friends and
family." The lawyers who provide the same services as those offered by
LegalZoom, such as estate
planning lawyers, and lawyers
filing trademark applications, aren't keen on the service.
Not much has happened in the Business Court so far,
except for LegalZoom's strident efforts to stay out of the Business
Court. Those began with the filing of the case by LegalZoom against the
State Bar. LegalZoom immediately asked the Chief Justice of the NC Supreme
Court for an exceptional case designation to Superior Court Judge Paul
Gessner. That was granted back in October, apparently without notice to
the NC Bar. The Bar then designated the case to the Business Court as a
mandatory complex business case, which LegalZoom opposed, saying its case was
not a " complex business case" within the mandatory jurisdiction of
the Business Court.
LegalZoom has lost Round 1. Judge Jolly (who
decides all designation motions as the Chief Judge of the Business Court) ruled
that the claims made by LegalZoom in its Complaint are squarely within the
jurisdiction of the Business Court. Count 1 of the Complaint is for a
violation of the Monopoly Clause of the North Carolina Constitution, saying
that the State Bar has interfered with LegalZoom's constitutional right to
freely do business in North Carolina. Count 2 says that the State Bar has
also violated the state Constitution by excluding LegalZoom from "register[ing]
its legally compliant prepaid legal services plan." (That's a whole different
LegalZoom service). The third count is for "commercial disparagement,"
alleging that the State Bar has made false statements to the public which
caused the public "to regard [LegalZoom's] product as legally unauthorized, and
imputing illegal conduct to [LegalZoom]."
In opposing the Bar's designation as a mandatory
business case, LegalZoom argued that its case was "exceptional," but not a
"complex business case." Judge Jolly didn't spill much ink in denying the
Opposition in an Order
on January 9th. He said:
Plaintiff's Complaint specifically alleges that
"this case includes claims that involve a material issue relating to . . .
[a] anti-monopoly, anti-competition, and antitrust law claims that are not
based solely on N.C. Gen. Stat. § 75-1.1; [b] unfair competition law claims that
are not based solely on N.C. Gen. Stat. § 75-1.1; and [c] the Internet and
electronic commerce." These allegations are substantially identical with
three separate statutory grounds for designation of a civil action as a
mandatory complex business case under the Removal Statute.
Order ¶3. So that's that. The case has been
assigned to Judge Gale and will be resolved in the Business Court.
Where was the vitriol?
Read this article in
its entirety on North
Carolina Business Litigation Report, a blog for lawyers focusing on issues
of North Carolina business law and the day-to-day practice of business litigation
in North Carolina courts.
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