Legal Zoom Consent Judgement

From Howard Gum, State Bar Councilor:


October 23, 2015

On October 22, 2015, the North Carolina Business Court entered a Consent Judgment in litigation between the North Carolina State Bar and, Inc., Wake County Superior Court file no. 11 CVS 15111. LegalZoom filed that lawsuit seeking a declaratory judgment that it is not engaged in the unauthorized practice of law in violation of Chapter 84 of the North Carolina General Statutes. The State Bar filed a counterclaim alleging that LegalZoom’ s activities constituted the unauthorized practice of law in violation of Chapter 84. Under the Consent Judgment, for two years or such shorter time as may elapse until the enactment of legislation revising the statutory definition of the practice of law, LegalZoom has agreed to abide by the following consumer protection measures in its dealings with North Carolina consumers:

(a) LegalZoom shall provide to any consumer purchasing a North Carolina product (a North Carolina Consumer) a means to see the blank template or the final, completed document before finalizing a purchase of that document;
(b) An attorney licensed to practice law in the State of North Carolina has reviewed each blank template offered to North Carolina Consumers, including each and every potential part thereof that may appear in the completed document. The name and address of each reviewing attorney must be kept on file by LegalZoom and provided to the North Carolina Consumer upon written request;
(c) LegalZoom must communicate to the North Carolina Consumer that the forms or templates are not a substitute for the advice or services of an attorney;
(d) LegalZoom discloses its legal name and physical location and address to the North Carolina
(e) LegalZoom does not disclaim any warranties or liability and does not limit the recovery of damages or other remedies by the North Carolina Consumer; and
(f) LegalZoom does not require any North Carolina Consumer to agree to jurisdiction or venue
in any state other than North Carolina for the resolution of disputes between LegalZoom and
the North Carolina Consumer.

The State Bar and LegalZoom have also agreed to work to obtain passage in the North Carolina General Assembly of House Bill 436, currently pending in House Judiciary Committee I. If the General Assembly has not modified the definition of the practice of law as contemplated by HB 436 at the end of two years, the parties can agree to seek extension of the Consent Judgment or can resume the litigation.

If the parties resume litigation, they will be free to pursue all claims and defenses that were available to them before the Consent Judgment was entered. The Consent Judgment also reflects that the Authorized Practice Committee of the State Bar will reconsider LegalZoom’s two modified prepaid legal services plans, upon the re-submission of those plans, and that LegalZoom will dismiss without prejudice all claims it asserted in a second lawsuit in the United States District Court for the Middle District of North Carolina, No. 1:15-CV-439, against the State Bar, its employees, and its representatives in their official capacities, and will dismiss with prejudice all claims against the State Bar’s employees and representatives in their individual capacities.

The State Bar’s officers and Executive Committee carefully considered the issues raised in the litigation with LegalZoom and whether the resolution of the litigation as set forth above was in the best interests of the people ofNorth Carolina. After much discussion and deliberation, the State Bar concluded that entering into the Consent Judgment at this time, and in these circumstances, fulfills its statutory duties as an agency of the State of North Carolina to the State, the public-at-large, and the State Bar’s members.

The State Bar is an agency of the State of North Carolina, created by statute and charged with regulating the practice of law and the unauthorized practice of law for the protection of the people of North Carolina.

Click Consent Judgment (10-22-2015) to read the judgement.

For more information, contact:
Ronald L. Gibson,·Immediate Past President

North Carolina State Bar
217 E. Edenton St. (27601)
Post Office Box 25908
Raleigh,NC 27611
Telephone: (919) 828-4620