September 29, 2010
Via Federal Express
Gretchen A. Mundorff, President
Pennsylvania Bar Association
100 South Street
Re: Pennsylvania Bar Association, Unauthorized Practice of Law Committee Formal Opinion 2010-01, Legal Document Preparation by Online and In-Person Services.
Dear Ms. Mundorff:
I am Vice President and General Counsel of LegalZoom.com, Inc. I am writing with regard to the Pennsylvania Bar Association Unauthorized Practice of Law Committee’s (the “Committee”) Formal Opinion 2010-01 (the “Opinion”), issued this year, which was recently brought to my attention. A copy of the Opinion is enclosed.
Without ever contacting LegalZoom or making a thorough investigation of the underlying facts, your Committee’s Opinion makes specific and repeated references to LegalZoom and concludes that LegalZoom is engaged in the unauthorized practice of law in Pennsylvania.
LegalZoom emphatically denies this accusation. I am chagrined that your Committee would issue an opinion specifically referencing my company and alleging illegal activity without complying with the most basic guidelines of professional courtesy and rules of due process. Predictably, many of the factual assumptions underlying the Opinion are inaccurate. Furthermore, the Opinion cites inapplicable case law, draws inaccurate conclusions, and ignores case law affirming the right of individuals to represent themselves in their own legal matters.
The legal profession is rightly proud of its role in establishing the core principles of due process: notice of allegations; an opportunity to be heard before a decision is made; an adversarial process to determine the truth; and an impartial tribunal to decide the case. Unfortunately, your Committee, in issuing an opinion purporting to define the reach of Pennsylvania lawyers’ legal monopoly over the practice of law, blatantly ignored each of these principles: (1) LegalZoom was given no notice that the Committee was considering this opinion; (2) LegalZoom had no chance to present facts or legal arguments to the Committee before it rendered its opinion; (3) the Committee rendered its opinion without the tempering effect of the adversarial process, despite the legal profession’s own belief that such a process is the best way to reach the correct conclusion; and (4) the Committee is made up of members of the Pennsylvania Bar Association, the very persons who benefit from the legal monopoly they enforce. As might be expected from an opinion that lacked both a meaningful independent investigation and the benefits of the adversarial process, the Opinion is riddled with false assumptions, factual errors and incorrect legal statements.
For instance, the Opinion inaccurately describes LegalZoom’s business practices. It confuses and conflates two different business models: online automated document assembly and in-person store-front document preparation. The Opinion relies almost entirely on non-binding, non-adversarial informal opinions issued by UPL committees in three states, none of which has taken any enforcement action against LegalZoom. The Opinion ignores the vast majority of states that have looked into LegalZoom’s business and found no violation of law. The Opinion ignores the extensive body of case law affirming the First Amendment rights of individuals to represent themselves and of legal publishers to make tools available to assist those individuals. The few cases the Opinion does cite do not support its sweeping conclusion. The Opinion even goes so far as to mischaracterize the results of a narrow enforcement action taken by the Pennsylvania Attorney General against We The People, and falsely suggests that this enforcement action supports the Committee’s claim that all legal document preparation services, online or storefront, are engaged in the unauthorized practice of law in Pennsylvania, when in fact it shows the opposite.
Most importantly, the Opinion entirely fails to address whether its conclusion actually promotes the public good or the good of the legal profession. The Opinion cites no evidence of actual harm to any Pennsylvania consumers caused by LegalZoom, We the People or any other document preparation service. To the contrary, the United States Federal Trade Commission has often noted that competition between lawyers and non-lawyers benefits consumers, and LegalZoom has a customer satisfaction record that would be the envy of any company. The Opinion ignores each citizen’s right to represent himself or herself in simple legal matters. It ignores the high costs of legal services. It ignores the large number of people who cannot afford to hire an attorney to prepare simple legal documents. It ignores numerous state and national studies that show most Americans, and arguably most of the residents of your Commonwealth, are not able to afford legal services.
These omissions leave the Opinion, and the Pennsylvania Bar, open to the criticism that its UPL enforcement is not motivated by a desire to protect the public from actual harm, but rather by a desire to protect its members’ law practices during an economic downturn.
Although “non-binding,” the Committee’s opinion has real impact. The Committee’s opinions are published on its website, so its claim that LegalZoom is engaged in illegal conduct is a public, unanswered accusation. The Opinion has already caused legal newspapers to refuse to accept fictitious name notices from LegalZoom’s customers for publication, needlessly increasing consumer costs by falsely suggesting that business owners must hire attorneys to draft even the most simple legal filings.
I am addressing this letter to you because, as the President of the Pennsylvania State Bar, I presume you are ultimately responsible for the actions of the committees that serve the State Bar. Formal Opinion 2010-01 is so flawed, in both its substance and the procedure used in rendering it, that I have no choice but to ask that you provide for its withdrawal.
Because Formal Opinion 2010-01 should not go unanswered, I provide below a non-exclusive list of its shortcomings.
1. The Opinion is Factually Inaccurate and Confuses Two Separate Business Models.
As the Opinion notes, Pennsylvania law requires that in any investigation into the alleged unauthorized practice of law, “[e]ach given case must turn on a careful analysis of the particular [legal] judgment involved and the expertise that must be brought to bear on its exercise.” Dauphin County Bar Ass’n v. Mazzarcaro, 465 Pa. 545, 533; 351 A.2d 229, 233 (1976). The Opinion itself fails, in multiple ways, to conduct the required “careful analysis.”
For example, the Opinion discusses interchangeably two different business models: automated, web-based online document assembly software, such as that provided by LegalZoom, and in-person, brick-and-mortar storefront document preparation services like We The People. The Opinion jumps back and forth between the two business models, mixing up the services they offer, which differ considerably. We The People, for instance, required individual, in-person contact between customers and employees inside a store, which at least invites the potential for improperly giving individualized legal advice. LegalZoom is entirely web-based; while non-legal customer care is available, no customer interaction with any employee of LegalZoom is required. We The People, as part of its service, also apparently provided its customers telephone access to a “supervising attorney” to give legal advice; LegalZoom does not.
The Opinion shows little, if any, independent factual investigation by the UPL Committee. Its “factual” statement is based entirely on select quotes and cites to three earlier informal UPL opinions, each of which is itself conclusory and flawed, as further outlined below.
The Opinion fails to acknowledge that LegalZoom’s website repeatedly informs its customers that it is not a law firm, does not give legal advice, and is not the substitute for the advice of an attorney. In fact, this disclaimer appears on virtually every page of the website. LegalZoom does not select or individually draft documents for its customers; its customers select their own forms by browsing the website and choosing which form or document they believe will meet their needs. There is no in-person consultation or meeting. LegalZoom specifically prohibits its employees from suggesting or recommending any particular legal form for its customers, and the Opinion cites no evidence that it has ever done so.
Rather, LegalZoom’s website operates using document assembly software, based on branching technologies. The LegalZoom documents are generated based solely on the consumer’s input and decisions in answering an online questionnaire by auto-populating pre-existing fill-in-the-blank forms and documents. Many of the form documents available through LegalZoom are based on standard forms published by government agencies; the rest of the form documents were drafted by attorneys. While LegalZoom believes that its documents are high-quality products, before-the-fact drafting and selection of standardized forms to offer for sale is no different than the decisions made by the publishers of legal form books, do-it-yourself legal kits, and legal document software, all of which are available throughout Pennsylvania in public libraries, bookstores and office supply stores such as Staples and OfficeMax.
2. The Opinion Places Misguided Reliance on Other Non-binding, Non-adversarial UPL Opinions.
The Opinion says it found “valuable input and inspiration” from the informal UPL opinions from three states, North Carolina, Connecticut and Ohio. However, the Opinion does not explain why the UPL Committee found no inspiration from the vast majority of states that have looked into LegalZoom’s practices and taken no enforcement action, such as Delaware, Florida, Georgia, Michigan, Montana, Missouri, New Jersey, Oregon, and West Virginia. The Opinion ignores states like California and Arizona that specifically provide for legal document preparation services. It ignores Texas, which specifically excludes from its definition of “the practice of law” the publication of legal forms, software, and websites. The UPL Committee’s decision to reference just these three opinions suggests that it was simply looking to justify a conclusion that it had already reached. The Committee also apparently did not investigate the actual status in any of these three specific jurisdictions, or it might not have so readily relied on them.
North Carolina. The Opinion cites a May 5, 2008, non-binding, advisory “letter of caution” from the Authorized Practice Committee of the North Carolina State Bar. LegalZoom responded to that letter in detail in June 2008, pointing out the letter’s factual and legal inaccuracies and including an opinion letter from a former American Bar Association president confirming that LegalZoom is not engaged in the unauthorized practice of law by providing incorporation services in North Carolina. A copy is enclosed. More than two years have passed, and the North Carolina State Bar has neither responded substantively nor taken any enforcement action. In light of the North Carolina State Bar’s letter confirming receipt of LegalZoom’s response, and LegalZoom’s understanding that the State Bar has removed the letter of caution from its website, LegalZoom can only conclude the State Bar was satisfied with the company’s position. North Carolina consumers continue to have the option to choose LegalZoom.
Connecticut. The Opinion cites a Connecticut UPL Committee informal opinion. Like your UPL committee, the Connecticut UPL Committee gave LegalZoom no notice or opportunity to be heard and issued its opinion without any input from the affected businesses. Significantly, the Connecticut Bar decided to take no enforcement action against LegalZoom. Instead, an ad hoc UPL task force referred the matter to the Connecticut Department of Consumer Protection (again without giving LegalZoom notice) which itself has taken no action. Indeed, in comments to the media, members of the Connecticut UPL task force themselves expressed doubt as to whether any action should or need be taken; one member agreed that a LegalZoom incorporation customer received correct documentation and “got a great value.” A copy of LegalZoom’s response, with attachments, is enclosed. Connecticut customers continue to have the option to choose LegalZoom.
Ohio. Finally, like North Carolina and Connecticut, an Ohio UPL committee, without notice or adversarial proceedings, issued a similarly flawed, non-binding UPL opinion regarding document services. The Ohio Supreme Court case cited in your Opinion, Ohio State Bar Ass’n v. Cohen, 107 Ohio St.3d 98, 836 N.E.2d 1219 (2005), does not support the Opinion’s conclusion. The respondent in that case conceded he was engaged in the unauthorized practice of law, so the issue was not actually contested; moreover, he personally selected and drafted legal documents for customers who “did not know what type of legal document was required to accomplish their objective,” and he personally “gave advice and counsel to people about their legal rights.” Id. at 98; 836 N.E.2d at 107. The Cohen case illustrates how a brick-and-mortal document service provider may cross the UPL line by providing individualized legal advice and services, but it provides no authority for banning Internet computer software-based document assembly services that do not involve in-person contact or individualized legal advice. Ohio consumers continue to have the option to choose LegalZoom.
3. The Opinion Relies on Inapplicable Pennsylvania Case Law.
The Opinion also relies on two Pennsylvania cases, but neither provides support for its conclusion that an online document assembly service is “the practice of law.” In Shortz v. Farrell, 327 Pa. 81, 193 A. 20 (1937), the Pennsylvania Supreme Court held that a non-lawyer could not represent an injured worker in a contested workmen’s compensation hearing, where the non-lawyer “appears at hearings before the referees, examines and cross-examines witnesses, and there, in general, conducts the ‘litigation.’” Id. at 82, 193 A.2d at 20. In Dauphin County Bar Ass’n v. Mazzacaro, 465 Pa. 545, 351 A.2d 229 (1976), the Court held that a “public adjuster” could not represent third parties in negotiations and settlements of personal liability and property damage claims, because such representation must involve “an assessment of the likelihood that liability can be established in a court of law,” which the court considered to be “a crucial factor in weighing the strength of one’s bargaining position. Id. at 554, 351 A.2d at 233-34.
The defendants in Shortz and Mazzacaro represented individuals in discrete, contested legal matters that were in litigation or headed towards it. LegalZoom does nothing of the sort. It simply provides automated web-based resources for individuals who want to create their own legal documents.
4. The Opinion Ignores Substantial Relevant Case Law.
While citing selected out-of-state informal UPL opinions and inapplicable Pennsylvania case law, the Opinion entirely fails to address or analyze the long and well-established line of cases holding that the publication of information about the law, as well as self-help legal books, forms with instructions, and do-it-yourself kits is not the practice of law and is, in fact, protected by the First Amendment. See, e.g., New York County Lawyers’ Ass’n v. Dacey, 21 N.Y.2d 694, 234 N.E.2d 459 (N.Y. 1967), aff’ing on grounds in dissenting opinion, 283 N.Y.S.2d 984 (N.Y. App. 1967); Oregon State Bar v. Gilchrist, 538 P.2d 913 (Or. 1975); State Bar of Michigan v. Cramer, 249 N.W.2d 1 (Mich. 1976); The Florida Bar v. Brumbaugh, 355 So.2d 1186 (Fla. 1978); People v. Landlords Professional Services, 215 Cal. App.3d 1599, 264 Cal. Rptr. 548 (Cal. 1989). Many other states have reached the same conclusion, holding that providing pro se litigants with resources and clerical services does not constitute UPL, in the absence of personal representation or individualized legal advice. See, e.g., Oregon Ethics Opinion 1994-137, 1994 WL 455098 (Or. State Bar Ass’n Bd. of Gov. 1994) (online legal information system that provides interactive answers to user’s questions without the direct participation of an employee does not constitute the practice of law); In re Thompson, 574 S.W.2d 365, 367-69 (Mo. 1978) (sale of forms, instructions on how to prepare forms, and instructions as to how to file forms to obtain an uncontested divorce is not the practice of law, so long as sellers “refrain from giving personal advice as to legal remedies or the consequences flowing therefrom”); State ex rel. Schneider v. Hill, 573 P.2d 1078, 1078-79 (Kan. 1978) (sale by non-attorney of kits purporting to contain all forms needed for the filing and obtaining of a divorce in Kansas, including sample forms filled out and instructions, both written and via tape recording, does not constitute practice of law); People ex. Rel Atty’n Gen. v. Bennett, 74 P.2d 671, 672 (Colo. 1937) (sale of legal forms for quit claim deeds, warranty deeds, deeds of trust, bill of sale and chattel mortgage not the practice of law).
The Opinion simply ignores these cases and their relevance to the question of what does, and does not, constitute the practice of law.
5. The Opinion Mischaracterizes the We The People Assurance of Voluntary Compliance.
Finally, in footnote 10, Formal Opinion 2010-01 notes “with appreciation” that the Pennsylvania Office of Attorney General’s Bureau of Consumer Protection “has been proactive in protecting Pennsylvania’s consumers” by obtaining an Assurance of Voluntary Compliance (“AVC”) from We The People. The footnote suggests that the We The People AVC supports the UPL Committee’s conclusion that document preparation services’ business models constitute the unauthorized practice of law. I have obtained the AVC, a copy of which is enclosed. It does no such thing. In fact, the opposite is true.
Although We The People was accused of the unauthorized practice of law, it denied the accusation, and the AVC clearly permits We The People to continue to operate its storefront legal document preparation services in Pennsylvania. In the AVC, We The People simply agreed to a narrow set of restrictions on activities that were apparently not part of its business model and are not part of LegalZoom’s business model: (1) orally counseling consumers on their legal rights or orally instructing or advising consumers on applicable law; (2) in making consumers aware of the forms they make available, selecting or recommending the appropriate forms; and (3) communicating with courthouse personnel or other third persons on behalf of consumers in a representative capacity other than in their role as a messenger service to file papers on behalf of the consumer. See AVC at 9-10.
The AVC did not prohibit We The People from continuing to prepare legal documents selected by its customers based on information provided by those customers in response to the company’s questionnaires. Rather than support a conclusion that legal document preparation services are engaged in “the practice of law,” the AVC establishes that the business model is not UPL, so long as the service does not recommend the specific form for specific customers’ needs or give individualized legal advice. LegalZoom does neither, and therefore is not engaged in the practice of law in Pennsylvania.
I am an attorney licensed in two states. I am proud of my profession and its contribution to American society. I admit, however, that the profession’s poor reputation is often deserved. Our services are too expensive for many Americans. Our work is generally too obtuse and complicated. We rarely innovate. We provide excellent legal services to the wealthy and big business, and we provide occasional pro bono services to the poor, but as a profession we fail to provide affordable legal services to working- and middle-class people for their simple and common legal needs.
According to Professor Laurence Tribe, Senior Counselor for Access to Justice at the US Department of Justice, “three out of five in the middle class have serious legal needs that remain unmet because justice is beyond their economic reach.”
LegalZoom provides a high-quality, much needed self-help document service to people who might choose not to hire an attorney or cannot afford one. Opinion 2010-01 does a disservice to both our profession and the consumers it purports to protect, and it is causing LegalZoom and its customers immediate and specific harm.
I therefore ask that you direct the UPL Committee to withdraw Formal Opinion No. 2010-01 and forgo issuing any opinion on the same topic without first ensuring basic fairness to the companies and individuals affected by the Committee’s opinions.
I would also welcome the opportunity to meet with you and any members of the UPL committee to further discuss LegalZoom’s concerns.
Charles E. Rampenthal
Vice-President and General Counsel
Member, State Bar of California and Massachusetts Board of Bar Overseers