TAKING ON LEGALZOOM: Somebody Had to Do It

Introduction

As a lawyer forced to compete against the giant scale and mighty marketing budget of LegalZoom, I should resent this Great Disruptor, and yet I find myself admiring the company. LegalZoom is a novel and useful service, and it has the right idea—to make legal “information” more accessible and cheaper for the masses and let people handle many tasks without any need for lawyers.

The one big problem is who gets crushed—who gets overrun by the unfair, unsavory and at times patently illegal methods that LegalZoom deploys. Unfair competitive acts, non-lawyers’ dispensing legal counsel that should come only from full-fledged attorneys, breach of fiduciary duties, misleading or false advertising claims—LegalZoom is its own kind of Wild West. 

Hey, if a few lawyers get sacrificed along the way, well, who’s going to worry? The answer is: I am. 

As CEO of my own law firm in Mountain View, Calif., LegalForce, and also as CEO of its sibling website for trademark search and registration, Trademarkia, I have filed an antitrust lawsuit against LegalZoom. Very soon, I’ll be filing an amended complaint laying out a newly updated and detailed litany of misdeeds perpetrated by LegalZoom.

The Problem with LegalZoom

LegalZoom is a non-lawyer firm that constantly claims to employ lawyers, though this would violate state laws and bar regulations. Consider this LegalZoom TV spot, in which eight smiling faces grace the screen, one at a time:“Hi I’m Josh. Kelly. Raphael. Steve. Ann. Tom. Brian. Crystal. And I am definitely not a robot.” Cue badly executed robot dance moves.

 “I’m one of the real live attorneys you can talk to through LegalZoom…because we’re here, and we’ve got your back.” Tagline on-screen: “LegalZoom. Real Attorneys. Real Advice.”

Now, hold on, pardner—LegalZoom legally is banned from offering lawyerly legal advice; it must confine itself to “information” and leave the rest to lawyers. 

LegalZoom employs no lawyers. Instead, it offers a referral program disclosed only in teensy-tiny print at the bottom of the frame: “This is an advertisement for a prepaid legal service plan, not for an individual attorney. This is not an attorney recommending legal advice.” Oh no, of course not—that would be wrong.

The Legal Battle

Likewise, LegalZoom bids against my firm, Trademarkia, for search terms on Google, each of us spending $100,000 or more a month. LegalZoom, though it employs no lawyers, pays high prices to acquire search words “trademark” and “trademark lawyer”—and it even buys “LegalForce” and “Raj Abhyanker.” That is cheeky, or perverse, and, somehow, I find it flattering.

LegalZoom has been encroaching on the practice of law for 10 years now, and state bar associations are loath to challenge this rapacious titan. LegalZoom has wrapped itself in the cloak of a self-proclaimed champion of the middle class. 

It buys peace in the legal community with generous sponsorships of American Bar Association events and grants and consulting engagements involving retired judges and other respected figures. 

That is the carrot, and LegalZoom also is known to wield the stick, sometimes akin to an Al Capone baseball bat. When LegalZoom sued the North Carolina Bar Association in YRTK for refusing to let the company advertise its lawyer-referral service in the state, it took the aggressive extra step of also suing individual lawyers running the bar.

The Impact on the Law Firm

Something about that rubs me the wrong way. Albeit in our lawsuit against LegalZoom, filed on Jan. 2, 2018 in U.S. District Court in San Jose, Calif., Case No. 5:17-cv-7194, we made sure to sue, personally, its three co-founders: attorneys Brian P. Y. Liu and Edward Richard Hartman and suspended co-founder attorney Brian S. Lee.

 As well, we named as co-defendants the U.S. Patent and Trademark Office and the state bar associations of California, Arizona, and Texas, although since then we have dropped the bar associations as defendants.

This is a David v. Goliath fight. My law firm has filed more trademarks than any other law firm in the country, and my Trademarkia website has registered some 10,000 trademarks since opening for business in 2009. LegalZoom, by contrast, has registered a massive 250,000 trademarks, 25 times as many as we have filed.

The Desired Outcome

Because I am a lawyer, I am required to deposit client funds in a separate interest-bearing account, search for any client conflicts before accepting a case, abide by attorney-client privilege and have only licensed attorneys to advise clients on trademark classification, selection, modifying the description of goods and services, reviewing specimens and appropriate classification. 

If I deviate from these exacting restrictions, I can be disbarred, sued or excluded from practicing at the U.S. patent office. LegalZoom, by stark contrast, is required to clear none of these hurdles. A client’s emails to LegalZoom are protected only by a company privacy policy, not attorney-client privilege. 

The company limits its own liability from any client problems in ways that are impermissible for practicing lawyers. The non-lawyer staff members at LegalZoom blithely hand out legal counsel in the unauthorized practice of law. 

They readily advise clients on specifics that only lawyers, by law, are allowed to address. At LegalForce, we know this because we experienced it—and tape-recorded it.

Conclusion

Though I am reluctant to pick a fight with LegalZoom, this may be the only way to force the quick adoption of a more level playing field. 

The U.S. Patent and Trademark Office and state bar associations should saddle LegalZoom and other non-lawyer interlopers with requirements to abide by the same ethical and consumer-safeguard rules that they force licensed lawyers to follow.

Or, alternatively, the federal court should find LegalZoom guilty of anti-trust behavior, restraint of trade, unfair business practices and the unauthorized practice of law. Order the company to hand over $60 million in treble damages to LegalForce and Trademarkia. I promise to reinvest it in resuming our crusade to provide better service to more clients at ever cheaper prices—and, this time, in a fair fight, on a level playing field.

Conclusion

LegalZoom's practices are seen as unfair and potentially illegal, leading to a lawsuit by LegalForce. The desired outcome is a level playing field where LegalZoom abides by the same rules as licensed lawyers, or faces penalties for anti-trust behavior and unfair business practices.