Complaint Alleges LegalZoom engages in the Unauthorized Practice of Law
In this lawsuit, filed on December 19, 2017, the plaintiffs, a law firm and attorneys that offer United States Patent and Trademark (USPTO) searches and services for its clients alleges that Legal Zoom, an entity not licensed to practice law anywhere in the United States, is, in fact, practicing law without a license. The complaint alleges that, “LegalZoom.com, Inc. is a Delaware corporation (“LegalZoom”)…[and that] LegalZoom is not a law firm in the United States and is not authorized to practice law in any state. LegalZoom is not a registered or bonded legal document assistant under California Business and Professions Code, sections §6400 et seq.” The complaint also alleges that, “Defendant Brian S. Lee (“Lee”) is a co-founder of LegalZoom, and a suspended California attorney.”
The gist of the complaint is that, “…LegalZoom has recently boasted that it has filed more than two-hundred fifty thousand (250,000) trademarks before the United States Patent & Trademark Office on behalf of customers. (Forbes article, October 9, 2017,
Exhibit M ). In addition, LegalZoom’s co-founder Brian P. Y. Liu admitted that he created LegalZoom with his co-founder to provide legal services.”
Well, that certainly sounds like practicing law especially when the USPTO states that the unauthorized practice of law includes, “Consulting with or giving advice to an applicant or registrant in contemplation of filing a trademark application or application-related document” as well as, “Preparing or prosecuting an application, response, post-registration maintenance document, or other related document.” So, at first blush, the complaint appears to have merit and LegalZoom appears to have a big problem. California State Law is clear on the matter as well – California Business and Profession §6125 – Unlawful Practice of Law. No person shall practice law in California unless the person is an active member of the State Bar.
LegalZoom, it is alleged, also illegally practiced law in its Trademark work by, “…provid[ing] legal advice to Plaintiffs by selecting classification and modifying the goods and services description from the template thereby applying specific law to facts” and “LegalZoom provided legal advice as to which trademarks found in the search report may conflict with the PIGGIEBANK trademark.” The complaint also alleges that LegalZoom hides and/or disguises its involvement in the process so as to not not be detected in its illegal practice of law. The seemingly endless LegalZoom violations include, “…non-lawyer assistants at LegalZoom prepared pre-filing searches for potentially conflicting marks for DRAWMARKIA mark and PIGGIEBANK without attorney review,” waiving client rights, and giving legal advice on a number of complex topics (much of which, it is alleged, was erroneous advice).
The complaint also alleges that LegalZoom illegally raised venture capital, fails to maintain client trusts accounts, performs no client conflicts checks, among a host of other legal and ethical violations.
The complaint further alleges that LegalZoom competes unfairly and directly with the plaintiffs by misusing and abusing Google Adwords; providing false and misleading advertising; creating misleading and misdirected webpages in offering its services, all to the harm of actual attorneys who must follow strict and stringent rules for the protection of the public (none of which apply to non-attorneys at LegalZoom.)
Given the above claims, the plaintiffs framed up the following causes of action against LegalZoom: 1. DECLARATORY JUDGMENT; 2. UNREASONABLE RESTRAINT OF TRADE IN VIOLATION OF SECTION 1 of the SHERMAN ACT, 15 U.S.C. §1;
3. FEDERAL UNFAIR COMPETITION; 4. CALIFORNIA FALSE AND MISLEADING
ADVERTISING; 5. CALIFORNIA UNFAIR COMPETITION; 6. PROFESSIONAL
NEGLIGENCE; and 7. BREACH OF FIDUCIARY DUTIES. Of course, the plaintiffs demand a jury trial. It will be interesting to see if the “celebrity” attorney Robert Shapiro, Esq. shows up in court and what impact, if any, he might have on the Jury’s deliberation on this very interesting lawsuit.