Legalzoom Complaint, Again

In its nine years or so of business, Los Angeles-based Legalzoom.com has earned praise, awards, quite a bit of money, and most recently…a 5-million dollar class-action petition.

In 2008, a Missouri man, Todd Janson, used Legalzoom to prepare a Last Will and Testament. Perhaps dissatisfied with the service, Janson filed a petition against Legalzoom in the District court of Cole County, Missouri titled Todd Janson on Behalf of Himself and all other Missourians similarly Situated v. Legalzoom, Inc. In January 2009, a class-action petition was filed, which included Todd Janson and C&J Remodeling (and any other Missourians who had used Legalzoom since 2004). C& J had used Legalzoom to create Articles of Organization for their business. Todd Janson, et al. are seeking $5 million in damages from Legalzoom.

The plaintiffs argue that Legalzoom is not authorized to practice law in the state of Missouri. Legalzoom has responded with a pleading to take the case to the federal level, on the grounds that: (1) there are more than 100 people involved, (2) defendants and plaintiffs are from different states, and (3) according to Legalzoom’s calculations, the amount of money sought by the plaintiffs would be well over $5 million, when all Missouri Legalzoom users since 2004 are accounted for.

The outcome of this dispute may not be realized for some time, but the case has interesting implications for service-based online businesses. Poor service may be the real complaint Janson and his associates have, not the unauthorized practice of law. Certain statutes may need to be re-examined as technology continues to change the way business operates.

Legalzoom.com has an A+ rating with the BBB.

Legalzoom Gets Sued

Legalzoom, the legal self-filing service is facing a hefty lawsuit from a Los Angeles attorney Kent Seton, whose speciality is in forming non-profit corporations. Seton sued Legalzoom on February 5, 2009 in Los Angeles Superior Court for breach of contract and misappropriation. The complaint alleges that Seton and Legalzoom entered into a joint venture in which customers of legalzoom would fill out forms on the Legalzoom website, and those forms would be sent to Seton to finalize the formation of a nonprofit entity.

The complaint further alleges that Legalzoom stopped sending Seton the forms and stopped sharing any profits earned, yet Legalzoom retained the proprietary system, that Seton claims he created, on the Legalzoom website.

Legalzoom was paying Seton a fixed fee of $350 per completed application. In total, Seton received $1.6 million from Legalzoom since the venture.

Legalzoom claims there was never a written agreement between them and Seton and that "there is no rational basis for the lawsuit" according to Legalzoom co-founder Brian Liu.