Regulatory Environment

Sell Legal Documents Online

The business of non-lawyers preparing and selling legal documents directly to the general public is an emerging business opportunity.

The idea of law without lawyers is not new. What’s new is the great increase in pro se representation during the past 30 years, and the increase in information and services that are specifically designed to enable consumers to represent themselves. The idea of non-lawyers preparing legal documents for consumers is an outgrowth of efforts in the early 1970’s to provide better access to the legal system for individuals who could not afford the high cost of legal fees.

Early Developments

In 1967, the New York Court of Appeals (the highest court in New York) overturned the conviction of Norman Dacey, the non-lawyer author of How to Avoid Probate (Crown Books), holding that the publication and sale of a book about how a layperson can accomplish legal procedures did not constitute unauthorized practice. [N.Y. County Lawyers’ Association v. Dacey, 234 N.E.2d 459 (1967).] The decision paved the way for the self-help law book industry, and is a precursor to evolution of legal document preparation services by non-lawyers.

In 1971, Nolo Press, the leading legal self-help publishing company today, published its first self-help law book on How to File Your Own Divorce in California by Charles Sherman. Two years later, Sherman and Ralph Warner – Nolo’s Chairman of the Board and co-founder, started an independent chain of divorce centers to assist people in using the book. These centers operated as typing services, transcribing information provided by their customers, into the forms provided by the book. Sherman continued to operate in one of the Centers for several years, but Warner left to concentrate on publishing self-help law books through Nolo Press. Many of these early document preparation centers remain in business today as independent operations. Nolo Press has become the leading self-help law book publisher, and today its Web site is one of the most popular Web sites on the Internet for consumers seeking legal information and legal self-help products.

These early divorce centers attracted the attention of the State Bar of California which scrutinized their operations to see whether they were in violation of the State’s unauthorized practice of law statute.?? However, the centers were able to avoid charges of unauthorized practice of law by pointing out that:

????????? Customers had to make their own decisions based on reading self-help books and no legal advice? was given;

????????? Center staff made it clear to customers that they were not lawyers as no legal advice was provided;

????????? The only services that were provided were legal information services and typing services. No legal services of the kind that lawyers provide were offered to customers.

More Recent Developments: Arizona,?California, Colorado, Florida and Washington

A number of states began to recognize the legitimacy of services provided by document preparers, as early as the mid-1970‘s.? In 1976, Colorado enabled document preparers to prepare divorce forms as long as the functions carried out are only those of a scrivener. In other words, if the form preparer sticks absolutely to the role of a public stenographer and takes down the customer’s words verbatim, he or she is not guilty of practicing law without a license.? [See generally, Colorado Bar Assn. v. Miles, 557 P.2d 1202 (1976).]

By the early 1980s, about 100 independent paralegals existed in Florida, California and several other Western states. In addition to divorce, those pioneers began preparing legal forms for other problems, including bankruptcy, step-parent adoption and change of name. By the mid-1990s, California alone had as many as 1,000 individual document preparers, and in a number of other states, including Florida, Arizona, Oregon and Texas, legal document preparation practice was common.

As the legal document preparation movement has gained momentum, legislation affecting this new business was introduced in a number of states. Some bills were designed to make it clear that the delivery of basic legal form preparation services by non-lawyers is legal. Ironically, almost 25 years after the creation of the California divorce centers,? the California legislature? finally decided to recognize and regulate this new profession beginning in 1998.? Effective Jan. 1, 2000, all California independent paralegals — not titled as Legal Document Assistants — had to be registered with the State’s Department of Consumer Affairs.? Also, to qualify for registration, the Legal Document Assistant must post a bond and prove some combination of a minimum level of education and experience.

In Florida, the Florida Supreme Court amended the Rules Regulating the Florida Bar to read:

“It shall not constitute the unlicensed practice of law for non-lawyers to engage in limited oral communications to assist individuals in the completion of legal forms approved by the Supreme Court of Florida. Oral communications by non-lawyers are restricted to those communications reasonably necessary to elicit factual information to complete the form(s) and inform the individual how to file such form(s).”

The? Florida Supreme Court has approved hundreds of pages of legal forms involving divorce, landlord-tenant and other routine legal issues, thus allowing Florida independent paralegals to help consumers prepare these forms, free of worry that they will be charged with UPL.

The? Florida court found that the service provided by legal document preparers would not amount to the “practice of law” as long as the service was “merely clerical” because:

????????? It is not UPL to make forms available for clients’ use.

????????? It is not UPL to fill in forms and file and serve them at the specific direction of the client.

????????? It is not UPL to give a client a detailed manual containing specific advice.

????????? It is not UPL as long as the service doesn’t personally advise the client with regard to his or her particular case.

The State of Washington?recently passed legislation that would?authorize legal technicians to service the public directly.

Legal Document Preparation as the Unauthorized?Practice of Law

In states other than Arizona, California. Florida, Nevada, Colorado, and Washington, the law is not clear on whether legal document preparation by non-lawyers where no legal advice is provided violates a state’s unauthorized?practice of law statutes.

It should be noted however that the South Carolina Supreme Court recently upheld LegalZoom’s business model and provided guidelines for non-lawyer legal document prepration (See Report?Here), and LegalZoom operates in all states in the United States despite certain Bar opinions that clearly state that LegalZoom’s operation constitutes the unauthorized practice of law.

Recent Academic Scholarship on What Constitutes the Unauthorized Practice of Law

The fact that 80% of US consumers can’t afford high legal fees has recently stimulated new discussion about where non-lawyers should be licensed to serve the public directly. Recent law school review articles are providing the intellectual foundation for a reassessment of unauthorized practice of law statutes making the case that these statutes should be narrowly drawn so as no to restrict access to the legal system by forcing consumers to look to the legal profession solely for legal solutions.

See for example:

Professor?ดู แผนที่ นํา ทาง รถยนต์Deborah L. Rhode and Lucy Buford Ricca, Executive Director of the Center on the Legal Profession, ? conclude in “Protecting the Profession or the Public? Rethinking Unauthorized-Practice Enforcement” that:

“Over a quarter century ago, an ABA Commission on Professionalism ?report concluded, “It can no longer?be claimed that lawyers have the?exclusive possession of the esoteric knowledge required and are therefore?the only ones able to advise clients on any matter concerning the law.”?It?is time for the bar to act on that?assertion and reform unauthorized-practice?law and enforcement accordingly. “

ดู แผนที่ นํา ทาง รถยนต์Prof. Renee Newman Knake has concluded in: ?“Legal Information, the Consumer Law Market, and the First Amendment?, that:

The economic arguments for liberalizing lawyer regulation to facilitate?the free flow of information support the First Amendment analysis.?Perhaps one state will bravely implement a regulatory structure to expand?access to legal information without intervention by the U.S. Supreme Court.?If not, as this Article has shown, many of the restrictions governing the?organizational form of law practice and the distribution of legal services are?constitutionally vulnerable to the extent they constrain the creation and?distribution of legal information by lawyers absent a justification that?enables or preserves the essence of the lawyer-client relationship.

Professor Catherine J. Lanctot from Villanova Law School in an article titled, ” Does LegalZoom Have First Amendment Rights? Some Thoughts About Freedom of Speech and the Unauthorized Practice of Law,”? summarizes the application of First Amendment principles to LegalZoom;s business activities:

Even assuming that the practice of preparing routine legal documents for consumers runs afoul of many unauthorized practice statutes, however, there remains an open question of whether these statutes may themselves interfere with First Amendment guarantees. In particular, to the extent that these statutes broadly sweep vast amounts of law-related speech within their scope, they may infringe on free speech rights. The article sets forth some of the possible First Amendment arguments available to document preparers, without extensive elaboration, to call attention to the possibility that they may be raised in defense to an unauthorized practice prosecution. It concludes with a caution about aggressive pursuit of these online document preparers without careful consideration of the possible risks involved. A successful First Amendment challenge to an unauthorized practice statute could have repercussions far beyond the world of LegalZoom.

A very recent article by Gilliam Hadfield from University of Southern California Law School, titled: “Innovating to Improve Access: Changing the Way Courts Regulate Legal Markets,” makes convincing case for reforming the entire mechanism maintaining the monopoly of the legal profession:

The vast majority of ordinary Americans lack any real access to courts as they struggle to navigate a world that is increasingly shaped by legal rules and obligations. Often this means simply forgoing legal rights and entitlements or giving up in the face of claims of wrongdoing. Among those who cannot avoid courts – such as those facing eviction, collection, or foreclosure and those seeking child support, custodial access, or protection from violence or harassment – the vast majority – as many as 99 percent in some cases – find themselves in court without any legal assistance at all. There are many reasons for this lack of meaningful access, including the underfunding of courts and legal aid, but perhaps the most fundamental is the excessively restrictive American approach to regulating legal markets. This regulation, controlled by the American legal profession and judiciary, closes off the potential for significant reductions in the cost of, and hence increases in access to, courts. Unlike the problem of funding, that is a problem that state courts have the power, if they can find the judicial will, to change.

Conclusion

The organized Bar is out of step with current academic scholarship where a consensus is emerging?that supports the idea that the provision of legal information and legal forms is not the unauthorized practice of law and is likely to be protected by the First amendment of the U.S. Constitution.? Attempts by state Bar associations to expand the definition of the unauthorized practice have in fact been thwarted by the U.S. Department of Justice and the Federal Trade Commission on the ground that to expand the scope of UPL is unjustified, anti-competitive, and a chill on innovation. Download the letters below from the U.S. Federal Trade Commission to the American Bar Associations and the Massachusetts Bar Associations to more fully understand the Federal government’s position and the underlying?legal analysis.

ดู แผนที่ นํา ทาง รถยนต์?(.PDF)

Letter to Massachusetts Bar Association from the Federal Trade Commission?(.PDF).