A lawsuit filed in December 2017 alleges LegalZoom engages in the unauthorized practice of trademark law.
In a lawsuit filed in the Northern District of California, the plaintiff, LegalForce RAPC, alleges LegalZoom is engaged in the “unauthorized practice of law, false advertising, unfair competition and other claims with respect to preparation and filing of trademark applications." Why could this be a problem? Because only licensed attorneys are authorized to provide legal advice when preparing and filing trademark applications.
Many people assume that the owner of LegalForce RAPC, Raj Abhyanker, is bitter about the success of LegalZoom and is only trying to harm a competitor. However, his interviews and public statements show the exact opposite. For example, he states in his blog explaining the reasoning behind the lawsuit that:
“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.”
Rather than suing a competitor Mr. Abhyanker resents, he is going after one he respects. So what gives? Mr. Abhyanker merely wants a level playing field, i.e. he should be allowed to follow the same business model as LegalZoom or LegalZoom should have to follow the onerous rules placed on lawyers and law firms to practice law.
Nearly every state requires that only licensed attorneys can practice law. The “practice of law” includes anytime a person gives legal advice to a client, including advice regarding filing a trademark application.
When preparing and filing a trademark application for clients, attorneys review the trademark, conduct trademark searches, and explain the likelihood the trademark application will be successful. They may also help clients decide what goods and services to select and what trademark classes to file in. Explaining whether a trademark is likely to be successful or what trademark classes to file for is nearly certain to be considered legal advice and part of the practice of trademark law.
In addition, attorneys are bound by professional legal ethical rules that are not required of non-attorneys (do not laugh, they really are). These rules include graduating accredited law schools that cost thousands of dollars, passing a state bar exam, strict requirements regarding how attorneys handle client money, required continuing legal education credits, yearly attorney membership dues, required malpractice insurance etc... that all increase the costs of an attorney practicing law.
If a firm can give legal advice without having to hire attorneys, they could avoid all these costs and requirements, which may decrease the level of service but will also decrease the costs of services for clients.
LegalZoom does not have to follow the attorney requirements because it claims it is not a law firm or engaged in the practice of law. LegalZoom claims it merely facilitates clients finding quick answers to legal questions or finding an independent attorney to handle a client’s needs. At the bottom of their website is the following disclaimer:
“We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.”
The complaint filed by LegalForce alleges they do indeed provide legal advice for trademark applicants. According to the complaint, prior to filing the lawsuit, the plaintiffs filed two trademark applications using LegalZoom’s services and received legal advice. The complaint specifically alleges that LegalZoom uses non-lawyer “trademark document specialists” who “provided legal advice to the plaintiffs by selecting classification and modifying the goods and services description from the template thereby applying specific law to facts.”
LegalZoom is no stranger to being accused of the unauthorized practice of law having faced issues in Missouri, Arkansas, and North Carolina. In each of the previous cases, LegalZoom was able to continue with their business model. Will this time be different? Time will tell.
Do you think LegalZoom will survive this latest lawsuit alleging they are engaged in the unauthorized practice of law? Let us know in the comments below.