Three Connecticut Lawyers Caught Stealing: would the FTC object if disbarred lawyers started offering the kind of “document preparation services” that LegalZoom offers?

Click here for Hartford Courant article by Jon Lender on March 29th.

Editor’s Note:  Under the Federal Trade Commission’s view of promoting competition for licensed lawyers by allowing non-lawyers to perform services traditionally performed by lawyers, the three lawyers mentioned in the article could start an online document preparation service – like LegalZoom – charge fees for taking customer information, incorporating it into legal document, proof-reading the documents, and return them to customers ready for execution.  Using the “it’s not the practice of law” argument championed by the FTC  disbarred lawyers could prepare and charge fees for estate planning documents, incorporation documents, real estate documents, divorce agreements, partnership agreements and hundreds upon hundreds of other legal documents all over the country, i.e. a market thousands of times larger than the market from which they have just been barred from practicing law. 

Does the FTC regulate the so-called document preparation business at all or does it only prohibit states from so-called anti-competitive regulation of the unauthorized practice of law?

Of course there is an anti-competitive element to professional regulation. That is the whole point of licensing, namely, that it is in the public interest to prevent unqualified, untrained or otherwise unfit people from selling certain services to the pubic.  Law, medicine, accounting, nursing, teaching, plumbers, electricians, builders, car repair shops, sellers of liquor and many, many activities require a license and are regulated in order to protect the public interest.

The FTC has begun the process of de-regulating the practice of law in order to promote competition, i.e. lower prices.  Lower prices may appear to be in the interest of the consumer.  But lower quality and total freedom from responsibility – see, for example, LegalZoom’s extensive disclaimer – are not.  It is questionable public policy to permit non-lawyers or lawyers – LegalZoom  claims that it was developed by expert lawyers with experience at the most prestigious firms in the country – to offer what are obviously legal services without any regulation or responsibility.  

For people attracted by the advertising and price of online legal service providers such as LegalZoom and We The People, two lessons from the current financial crisis might be worth bearing in mind:

1.  If it seems too good to be true, it probably is.

2. Buyer Beware.  (And if you are harmed by a LegalZoom or We The People or some similar anonymous, “inexpensive” provider of legal services, the FTC may not be the best place to lodge a complain).