INTRODUCTORY STATEMENTonline.wsj.com/public/resources/documents/LegalZoom.pdf · Prepaid Legal...

STATE OF NORTH CAROLINA

WAKE COUNTY

LEGALZOOM.COM, INC.,

Plaintiff/Petitioner,

v.

THE NORTH CAROLINA STATE BAR,

Defendant/Respondent.

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IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION

ll-CVS-

COMPLAINT FOR DECLARATORY AND

INJUNCTIVE RELIEF

Plaintiff/Petitioner LegaIZoom.com, Inc. ("LegaIZoom"), by and through its attorneys,

files this Complaint. Plaintiff, complaining of Defendant, alleges and says:

INTRODUCTORY STATEMENT

1. This action is brought pursuant to Article I, Sections 19 and 34 of the North

Carolina Constitution, the Declaratory Judgment Act, N.C. Gen. Stat. §§ 1-253 et seq. and

common law, and stems from Defendant's unlawful refusal to register Plaintiffs

compliant prepaid legal services plans under N.C. GEN. STAT. § 84-23.1; from Defendant's ultra

vires actions and assertions that Plaintiff is prohibited from offering its services to consumers in

North Carolina; from the anti-competitive, false and disparaging conduct of Defendant the North

Carolina State Bar; and from Defendant's unlawful attempt to deprive Plaintiff of its right to

offer its services to consumers in North Carolina.

LegalZoom.com, Inc. v. The North Carolina State Bar, 11 CVS Wake County Complaint Page 2 of25

PARTIES, JURISDICTION AND VENUE

2. Plaintiff LegalZoom is a Delaware corporation with its principal place of business

in Glendale, California. Plaintiff's business includes providing legal document services and

prepaid legal services plans under the name LegalZoom.

3. Defendant North Carolina State Bar ("NCSB") is an instrumentality and agency

of the State of North Carolina. The NCSB was created pursuant to N.C. GEN. STAT. § 84-15:

"There is hereby created as an agency of the State of North Carolina, for the purposes and with

the powers hereinafter set forth, the North Carolina State Bar."

4. The NCSB is a state agency, and as such is subject to state laws applicable to all

instrumentalities of the state. Thus the NCSB is subject to, and must comply with,

North Carolina's Constitution, Administrative Procedure Act (N.C. GEN. STAT. §§ 150B-l

to -52), State Government Ethics Act (N.C. GEN. STAT. §§ 138A-l to -45) and N.C. GEN. STAT.

Chapter 84 ("Attorneys-at-Law").

5. All of the NCSB's administrative proceedings are subject to judicial review by the

State's Superior Courts. N.C. GEN. STAT. §§ 150B-43 to -52. Any action by the NCSB to enjoin

the unauthorized practice of law must be brought in North Carolina Superior Court. N.C. GEN.

STAT. § 84-37(c). N.C. GEN. STAT. § 84-7 authorizes criminal prosecution by North Carolina

district attorneys based on information provided by members of the North Carolina bar alleging

the unauthorized practice oflaw, and N.C. GEN. STAT. § 84-8 provides that unauthorized practice

of law violations are misdemeanors. In addition, NCSB actions are subject to challenge in the

General Court ofJustice of North Carolina. N.C. GEN. STAT. § 7A-3.

LegaIZoom.com, Inc. v. The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 3 of25

6. The NCSB's enforcement of N.C. GEN. STAT. § 84-15 to -38 is subject to

North Carolina's constitutional prohibition against monopolies l and the North Carolina

Constitution's Law of the Land Clause.2

7. Jurisdiction and venue in this Court are proper. Specifically, this case includes

claims that involve a material issue relating to the following: (1) the determination that

commercial activity is or is not subject to occupational licensing laws; (2) the determination that

commercial activity is required to be registered; (3) anti-monopoly, anti-competition, and

antitrust law claims that are not based solely on N.C. GEN. STAT. § 75-1.1; (4) unfair competition

law claims that are not based solely on N.C. GEN. STAT. § 75-1.1; and (5) the Internet and

electronic commerce.

FACTS

8. This is an exceptional and complex case of first impression on the facts and the

law.

9. Plaintiff principally provides two services: (1) a self-help legal document service

and (2) prepaid legal services plans, both of which are available on the Internet at

www.LegaIZoom.com. Plaintiff's self-help legal document servIces are available online

nationally and are available to consumers in North Carolina. Plaintiff's prepaid legal services

plans are available in most of the United States, but are not currently offered in North Carolina

pending their registration status.

I "Monopolies are contrary to the genius of a free state and shall not be tolerated." N.C. CONST., art. 1, § 34. 2 "No person shall be taken, imprisoned, or disseized of his freehold, liberties, or privileges, or outlawed, or exiled, or in any manner deprived of his life, liberty, or property, but by the law of the land. No person shall be denied the equal protection of the laws; nor shall any person be subjected to discrimination by the State because ofrace, color, religion, or national origin." N.C. CONST., art. 1, § 19.

LegalZoom.com, Inc. v. The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 4 of25

lO. Plaintiffs self-help legal document service does not select legal forms for its

customers - customers make their own decisions as to which forms they believe they need.

Documents are created in an automated process similar to off-the-shelf legal software available

throughout the state. Customers go to the LegalZoom website, decide what form they want to

purchase, fill in the intormation in the selected form, and a document is generated from

standardized language based on the information and decisions made by the customer.

11. Plaintiff s prepaid legal services plans provide an efficient mechanism for

delivering legal services to people in need of legal help. A consumer pays a fixed amount each

month in exchange for certain service benefits to be used as and if needed. Like most legal

service plans in operation today, Plaintiff's plan relies on a panel oflawyers in private practice to

provide covered services.3 The basic service provided under each plan varies, but the services

provided under the plans generally consist oflegal advice and consultation by telephone and may

also include brief office consultations, review of simple legal documents, and short letters

written or phone calls made by a lawyer to an adverse party.

12. Plaintiff, through its officers and employees, IS a member of the American

Prepaid Legal Services Institute, an entity affiliated with the American Bar Association whose

purpose is to act as a clearinghouse and technical assistance source for the prepaid legal

services industry.

13. LegalZoom's self-help legal document service provides the standardized language

that is used in the automated document-creation process; such forms are typically obtained trom

state agencies or approved by licensed North Carolina attorneys. This selection takes places

3 The American Bar Association describes common features of such plans on its website. See h!1P.l{WW.:'Y.:i!J.D.9I!~.<.mQi!LQIg!gt:mm.~~mJll.~r.~R!}id)egal seryj~~'tJltlul (last visited Sep. 29, 2011).

LegaIZoom.com, Inc. v. The North Carolina State Bar, 11 CVS Wake County Complaint Page 5 of25

prior to, and independent of, any customer seeking to generate a legal document. It is no

different than the selection of one form from among many potential forms that is made by the

author of any legal textbook, legal form book, or do-it-yourselflegal document kit.

14. Both LegalZoom's self-help legal document service and prepaid legal services

plans otTer alternative low-cost personal resources to the consuming public of North Carolina in

general, and to consumers oflow and moderate means in particular.

15. N.C. GEN. STAT. § 84-2.1 states that the practice oflaw is defined as "performing

any legal service for any other person, firm or corporation, with or without compensation .... "

(emphasis added). Accordingly, although providing legal assistance to another person can

constitute the practice of law, self-help conduct undertaken by an individual on his or her own is

not the practice of law. Long-standing case law has upheld the principle that the sale of legal

forms and instructions and do-it-yourself legal document kits is not the unauthorized practice of

law, and has held that the sale of such products and services is protected by the First

Amendment. E.g., New York County Lawyers' Ass 'n v. Dacey, 21 N.Y.2d 694, 287 N.Y.S.2d

422,234 N.E.2d 459 (1967); Oregon State Bar v. Gilchrist, 272 Ore. 552, 538 P.2d 913 (1975);

State Bar v. Cramer, 399 Mich. 116,249 N.W.2d 1 (1976).

16. LegalZoom' s self-help legal document service does not determine which form is

appropriate for individual customers, because the process is fixed and automated. LegalZoom

does not exercise legal judgment based on the facts or circumstances of any given customer's

needs, nor does it provide legal assistance to individual customers. If two North Carolina

customers selected the same product and answered the questions identically, they would receive

identical documents. There is no discretion or independent judgment by LegalZoom.


17. LegalZoom's self-help legal document service does not (and does not claim to)

have attorneys who review the customer's documents after they are generated to determine if the

forms meet the individual customer's needs. The generated documents are checked for

completeness, spelling and grammar errors, and correct addresses and the like - not for legal

sufficiency. This is clearly stated in numerous disclaimers throughout the website.

18. Plaintiff provides dependable and legally compliant legal document services and

its document templates are prepared by attorneys.

19. Prior to Defendant's actions complained of herein, Plaintiff had made its self-help

legal document services available to North Carolina customers. Subsequent to Defendant's

actions complained of herein, Plaintiff has continued to make its services available in North

Carolina on the advice of counsel.

20. In March 2003, Defendant's Authorized Practice of Law Committee

(the "APL Committee") opened an inquiry into Plaintiff's online self-help legal document

services, and sent a letter to Plaintiff notifying the company of its inquiry. See Letter from

NCSB dated March 13,2003, true and correct copy attached hereto as Exhibit 1.

21. On April 10, 2003, Plaintiff responded with a letter (true and correct copy

attached hereto as Exhibit 2), and described how its self.-help legal document service did not

constitute the unauthorized practice oflaw, explaining that:

a. The purpose of LegalZoom is to be a general legal portal and to give

customers a general understanding of the law, as well as to provide automated

software solutions to allow individuals to prepare legal documents.

b. The website contains numerous disclaimers that LegalZoom is not a law

firm and does not give legal advice. The website also encourages visitors to seek


an attorney for more information, for example stating "This website should not

be used as a substitute for the advice of an attorney," and that visitors to the

website should "consult with professional legal counsel in his or her state

regarding the applicability of any points of law discussed at this Site to any

specific problem."

22. Plaintiff in its April 10, 2003 letter also provided detailed information on the se1f-

help legal document service it provides, including a detailed description of its incorporation and

LLC formation services.

23. On August 26, 2003, the APL Committee issued a letter stating that it had

"carefully considered" the information received by it and provided by Plaintiff, and "[b ]ased on

all of the information available, the APL Committee voted to dismiss this complaint because the

evidence was insufficient to support a fInding of probable cause that [Plaintiff was] engaged in

the unauthorized practice oflaw." See 2003 NCSB Letter, true and correct copy attached hereto

as Exhibit 3.

24. In January 2007, the APL Committee opened a second inquiry raising a concern

about Plaintiff being named as the incorporator of corporations formed by its customers in

North Carolina. See January 30, 2007 NCSB Letter, true and correct copy attached hereto as

Exhibit 4.

25. In a letter to NCSB dated February 13, 2007 (true and correct copy attached

hereto as Exhibit 5), Plaintiff provided a response to the APL Committee detailing how

Plaintiffs self-help legal document service business model, including its incorporation service,

had not materially changed since 2003 when the NCSB closed its inquiry into LegalZoom.


26. Despite the fact that Plaintiffs business practices had not changed since the

NCSB Commission's 2003 inquiry, Defendant on May 5, 2008 sent a "Letter of Caution[;] Cease

& Desist" letter4 to Plaintiff stating that Plaintiff was engaged in the unauthorized practice of

law. See Cease & Desist Letter from NCSB to Plaintiff dated May 5, 2008 ("Cease & Desist

Letter"), true and correct copy attached hereto as Exhibit 6. Defendant indicated in the Cease &

Desist Letter its belief that "[t]he North Carolina General Statutes prohibit individuals or other

entities other than North Carolina licensed attorneys at law from providing or offering to provide

legal services" such as the self-help legal document service described above. See Ex. 6, Cease &

Desist Letter.

27. The NCSB's Cease & Desist Letter contained a number of inaccuracies in its

description of the self-help legal document services provided by Plaintiff. On June 13, 2008,

Plaintiff sent a letter responding to Defendant's Cease and Desist Letter, explaining that the

APL Committee's 2003 conclusion was correct, and that its 2008 conclusion was based on

mistaken assumptions about Plaintiffs business practices and the applicable law. A true and

correct copy of Plaintiffs June 13, 2008 letter is attached hereto as Exhibit 7.

28. Plaintiffs letter of June 13,2008 noted the following inaccuracies in the Cease &

Desist Letter:

a. The Cease & Desist Letter states that "[a]mong the documents LegalZoom

prepares or offers to prepare are articles of incorporation, wills, trusts,

[uncontested] divorce pleadings, and deeds." Ex. 6, Cease & Desist Letter. These

legal documents "are prepared through LegalZoom's website where, once the

4 Although the letter is styled as a "LETTER OF CAUTION", the style subheading also states "Cease and Desist" and the letter has been nominally referred to by NCSB representatives as a "cease and desist letter."


customer purchases the service, the customer is presented a questionnaire that the

customer completes online. LegalZoom transcribes the responses onto a form

template that Legalzoom [sic] has determined is appropriate for the customer's

legal document and in a form or manner determined by LegalZoom or through

software developed by or on behalf of LegaIZoom." Ex. 6, Cease & Desist Letter.

However, as noted in Plaintiffs response on June 13, 2008, LegalZoom's self-

help legal document service does not "transcribe" or "determine[] [what form] is

appropriate for the customer's legal document." Rather, "the process is fixed and

automated, just as in any form book with instructions or a do-it-yourself kit."

Ex. 7 at 2. LegalZoom's "customers make their own decisions as to which forms

they believe they need." Id.

b. The Cease & Desist Letter also stated: "In the case of the articles of

incorporation, [Plaintiff] files the document with the North Carolina Secretary of

State without any prior delivery of the document to the customer. The template

used for North Carolina corporations is the template offered by the Secretary of

State." Ex. 6, Cease & Desist Letter. Plaintiff "select[ s] or prepare[ s] the

template for each type of document selected by its customers." !d. As noted

above, Plaintiffs response on June 13, 2008 clarified to the NCSB that its

self-help legal document service process is "fixed and automated", and that

"LegalZoom does not exercise legal judgment based on the facts or circumstances

of any given customer's needs." Ex. 7 at 2. This is true for form articles of

incorporation that are offered as part of LegalZoom's self-help legal document

servIce.


29. Additionally, as is clear from reviewing Plaintiff's website, Defendant's assertion

in the Cease & Desist Letter that LegalZoom "offers to prepare legal documents to the public

through a web-based system" is inaccurate and misleading. LegalZoom merely offers its

self-help legal document service online so that its customers can create the documents

themselves using LegalZoom's website.

30. In Plaintiff's letter of June 13, 2008, Plaintiff's North Carolina counsel also

provided a legal opinion explaining that, under North Carolina law, the automated document

preparation and filing service provided by Plaintiff does not constitute the "organizing" of a

corporation, and therefore is not the unauthorized practice oflaw in violation of N.C. GEN. STAT.

§ 84-4. A true and correct copy of that legal opinion is attached hereto as Exhibit 8.

31. Defendant did not ever respond to Plaintiff's letter of June 13, 2008, other than to

acknowledge its receipt in a letter to Plaintiff's counsel dated June 17, 2008 (true and correct

copy attached hereto as Exhibit 9).

32. Additionally, Defendant, as threatened in the Cease and Desist Letter, has not

sought an injunction pursuant to N.C. GEN. STAT. § 84-37, nor an injunction and/or criminal

action pursuant N.C. GEN. STAT. §§ 84-7 and 84-8, nor any other relief for that matter, to

establish as a matter of law that Plaintiff's self-help legal document service constitutes the

unauthorized practice of law in North Carolina.

33. The Cease & Desist Letter falsely accuses Plaintiff of engagmg m the

unauthorized practice of law in North Carolina, accuses Plaintiff of engaging in criminal

conduct, and was derogatory to Plaintiff's business in general.

34. For over three years and almost five months, since May 5, 2008, the NCSB has

wrongfully failed to either: withdraw its Cease & Desist Letter; or pursue its right to have the


matter determined judicially per N.C. GEN. STAT. § 84-37(c) or N.C. GEN. STAT. §§ 84-7 and

84-8, as it threatened to do in its Cease & Desist Letter.

35. The Cease & Desist Letter was published and made available by Defendant on the

internet, including on NCSB's website, and thus was widely disseminated to other state

regulatory bars, and the legal services provider, legal services consumer, and legal document

services consumer communities.

36. Upon information and belief, Defendant's Deputy Counsel, David R. Johnson, has

made statements to other individuals incorrectly stating that the Cease & Desist Letter has the

force of law and that Plaintiff is "prohibited" from doing business in North Carolina.

37. Upon information and belief, Mr. Johnson stated to third parties that LegalZoom

was prohibited from doing business in North Carolina.

38. Plaintiff never received a response from the APL Committee to its June 13, 2008

letter. Since June 13, 2008, Plaintiff has continued to lawfully make available its self-help legal

document products and services in North Carolina.

39. Pursuant to that goal, Plaintiff on July 14,2010 sent a letter to the NCSB (true and

correct copy attached hereto as Exhibit 10) seeking to register one of its prepaid legal services

plans, its Legal Advantage Plus Plan, in accordance with N.C. GEN. STAT. § 84-23.1.

Subsection (bl) of N.C. GEN. STAT. § 84-23.1 provides that "all organizations offering prepaid

legal services plans shall register those plans with the North Carolina State Bar Council on forms

provided by the Council."

40. On September 30, 2010, the NCSB sent a letter in response that listed

requirements for the registration of Plaintiff's plan. That letter also described the NCSB

APL Committee's 2008 Cease & Desist Letter regarding Plaintiff's activities, and noted that "[i]t


appears ... that LegalZoom continues to conduct business in a way that the Authorized Practice

Committee prohibited in its May 5, 2008 cease and desist letter," and asking that Plaintiff

respond to this concern. See September 30, 2010 NCSB Letter, true and correct copy attached

hereto as Exhibit 11 (emphasis added).

41. On October 14, 2010, Plaintiff responded with a letter from Kenneth Friedman,

Plaintiff's Senior Counsel, noting (1) the conflicting conclusions ofNCSB's 2003 and 2008

inquiries, (2) that in June 2008 Plaintiff responded to the NCSB's Cease & Desist Letter stating

that its 2008 conclusion was based on mistaken assumptions about Plaintiff's business practices

and the applicable law, and (3) that the NCSB had not responded to Plaintiff's June 2008 letter.

A true and correct copy of this letter is attached hereto as Exhibit 12. Plaintiff also provided a

separate letter from James Peters, a Vice President with Plaintiff's Attorney Services Division,

also dated October 14, 2010, again requesting registration of Plaintiff's legal services plans and

clarifying that LegalZoom sought registration of both its Business Advantage Pro Plan and its

Legal Advantage Plus Plan, and also providing information regarding a North Carolina-licensed

attorney intended to be registered under the plans. A true and correct copy of this letter is

attached hereto as Exhibit 13.

42. In its October 14, 2010 response (Exhibit 12), Plaintiff also noted that, while the

NCSB's APL Committee was certainly within its statutory authority to make a finding of no

probable cause or probable cause of unauthorized practice, and to "demand" action consistent

with its probable cause finding, the Cease & Desist Letter did not "prohibit" any activity by its

terms or by operation oflaw, as stated in NCSB's September 30,2010 Letter. (Exhibit 11)


43. The NeSB cannot by law enforce its "order" to "prohibit" any activity without

first seeking a court order, according to the statutes governing the NCSB's enforcement

authority. See N.C. GEN. STAT. § 84-15 to -38.

44. In its October 14, 2010 response (Exhibit 12), Plaintiff further noted that the

NCSB's Cease & Desist Letter should have no effect on Plaintiffs pending application for

registration of Plaintiffs pre-paid legal services plan.

45. Defendant responded with a letter dated November 18, 2010 (true and correct

copy attached hereto as Exhibit 14) stating that the NCSB's APL Committee met on October 27

and that it declined to register the Legal Advantage Plus Plan, and requested responses regarding

some "concerns" the APL Committee had about the plan regarding whether the plan satisfied

North Carolina's definition of a prepaid legal service plan, whether the plan violates

unauthorized practice of law statutes, whether LegalZoom wanted to register an additional plan,

the Business Advantage Pro Plan, and also requested further information about registered

attorneys under the plans and their attorney certification forms.

46. Plaintiff responded with a letter dated December 29, 2010 (true and correct copy

attached hereto as Exhibit 15) and stated how LegalZoom's prepaid legal services plan would be

offered to North Carolina consumers in such a way as to fully comply with North Carolina

unauthorized practice of law statutes, confirmed that Plaintiff sought to register more than one

plan, and provided the contact information of an additional attorney along with both attorneys'

attorney certification forms.

47. Defendant did not respond until March 24,2011, at which point Defendant sent a

letter (true and correct copy attached hereto as Exhibit 16) requesting that the two prepaid legal

services plans be registered separately. Defendant wrote an additional letter dated April 28, 2011


(true and correct copy attached hereto as Exhibit 17) stating that the NCSB APL Committee had

concerns about whether North Carolina residents would have access to LegalZoom's self-help

legal document service from the prepaid service plan web pages, and that the APL Committee

had "voted to continue consideration" of the two plans until LegalZoom responded.

48. Plaintiff responded by a letter dated July 8, 2011 (true and correct copy attached

hereto as Exhibit 18), and stated that its self-help legal document service would be available on

its website to North Carolina residents in addition to its prepaid legal services plan. Plaintiff

stated that there is no legal basis to deny registration of LegalZoom's prepaid legal services plans

based on the NCSB's previously expressed concerns regarding LegalZoom's separate self-help

legal document service. Plaintiff also stated that LegalZoom continued to otTer its self-help legal

document service in North Carolina when the NCSB did not respond to LegalZoom's June 13,

2008 letter that raised the numerous mistaken factual and legal assumptions in the NCSB's Cease

& Desist Letter, and that under North Carolina law the Cease & Desist Letter did not prohibit

any activity but was merely advisory.

49. To date there has been no response by Defendant to Plaintiff's July 8,2011 letter.

50. On or about August 12, 2011, Counsel for Plaintiff telephonically contacted NC

State Bar President Anthony di Santi and requested a meeting between Plaintiffs CEO and

Counsel with the officers of the State Bar to discuss the C&D Letter (noting that it had been

outstanding for over three years) and the Plaintiffs prepaid legal application for registration

(noting that it had been outstanding for more than a year). President di Santi indicated to Counsel

that he would consult with his fellow officers on August 15, 2011 regarding the request. When

no response was received from President di Santi by August 18, 2011, Counsel inquired through

voice mail of President di Santi as to the status of the request, which had included four specific

LegaIZoom.com. Inc. v. The North Carolina State Bar. 11 CVS Wake County Complaint Page 15 of25

dates on which Plaintiffs CEO and Counsel would be available. President di Santi responded by

email to Counsel on August 18, 2011, indicating that the State Bar officers did not believe that

the requested meeting "would be productive at this time", and that counsel would be receiving "a

detailed written response soon". (See Exhibit 19). To date (September 30, 2011), no further

response of any kind has been received from Mr. di Santi or from the State Bar.

51. Despite Plaintiffs continuing efforts over a period of more than twelve months to

register its prepaid legal services plans, the NCSB has unjustifiably and in contravention of

N.C. GEN. STAT. § 84-23.1 refused and failed to register LegalZoom's compliant prepaid legal

services plans, including Plaintiffs Legal Advantage Plus Plan and its Business Advantage Pro

Plan. Additionally, Section .0301 of the North Carolina Regulations for Organizations

Practicing Law provides that "The North Carolina State Bar shall not approve or disapprove any

prepaid legal services plan or render any legal opinion regarding any plan. The registration of

any plan under these rules shall not be construed to indicate approval or disapproval of the plan."

52. Once the statutory requirements of N.C. GEN. STAT. § 84-23.l have been met, the

act of registering prepaid legal services plans by the NCSB constitutes a ministerial act.

53. The NCSB's conduct undertaken on four different occasions under color of law to

refuse to register LegalZoom's compliant prepaid legal services plans by tying such services to

LegalZoom's separate self-help legal document service is ultra vires and without any authority

under North Carolina law and is in contravention of Sections 19 and 34 of the North Carolina

Constitution.

54. The NCSB's conduct of publishing and asserting that its Cease & Desist letter

"prohibits" any activities by Plaintiff is ultra vires and without any authority under North

Carolina law.


55. The publication and promotion of the Cease & Desist Letter by Defendant has

resulted in harm to Plaintiff s pecuniary interest, providing support to supporting private class

action lawsuits in other states and also has invited additional regulatory scrutiny from other

states:

a. The Pennsylvania State Bar issued Formal Opinion 2010-01 regarding

Legal Document Preparation By Online And In-Person Services, concluding that

"the offering or providing [in Pennsylvania] of legal document preparation

services as described herein ... either online or at a site in Pennsylvania is the

unauthorized practice of law and thus prohibited." While not concluding that

LegalZoom itself was engaged in the unauthorized practice of law, the opinion

described the activities of online "legal document preparation services" based on

mistaken factual and legal assumptions taken in large part from the NCSB's

findings. 5 The opinion specifically cites its review of the NCSB' s Cease & Desist

Letter as providing authority for its decision, and quotes at length from the Cease

& Desist Letter.

b. A Missouri class action complaint filed in November 2009 against

Plaintiff also explicitly cites and quotes from the NCSB's Cease & Desist Letter.

A true and correct copy of this class action complaint is attached hereto as

Exhibit 20.

c. North Carolina attorneys, given the impression fostered by the NCSB's

Cease & Desist Letter, have openly and publicly discussed the possibility that a

5 The Pennsylvania Bar Association rendered this opinion without any consultation with LegalZoom. LegalZoom objected to the opinion in writing and has not been the target of an inquiry to date.

LegaIZoom.com, Inc. v. The North Carolina State Bar, 11 CVS Wake County Complaint Page 17 of25

recent legislative enactment in North Carolina creating a private cause of action

for violations of unauthorized practice of law statutes could be used against

LegalZoom. See NC Lawyer's Weekly Article dated June 24, 2011, true and

correct copy attached hereto as Exhibit 21 (quoting North Carolina attorney

Holden Reaves: "Companies like LegalZoom who, in my opinion, are engaged in

the unauthorized practice of law by preparing wills and setting up corporations for

citizens in this state, may be subject to actions based on this new law.").

d. National media coverage of LegalZoom's activities also has taken note of

Defendant's Cease & Desist Letter. See, e.g., Associated Press Article re

Missouri Class Action, true and correct copy attached hereto as Exhibit 22 ("The

business practices of LegalZoom have been challenged elsewhere, including in

... North Carolina.").

56. In many of these instances, such private actions and regulatory activity have been

based at least in part on the erroneous impression, actively fostered and encouraged by

Defendant, that the Cease & Desist Letter has a legal effect and/or is a legal finding that

LegalZoom engages in the unauthorized practice of law.

57. Plaintiff has a right to do business in North Carolina III accordance with

applicable law.

58. Defendant's actions are an attempt to deprive Plaintiff of its right to offer its

services to residents of North Carolina in violation of the Law of the Land Clause, Article I,

Section 19 of the North Carolina Constitution.

59. Defendant has intentionally engaged in conduct in contravention to and ultra vires

from activities contrary to N.C. GEN. STAT. Chapter 84, and knowingly caused harm to


Plaintiffs pecuniary interest; or, either recognized or should have recognized that publication of

the Cease & Desist Letter and its ultra vires actions were likely to do so.

60. Defendant has intentionally and knowingly engaged in monopolistic and anti-

competitive conduct in violation of Article I, Section 34 of the North Carolina Constitution and

in contravention to and ultra vires from activities contrary to N.C. GEN. STAT. Chapter 84 by

seeking to prevent Plaintiff from doing business in North Carolina.

61. Defendant has intentionally and knowingly engaged in monopolistic and anti-

competitive conduct in violation of Article I, Section 34 of the North Carolina Constitution and

in contravention to and ultra vires from activities contrary to N.C. GEN. STAT. Chapter 84 by

refusing to register Plaintiffs prepaid legal services plans according to N.C. GEN. STAT. § 84-

23.1.

62. Defendant has knowingly and intentionally engaged in and continues to engage

in, in contravention to and ultra vires from activities contrary to N.C. GEN. STAT. Chapter 84, a

national campaign of intentionally publishing and uttering wrongful and incorrect statements

about the status of Plaintiffs bona fide and legally compliant business operations in North

Carolina.

FIRST CAUSE OF ACTION Violation of Monopoly Clause

63. Paragraphs 1 - 61 are incorporated herein by reference.

64. Plaintiff files this cause of action under the Monopoly Clause, Article I,

Section 34, of the North Carolina Constitution.

65. Defendant's conduct violates the Monopoly Clause by engaging in monopolistic

and anti-competitive conduct excluding Plaintiff and wrongfully utilizing its regulatory authority

LegalZoom.com, Inc. v. The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 19 of 25

in attempting to prevent Plaintiff from providing its products and services to North Carolina

consumers.

66. By its actions as described above, Defendant has caused and continues to cause

irreparable and incalculable injury, including but not limited to Plaintiff's constitutional right to

freely do business in North Carolina pursuant to the monopoly clause. As a result of being so

excluded Plaintiff also is suffering from incalculable economic injury in the form of irretrievably

lost opportunities to reach and provide its business to potential customers in North Carolina and

to acquire the economic benefits thereof.

SECOND CAUSE OF ACTION Denial of Equal Protection of the Laws


68. Petitioner files this cause of action under the Equal Protection of the Laws Clause,

also known as the Law of the Land Clause, Article I, Section 19, of the North Carolina

Constitution.

69. Defendant's conduct violates the Equal Protection of the Laws Clause of the

North Carolina Constitution in singling out and excluding Plaintiff from the opportunity to

provide its products and services in North Carolina by not allowing Plaintiff to register its legally

compliant prepaid legal services plans.

70. By its actions as described above, Defendant has caused and continues to cause

irreparable and incalculable injury, including but not limited to Plaintiff's constitutional right to

equal protection under the Law of the Land clause. This deprivation has harmed Plaintiff in the

form oflost business opportunities from potential customers.

Lega/Zoom.com, Inc. v. The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 20 of25

THIRD CAUSE OF ACTION Commercial Disparagement


72. Defendant's statements that Plaintiff has engaged in the unauthorized practice of

law are false and untrue, and disparaged Plaintiff's product, LegalZoom.

73. By making the statements available on the NCSB website and online, Defendant

published the disparaging statements to one or more people.

74. Defendant's conduct is ultra vires and without any authority under North Carolina

law.

75. Defendant knowingly published wrongful ultra vires statements concernmg

LegalZoom, causing the consuming public and others to regard Plaintiff's product as legally

unauthorized, and imputing illegal conduct to Plaintiff.

76. By knowingly publishing the wrongful, ultra vires statements on the NCSB

website and online, Defendant published the disparaging statements to a wide range of persons in

the public.

77. Defendant knowingly published the wrongful, ultra vires statements about

Plaintiff, causing Plaintiff to suffer the monetary loss of certain important and valuable

customers and injury to the reputation of Plaintiff.

78. Defendant knowingly published the wrongful, ultra vires statements with the

knowledge that the statements were incorrect, or with open and knowing disregard as to the

Lega/Zoom.com, Inc. v. The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 21 of25

falsity of the statements. This conduct was ultra vires and Defendant was without legal authority

to do so.

79. Plaintiff is informed and believes that Defendant will continue to harm Plaintiff

until Defendant is enjoined and constrained from doing so by order of this Court.

FOURTH CAUSE OF ACTION Petition for Declaratory Judgment


81. Plaintiff files this Petition for Declaratory Judgment under Chapter 1, Article 26

of the North Carolina General Statutes, and this Court has jurisdiction of this matter under such

statutes.

82. Plaintiff is entitled to a declaration that Defendant has disparaged Plaintiff's

products and services, and has acted ultra vires to its authority in doing so.

83. Plaintiff has an actual controversy with Defendant resulting from Defendant's

ultra vires and intentional publication of false and disparaging statements regarding Plaintiff.

84. Wherefore, Plaintiff's further seek a judicial declaration pursuant to N.C. GEN

STAT. § 1-253 et. seq. that Plaintiffs are not engaged in the unauthorized practice of law by

providing a "self help legal document service" through the internet.

RELIEF REQUESTED

WHEREFORE, Plaintiff requests that this Court:

I. Enter a mandatory injunction, without bond, ordering Defendant to register Plaintiff's

prepaid legal services plans in accordance with N.C. GEN. STAT. § 84-23.1, including

Plaintiff's Legal Advantage Plus Plan and its Business Advantage Pro Plan;

II. Declare that NCSB's publication of its Cease & Desist Letter was ultra vires and


unlawfully disparaged Plaintiff's products and services.

III. Declare that Plaintiff is not prohibited from or unlawfully operating a "self help legal

document service" through the internet.

IV. Enter a mandatory injunction, without bond, ordering Defendant to publicly withdraw the

Cease & Desist Letter and prominently publish notice of the same on the NCSB website;

V. Enter a mandatory injunction, without bond, ordering Defendant to withdraw and/or

remove all published NCSB reports of Plaintiff's operations in North Carolina;

VI. Award Plaintiff its attorney's fees, costs, and expenses; and

VII. Grant such further relief as this Court deems just and proper.


Respectfully submitted, this the 30th day of September, 2011.

COUNSEL:

p, Carlton, Jr. NC State Bar No. 6544 ALLEN, PINNIX & NICHOLS, P.A. Attorney for Plaintiff Post Office Drawer 1270 Raleigh, North Carolina 27602 Telephone: 919-755-0505 Facsimile: 919-829-8098 Email: [email protected]

CO-COUNSEL:

NC State Bar No. 12329 NEXSEN PRUET, PLLC Attorney for Plaintiff Post Office Drawer 30188 Raleigh, North Carolina 27622 Telephone: 919-755-1800 Facsimile: 919-653-0435 Email: [email protected]

Gene Boyce NC State Bar No. 0435 NEXSEN PRUET, PLLC Attorney for Plaintiff Post Office Drawer 30188 Raleigh, North Carolina 27622 Telephone: 919-755-1800 Facsimile: 919-653-0435 Email: [email protected]

Lega/Zoom, com, Inc, v, The North Carolina State Bar, 11 CVS __ , Wake County Complaint Page 24 0[24

CERTIFICATE OF SERVICE

I, the undersigned do hereby certify that I have this day served the foregoing COMPLAINT by depositing a copy of the same in the United States mail, First Class, Certified Mail, Return Receipt Requested, postage prepaid, addressed as follows:

This the --

L. Thomas Lunsford, II Executive Director The North Carolina State Bar 208 Fayetteville Street Mall Raleigh, NC 2760

September, 2011.

The North Carolina State Bar

AUTHORIZED PRACTICE COMMITTEE

I ,,~~ IZoofl"' ,'001, [n.:

SHY N. Lan:nmont Ave., 2nd Hour Lo." :\ngeles, C A 90004

MAR .1 :z 200J

Re: Authorized Practlce- Our File Number: 03APOOi5

Dear Sir or Madam:

LETTER OF NOTICE

David R. Johnson UPL Counsel

fhis is to advise you that information that you may have been engaged in conduct constituting the unauthorized practice of law has been received by this office, The North Carolina State Oar, through its Authorized Practice Committee, is conducting an inquiry into your conduct pursuant to the statutory authority granted by North Carolina General Statute SectIOn 84-3'1 and Chapter One, SUbchapter D, Section .0205 of the Rules and Regulations of the North Carolina State Oar. You are requested to respond to this Letter of Notice within fifteen (15) days of its receipt. If you fail to respond within fifteen (15) days after receipt, the Chailman of the Committee may instruct the Counsel of the North Carolina State Bar to proceed with action in accordance with Section ,0207 of the Rules, mcluding the seeking of injunctive relief.

To assist you in preparing a response to this letter, I am enclosing a form entitled "Substance of the Authorized Practice Complaint" The substance is a summary of the information received but is not intended as a pleading of any kind. The Committee has not made any assumptions as to the validity of these allegations against you,

fn those cases where a violation of the unauthorized practice statutes is found to be inadvertent, or without knowledge of the statutes, the Committee generally closes its file upon assurance that the prohibited act will not be repeated. I also am cnclosing copies of pcrtincnt statutes rcgarding the unauthorized practice of law. It may be

practice of In' v is a mIsdemeanor cnme.

If you have any questions, you may Gall or write to me at the North Carolina State Bar, PO Box 25908, Raleigh, NC 27flll, telephone number (919) 828-4620 ext. 262.

DRJ/paa

Enclosure

Sincerely yours.

~',(K9~ David R. Johnson UPL Counsel

~ ~

CERTIFIED MAIL-RETURN RECEIPT REQUESTED ~

~ 208 Fayetteville Street Mall Post Office Box 25908 Raleigh, NC 27611 (919) 828-4620 Fax (919) 834-8156

EXHIBIT

1

David R. Johnson, Esquire The North Carolina State Bar 208 Fayetteville Street Mall Raleigh, NC 27611

Dear Mr. Johnson:

~.I Ie /

(, Ocro~,2003

This letter is written in response to your correspondence dated March 13,2003 regarding the North Carolina State Bar's Unauthorized Practice of Law Committee and its examination of the information and services contained on our Internet site, LegalZoom.com ("LegaIZoom"). In this letter, we would like to better clarify the contents on the Internet site and our business practices.

BACKGROUND

The purpose of LegalZoom is to be a general legal portal and to give visitors a general understanding of the law, as well as to provide automated software solutions to allow individuals to prepare legal documents. To that extent, the site publishes general infonnation on legal issues commonly encountered. Neither LegalZoom nor its employees provide legal advice or guidance. We do not apply the law to the facts of a visitor's particular situation and we do not provide legal representation.

The website contains numerous disclaimers to inform our visitors that LegalZoom is not a law firm and docs not give legal advice. (See Exhibit A for examples.) Throughout the site, we clearly and repeatedly encourage our visitors to seek an attorney for more information. For example, we state that "This web site should not be used as a substitute for the advice of an attorney," and we urge our visitors to "consult professional legal counsel in his or her state regarding the applicability of any points of law discussed at this Site to any specific problem."

For visitors seeking legal advice and guidance, our website provides three options. First, our co-branding and marketing arrangement with Respond.com allows our customers to submit an online request for legal services in specific legal categories. The attorney referral network is managed and maintained by Martindale-Hubbell's Lawyers.com. Customers describe the facts of their particular situation and provide an estimated budget. Thereafter, attorneys licensed to practice in the customer's state may choose to respond to the request by contacting the customer directly via e-mail.

EXHIBIT

2

Respond.com has informed us that 32 attorneys licensed to practice law in North Carolina subscribe to their service. We actively promote our attorney request service on the home page of LegalZoom, as well as through embedded links on the site.

Second, we offer an attorney directory through a distribution agreement with Findlaw.com (a division of The West Group). This service allows our visitors to browse through a comprehensive listing of attorneys by practice area, city and state. Hundreds of North Carolina attorneys are listed in this directory. The attorney directory is also promoted on our home page.

Third, we refer visitors to Te1e-Lawyer, where visitors can speak with a licensed attorney on the phone for $3.00 per minute. Unfo11unately, Tele-Lawyer has informed us that this service is currently not available to residents of North Carolina.

Due to the fact that we are an online resource, we do not receive many phone calls. Personal contact with any customer is extremely rare. On the rare occasion that we receive a phone call or e-mail requesting legal advice or guidance, wc refer these individuals to Te1e-Lawyer, our attorney-by-request service or the attorney directory. fn other unique situations, where Te1e-Lawyer is not available and a customer needs legal consultation, we refer them to www.legalopinion.com (where a customer can obtain a written legal opinion for a fixed fee) or www.lawexpress.com (a telephone legal advice service affiliated with the ARAG Group).

In terms of legal document preparation services, LegalZoom has developed a proprietary document assembly software based on branching technologies called "LegaIZip." Users may read tlu'ough our reference area, called the "law library," at their leisure. They can even link directly to governmental agencies' websites to gather the intormation that will assist them in making their decisions. Users' answers are migrated to LegalZoom's internal infrastmcture through a highly secure n-tiered system. Like other commonly available legal document assembly software, including Quicken Lawyer and Kiplinger's WILLPower, LegalZoom's web-based software prompts individuals to complete a questionnaire which is customized based on answers previously given. For example, a person who does not have children will not be asked for the names of the children. The information is then auto-populated into fill-in-the hlank forms and reviewed by staff for completeness, spelling and grammar. We print the documents on high-quality bond paper and send the documents to our customers by mail.

For incorporation and LLC formation services, after the answers are auto-filled into government-approved forms (such as Form B-O I, Articles ofIncorporation for Business Corporation, published by the NOl1h Carolina Secretary of State), we deliver the completed form to the Secretary of State for filing. Thereafter, we package the filed Articles of Incorporation with.a corporate kit, which is supplied by a third-party vendor.

2

The corporate kit includes a corporate seal, customized stock certificates and fill-in-theblank forms for resolutions and corporate minutes.

As described on the LegalZoom website, our review of the answers provided by the customers relates only to checking for completeness (ie, making sure that all required fields are answered), spelling errors, grammatical errors, mailing addresses and name spellings. LegalZoom docs not review user information for legal sufficiency or any other legal matter. Programs such as Microsoft's spell check and grammar check components are employed to ensure that basic rules of the English language have been followed. Zip codes are matched to other location data to ensure that the user has not made a typographical error which could result in a frustrating delay. Information from each questionnaire across the enterprise is pooled and sorted, bringing together information from each functional group into a central whole to create the final automated forms. Again, LegalZoom does not provide legal advice or direction to any particular person, but allows a general use format for the public at large.

The amount charged for LegalZoom' services range between $35 to $55 for our most popular legal forms, such as Powers of Attorney and Last Wills. These prices are comparable to the retail price of most off-the-shelf legal software.

COMPARABLE SERVICES

As previously noted, LegalZoom's document assembly software is similar to Quicken Lawyer, Kiplinger's WILLPower and Broderbund's Family Lawyer, all of which are widely available in retail stores throughout North Carolina.

LegalZoom is among many law-related companies presently operating on the internet. The American Bar Association's "elawyering website" (www.e1awyering.org/what/practice.shtml) lists the following law-related organizations as illustrative of the types of services currently available on the internet:

• American Law Online -- "State-specific explanations of law in every-day language, access to state-specific legal resources, tools to conduct on-line legal research services, on-line legal education workshops, legal checklists, legal forms and document assembly services on-line, child support and other interactive calculators, and detailed state-specific procedural information -- all designed for pro se litigants." Covers Maryland and Pennsylvania now; more states on the way.

• Cybersettle.com -- Computer-mediated dispute resolution.

3

• Divorcelawinfo.com -- Assisting pro se divorce representation in all 50 states.

• Divorce Source -- Extensive site with many innovative features. • Estate PlannerfM 2.0 -- "Estate Planncr™ 2.0 gives you comprehensive

estate-planning information - more than you could get from any other single source! You get expert guidance on issues such as finances, minimizing taxes, health and eldercare issues, insurance needs and more!"

• It's Legal! -- "Your sources for do it yourself legal solutions." Legal documents, legal software and legal information from Quicken Family Lawyer

• LawExpress -- "Legal Advice Quick, Find An Attorney." • Nolo Press -- The online "Self-Help Law Center" of a major publisher of

inexpensive legal information for consumers. • LawSmart Services -- Free legal documents, F AQs, audio guides and

discussion boards. • Lawstreet.com -- Lawyer directory provides free legal information. • Lawguru.com u Legal fOlms, extensive legal research aids, and a database

of 14,000 legal questions and answers contributed at no charge by the site's 500 lawyer network.

• Legal Information Access Centre u State Library of New South Wales offers directory of free legal advice services in Australia.

• MyClaim.com u "Injured? Why Not Prepare Your Own Claim for Settlement'?"

• MyCounsel.com -- "Reinventing the delivery oflegal information and services to consumers and small businesses by combining the Internet's most comprehensive source of accessible legal information with legal services and solutions delivered by a Certified Network oflawyers." MyCounsel.com was recognized in the American Bar Association 2001 Louis M. Brown Award for Legal Access competition on Feb. 17,2001 during the ABA Midyear Meeting in San Diego.

• MyLawyer.com u Concentrates on online document preparation, using sophisticated software. Has a good lawyer directory.

• Prairielaw.com -- A major virtual community site, focusing on topics of interest to consumers and plaintiff-oriented trial lawyers. Now operated by Martindale- Hubbell.

• SecureTax.com -- Prepare tax returns on the Internet using expert systems software.

• Virtualjury.com and the Wilmington Institute Network oiTer online case evaluation services.

• Will Works -- Online will preparation. "In a simple 5 page interview that takes about 15 minutes, you instruct the program to build your document

4

according to your state of residence and your personal situation. According to your wishes, the WillWorks program will construct a different document for, say, a married parent 0 f minor children living in Vermont than for a single, childless person living in Texas."

Finally, there are numerous companies that provide corporate formation services, both online and offline. Some of these companies have been around for over 100 years. They include The Company Corporation (www.incorporate.com. a subsidiary of Corporation Service Company), CT Corporation (www.ctadvantage.com. a subsidiary of Wolters Kluwer) and CorpAmerica, Inc. (www.corpamerica.com. owned by LexisNexis).

CONCLUSION

[n conclusion, LegalZoom serves as a general resource for legal information. Our legal document service is an online version of off-the-shelf legal software widely available throughout the United States. The website repeatedly states that is not a substitute for the advice of an attorney, and it provides three different methods for referring customers to attorneys for legal advice.

Thank you for giving us the opportunity to clarifY our business practices. If you have any questions or would like any additional information, please do not hesitate to contact me at (323) 962-8600.

5

Sincerely,

LegaIZoom.com, Inc.

By: ______ _ Brian Liu Chief Exec uti ve 0 fficer

Attachment A

The North Carolina State Bar

AUTHORIZED PRACTICE COMMITTEE Barbara B. Weyher Chair

Mr. Brian Liu LegaIZoom.com, Inc. 589 N. Larchmont Ave., 2nd Floor Los Angeles. LA YU004

Dear Liu:

Re: Alleged unauthOlized practice of law Our file number: 03APOO 15

On July 24. 2003, the Authorized Practi(~: Committee met and cvnsidered thi! results of its invesligat;olll11adc into your activities in tne ahove referenced matter. As JOU will recall, yot! were informed of the allegations before the Committee and given an opportun;i.Y to res;JOnd. '( \ltJ

responded, and the C:)mmittee carefuily considered both the infomlation recer'ied by it and yuur rt:sponse.

Based upon all of the information available, the Committee voted to dismiss this complaint because the evidence was insufficient to support a finding ofprobablc cause that you were engaged in the unauthorized practice of law. Although the matter was dismissed, the Committee reminds you that it is the unauthorized practice of law [or anyone, other than an active member of the North Carolina State Bar. (i) provide legal advice or servircs to any other person, finn. or curporatiun.

Thank you tor your cooperation in this matter. Plea~e feel free to contact the Committee's cOllnsel, lenni fer A. Porter, if you have any questions.

BOW/pC'.:l EXHIBIT ~

~ w !<

~ 3

208 Favetteville Street ~'aU Post Office Box 25908 Raleigh, NC 17611 (919) 828-4620 Fax (919) 834-8156

rrhe North Carolina State Bar Authorized Practice Committee

LegaIZoom.com, Inc. 7083 Hollywood Boulevard, Suite 180 Los Angeles, California 90028

January 30,2007

208 Fayetteville Street (27601)

Post Office Box 25908 Raleigh, North Carolina :n6lI Telephone (919) 828-4620

Fax: (919) 834-8156 Web: www.ncbar.gov

LETTER OF NOTICE

Re: AHcgation of UnauthorIzed Pmctice of Law File number: 07APOOll

Dear Sir or Madam:

This is to advise you that the Authorized Practice Committee of the North Carolina State Bar has received information that you are engaged in activities that may constitute the unauthorized practice of law in North Carolina. The North Carolina State Bar, through its Authorized Practice Committee, is conducting an inquiry into your activities pursuant to the statutory authority granted by North Carolina General Statute Sel:tion 84-37 and Chapter One, Subchapter l), Section .0205 of the Rules and Regulations of the North Carolina State Bar. You arc requestt:d to respond to this Letter of Notice within tifteen (15) days of its receipt. If you tail to respond within fifteen (15) days after receipt, the Chairman of the Committee may instruct the Counselor the North Carolina State Bar to proceed with appropriate action in accordance with Sedion ,0207 of the Rules, including seeking injunctive relief.

the information received by the Committee may be summarized as tallows:

LegalZoom.com is a web based company that purport'> to provide legal services to t h~ !luhl ir:-, in':' ~!ding but not lil"!!!ted to !'Jo;-th C~r0} in~~ i~~~jllJoraticj~ SCi"\" ic\...:.-i. The North Carolina incorporation :-,ervices otfercd by LegalZoom.cdm include preparation of the Articles ofIncorporation and "customized bylaws and resolutions." LegalZoom.com offers to file the articles of incorporation for the customer. The customer is asked to complete a questionnaire and LegalZoom.com transcribes the answers onto a template. The template used is based on a torm available for free on the North Carolina Secretary of State's websited. The website assures the customer that Lt:galZoom will review the customers' answers for mistakes. An employee of LegalZoom.com signs the articles of incorporalion as the incorporator. LegalZoom.com offers similar services for other legal documents in North Carolina. including wills. living trusts, and divurce complaints. Legal/oom.com compares the price for its services to that of an attorney I;;ven though there is no substantiation to the comparison.

Anthony S. Ji Santi, Chair Joshua W. Willey, Jr., Vice-Chair EXHIBIT

4

January 30, 2007 Page 2

The North Carolina General Statutes prohibit individuals or entities other than North Carolina I icensed attorneys at law from providing legal services to other persons, firms, or -:orporations. Legal services include the provision of legal advice and the preparation of legal documents. Organizing corporations for others is specifically included in the definition of the practice of law in North Carolina. Business corporaitons are prohibited by these statutes from providing or offering to provide legal services to their customers, even if those services are actually performed by licensed North Carolina attorneys.

The Committee asks that you respond by describing your version of the events, the services you provided, and any other response to this letter of notice that you deem appropriak. Please be advi~ed that Authorized Pr:'clic': ft!c~ "'f!.' (:ol1si!krd puhlic: m:<l, ''-!PC'11 rc:qu~~t, individL::!!s un: allowed to review the files.

The Committee has not made any assumptions regarding the validity of the complaint against you. In those cases where a violation of the unauthorized practice statutes is found to be inadvertent or without knowledge of the statutes, the Committee generally closes its file upon assurance that the prohibited act will not be repeated.

I am enclosing copies of pertinent statutes regarding the unauthorized practice of law. It may be advisable for you to consult an attorney before responding to this Lcttcr of Notice because the unauthorized practice of law can be prosecuted as a misdemeanor criminal offense in North Carolina.

Please give this matter your immediate attention. You may contact me with any questions.

Sincerely,

~-D' . e- i '1 )/n ,f OJlf\.cL - ,_ C)"v'r\...~>(''''- ,u"/\

David R. Johnson I Deputy Counsel

DRJ/lr

Endosure

CERTIFIED MAIL-RETURN RECEIPT REQUESTED

EXCERPTS FROM THE NORTH CAROLINA GENERAL STATUTES AUTHORIZED PRACTICE COMMITTEE, THE NORTH CAROLINA STATE BAR

§ 84-2.1. "Practice law" defined

The phrase "practice law" as used in this Chapter is defined to be performing any legal service for any other person, firm or corporation, with or without compensation, specifically including the preparation or aiding in the preparation of deeds, mortgages, wills, trust instruments, inventories, accounts or reports of guardians, trustees, administrators or executors, or preparing or aiding in the preparation of any petitions or orders in any probate or court proceeding; abstracting or passing upon titles, the preparation and filing of petitions for use in any court, including administrative tribunals and other judicial or quasi-judicial bodies, or assisting by advice, counsel, or otherwise in any legal work; and to advise or give opinion upon the legal rights of any person, firm or corporation: Provided, that the above reference to particular acts which are specifically included within the definition of the phrase "practice law" shall not be construed to limit the foregoing general definition of the term, but shall be construed to include the foregoing particular acts, as well as all other acts within the general definition. The phrase "practice law" does not encompass the writing of memoranda of understanding or other mediation summaries by mediators at community mediation centers authorized by G.S. 7 A-38.5.

§ 84-4. Persons other than members of State Bar prohibited from practicing law

Except as otherwise permitted by law, it shall be unlawful for any person or association of persons, except active members of the Bar of the State of North Carolina admitted and licensed to practice as attorneys-at-law, to appear as attorney or counselor at law in any action or proceeding before any judicial body, including the North Carolina Industrial Commission, or the Utilities Commission; to maintain, conduct, or defend the same, except in his own behalf as a party thereto; or, by word, sign, letter, or advertisement, to hold out himself, or themselves, as competent or qualified to give legal advice or counsel, or to prepare legal documents, or as being engaged in advising or counseling in law or acting as attorney or counselor-at-law, or in furnishing the services of a lawyer or lawyers; and it shall be unlawful for any person or association of persons except active members of the Bar, for or without a fee or consideration, to give legal advice or counsel, perform for or furnish to another legal services, or to prepare directly or through another for another person, firm or corporation, any will or testamentary disposition, or instrument of trust, or to organize corporations or prepare for another person, firm or corporation, any other legal document. Provided, that nothing herein shall prohibit any person from drawing a will for another in an emergency wherein the imminence of death leaves insufficient time to have the same drawn and its execution supervised by a licensed attorney-at-law. The provisions of this section shall be in addition to and not in lieu of any other provisions of this Chapter. Provided, however, this section shall not apply to corporations authorized to practice law under the provisions of Chapter 558 of the General Statutes of North Carolina.

§ 84-4.1. Limited practice of ou t-of-sta te attorneys

Any attorney domiciled in another state, and regularly admitted to practice in the courts of record of that state and in good standing therein, having been retained as attorney for a party to any civil or criminal legal proceeding pending in the General Court of lustice of North Carolina, the North Carolina Utilities Commission, the North Carolina Industrial Commission, the Office of Administrative Hearings of North Carolina, or any administrative agency, may, on motion, be admitted to practice in that forum for the sole purpose of appearing for a client in the litigation. The motion required under this section shall contain or be accompanied by:

(I) The attorney's full name, post-office address, bar membership number, and status as a practicing attorney in anot~er state.

(2) A statement, signed by the client, setting forth the client's address and declaring that the client has retained the attorney to represent the client in the proceeding.

(3) A statement that unless permitted to withdraw sooner by order of the court, the attorney will continue to represent the client in the proceeding until the final determination thereof, and that with reference to all matters incident to the proceeding, the attorney agrees to be subject to the orders and amenable to the disciplinary action and the civil

b. Preparing and publishing notice of administration to creditors.

c. Handling formal court proceedings.

d. Drafting legal papers or giving legal advice to spouses concerning rights to an elective share under Article IA of Chapter 30 of the General Statutes.

e. Resolving questions of domicile and residence of a decedent.

f. Handling proceedings involving year's allowances of widows and children.

g. Drafting deeds, notes, deeds of trust, leases, options and other contracts.

h. Drafting instruments releasing deeds 0 f trust.

i. Dratting assignments 0 f rent.

j. Drafting any formal legal document to be used in the discharge of the corporate fiduciary's duty.

k. In matters involving estate and inheritance taxes, gift taxes, and federal and State income taxes:

I. Preparing and filing protests or claims for refund, except requests for a refund based on mathematical or clerical errors in tax returns filed by it as a fiduciary.

2. Conferring with tax authorities regarding protests or claims for refund, except those based on mathematical or clerical errors in tax returns filed by it as a fiduciary.

3. Handling petitions to the tax court.

I. Performing legal services in insolvency proceedings or before a referee in bankruptcy or in court.

m. In connection with the administration of an estate or trust:

I. Making app lication for letters testamentary or letters of administration.

2. Abstracting or passing upon title to property.

3. Handling litigation relating to claims by or against the estate or trust.

4. Handling foreclosure proceedings of deeds oftrust or other security instruments which are in default.

(3) When any of the following acts are 10 be performed in connection with the fiduciary activities of such a corporation, the corporation shall comply with the following:

a. The initial opening and inventorying of safe deposit boxes in connection with the administration of an estate for which the corporation is executor or administrator shall be handled by, or with the advice ot~ an attorney, not a salaried employee of the corporation, retained by the corporation to perform legal services required in connection with that particular estate.

b. The furnishing of a beneficiary with applicable portions of a testator's will relating to such beneficiary shall, if accompanied by any legal advice or opinion, be handled by, or with the advice of, an attorney, not a salaried employee of the corporation, retained by the corporation to perform legal services required in connection with that particular estate or matter.

c. In matters involving estate and inheritance taxes and federal and State income taxes, the corporation shall not execute waivers of statutes of limitations without the advice of an attorney, not a salaried employee of the corporation, retained by the corporation to perform legal services in connection with that particular estate or matter.

d. An attorney, not a salaried employee of the corporation, relained by the corporation to perform legal services required in connection with an estate or trust shall be furnished copies of inventories and accounts proposed for filing with any court and proposed federal estate and North Carolina inheritance tax returns and, on request, copies of proposed income and intangibles tax returns, and shall be afforded an opportunity to advise and counsel the corporate fiduciary concerning Ih~rn prior to filing.

(b) Nothing in this section shall prohibit an attorney retained by a corporation, whether or not the attorney is also a salaried employee of the corporation, from representing the corporation or an affiliate, or from representing an officer, director, or employee of the corporation or an affiliate in any matter arising in connection with the course and scope of

§ 84-37. State Bar may investigate and enjoin unauthorized practice

(a) The Councilor any committee appointed by it for that purpose may inquire into and investigate any charges or complaints of unauthorized or unlawful practice of law. The Councilor any committee of its members appointed for that purpose may inquire into and investigate any charges or complaints of unauthorized or unlawful practice of law. The Council may bring or cause to be brought and maintain in the name of the North Carolina State Bar an action or actions, upon information or upon the complaint of any person or entity against any person or entity that engages in rendering any legal service or makes it a practice or business to render legal services which are unauthorized or prohibited by law or statutes relative thereto. No bond for cost shall be required in the proceeding.

(b) In an action brought under this section the final judgment if in favor of the plaintiff shall perpetually restrain the defendant or defendants from the commission or continuance of the act or acts complained of A temporary injunction to restrain the commission or continuance thereof may be granted upon proof or by affidavit, that the defendant or defendants have violated any of the laws or statutes applicable to unauthorized or unlawful practice of law. The provisions of statute or rules relating generally to injunctions as provisional remedies in actions shall apply to a temporary injunction and the proceedings thereunder.

(c) The venue for actions brought under this section shall be the superior court of any county in which the acts constituting unauthorized or unlawful practice of law are alleged to have been committed or in which there appear reasonable grounds that they will be committed or in the county where the defendants in the action reside or in Wake County.

(d) The plaintiff in the action shall be entitled to examination of the adverse party and witnesses before tiling complaint and before trial in the same manner as provided by law for the examination of parties.

(t:) This section shall not repeal or curtail any remedy now provided in cases of unauthorized or unlawful practice of law, and nothing contained herein shall be construed as disabling or abridging the inherent powers of the court in these matters.

(I) The Council or its duly appointed committee has the authority to issue advisory opinions in response to inquiries from members or the public regarding whether contemplated conduct would constitute the unauthorized practice of law.

§ 84-38. Solicitation of retainer or contract for legal services prohibited; division of fees

It shall be unlawful for any person, firm, corporation, or association or his or their agent, agents, or employees, acting on his or their behalt~ to solicit or procure through solicitation either directly or indirectly, any legal business, whether to be performed in this State or elsewhere, or to solicit or procure through solicitation either directly or indirectly, a retainer or contract, written or oral, or any agreement authorizing an attorney or any other person, finn, corporation, or association to perform or render any legal services, whether to be performed in this State or elsewhere.

It shall be unlawful for any person, firm, corporation, or association to divide with or receive from any attorney-atlaw, or group of attorneys-at-law, whether practicing in this State or elsewhere, either before or after action is brought, any portion of any fee or compensation charged or received by such attorney-at-law, or any valuable consideration or reward, as an inducement for placing or in consideration of being placed in the hands of such attorney or attorneys-atlaw, or in the hands of anuther person, firm, corporation or association, a claim or demand of any kind, for the purpose of collecting such claim or instituting an action thereon or of representing claimant in the pursuit of any civil remedy for the recovery thereof, or for the settlement or compromise thereof, whether such compromise, settlement, recovery, suit. claim, collection or demand shall be in this State or elsewhere. This paragraph shall not apply to agreements between attorneys to divide compensation received in cases or matters legitimately, lawfully and properly received by them.

Any person, firm, corporation or association of persons violating the provisions of this section shall be guilty of a Class I misdemeanor.

The coullcil of the North Carolina State Bar is hereby authorized and empowered to investigate and bring action against persons charged with violations of this section and the provisions as set forth in G.S. 84-37 shall apply. Nothing contained herein shall be construed to supersede the authority of district attorneys to seek injunctive relief or institute criminal proceedings in the same manner as provided for in G.S. 84-7. Nothing herein shall be construed as abridging the inherent powers of the courts to deal with such matters.

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VIA OVERNIGHT MAIL David R. Johnson Deputy Counsel The North Carolina State Bar Authorized Practice Committee 208 Fayetteville Street P.O. Box 25908 Raleigh, North Carolina 27611

Dear \IIr. Johnson:

February 13, 2007

This It!tter is written in response to your correspondence dated January 30, 2007 concerning the ~orth Carolina State Bar Allegation of Unauthorized Practice of Law Inquiry File Number 07 APOO I regarding our internet site, www.LegaIZoom.com.

We would first like to note that your State Bar has already investigated our website and the State Bar Committee found on July 26, 2003 that there was no evidence to support that www.LcgaIZoom.col11 was engaged in the unauthorized practice of law. We have enclosed a prior correspondence from your Authorized Practice Committee on July 26, 2003 regarding tile number 03AI'00 15 to that effect. (see Attachment A).

We are happy, however, to provide you with a more comprehensive explanation of the incorporations services provided by our site and our general business practices to further allay any concerns. I hope this response provides you with the information you require.

BACKGROUND OF LEGALZOO~1.COM

l.cgaIZoom.com. Inc. ("LegaIZoom") was founded in 2000 to provide an online legal portal and to give visitors a gcneralunderstanding of the law, as ,"ell as to provide an automated solhvare solution to individuals who choose to prepare their own legal documents. To that extent. the site publishes general information on legal issues commonly encountered.

I.egaIZoom.com is not a law firm and does not hold itself out as such. Nt!ither the website nor its employees provide It!gal advice or guidance. We do not apply the law to the facts of a visitor's particular situation and we do not provide legal representation. l.egalZoorn.com is a bonded Legal Document Assistant registered under California Business & Professions Code §§ 6400, ct seq., registration No. LOA #0104 (Los Angeles County) and is certified as a Legal Document Preparer in Arizona pursuant to Rule 31 and Arizona Code of Judicial Administration §7-208. LegalZoom.com is a leading legal self-help documentation service competing with a number of other companies providing similar business resources and services in ;-..lorth Carolina

EXHIBIT

5

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and many of thc 50 States, including Nolo (www.nolo.com). Bizfilings (www.northcaroina.bizt1lings.com) and Intuit's MyCorporation.com (www.mycorporation.com).

LEGALZOOM.cOM DOES NOT FUR"lISH LEGAL ADVICE

The website contains numerous disclaimers to infonn ollr visitors that LegalZoom is not a law finn and docs not give legal advice. Throughout the site, we clearly and repeatedly encourage our visitors to seek an attorney for more information. For example, we state that "This web site should not be used as a substitute for the advice of an attorney," and we urge our visitors to "consult professional legal counsel in his or her state regarding the applicability of any points of law discussed at this Site to any specific problem." Similar language can be found in multiple places on our website incluuing our disclaimer page, full terms and conditions page, and each of our product summary pages (see Attachment B Ilx examples).

For visitors seeking legal auvice and guidance, LcgalZoom directs visitors to an attorney locator service called Filldlaw.com. (see Attachment C for an example) The consumer is prompted to provide their legal issue as well as their location in order to locate an attorney. On the rare occasion that we receive a telephone call or e-mail requesting legal advice or guidancl!, we refer these individuals to www.Findlaw.com.

LEGALZOOM.COM DOES NOT FURNISH LEGAL SERVICES

Your letter indicates concern that LegalZoom furnishes legal services or legal document preparation services to its consumers in violation of :--Jorth Carolina General Statute Section K4-4. LegalZoom.com maintains that the website does not proviue legal services or ll!gal advice to its consumers. Instead, the website provides a number of se1t~help services for its customers \vho choose to handle their own legal matters without an attorney.

LegalZoom has developed its own proprietary document assembly sottware based on branching technologies called "LegaIZip." A consumer is able to read through various referencl! areas in our "law library." From either these reference areas or the home page, the consumer may select to prepare his or her own legal document or form from a specitic list of documents. Once the consumer has sl!lected a document, LegalZoom's web-based software prompts the inuividuals to complete a questionnaire which is customized based on the customer's previously provided answers. For example, a consumer from North Carolina is not prompted to answer questions specific to Calilornia residents. The information provided by the consumer is thcn auto-populated into till-in-the blank torms and documents. The "I.egal-Zip" software essentially offers the consumer the ability to create his or her own legal torm based on information provided in response to standardized questionnaires, but it does not select or recommend particular f()rms for any consumer.

I,ike commonly available legal documcnt assembly software available in many office supply stores (sueh as Staples and Office\l1ax), l.egaIZoorn.com's "LegalZip" software is automated and stanuardized. Each customer who checks the same boxes will receive a document with the same language. LegalZoom does not provide any individualized advice or counseling to its cllstomers regarding their legal isslles or the documents that are prepared based on the

2

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customer's information and choices. Wc thcn print the final document on high-quality bond paper and send the document to our customers by mail.

With corporate formation services, the consumer's answers are similarly auto-populated into government approved fonns (such as Form B-01, Alticles of Incorporation for Business Corporation, published by the North Carolina Secretary of State). The consumer then uses this same sot1ware to create or "customize" their own bylaws and resolutions. In other words, the software allows the customer to write their own bylaws using a "LegaIZip" standardized template from the freedom of their home computer. The website's software is a utility for a consumer to organize his or her own corporation.

LegalZoom.com then delivers the completed form to the Secretary of State for tiling. Although a LegalZoom employee does sign the articles of incorporation as an incorporator, according to North Carol ina Business Corporation Act Sections 55-1-40 and 55-2-01, a corporation may in fact act as an incorporator for an individual and file the articles of incorporation. According to North Carolina Business Corporate Act Section 55-2-0 I, "one or more persons may act as the incorporators of a corporation by delivering articles of incorporation to the Secretary of State for tiling." This statute would appear to limit the incorporator to an individual human being. However, under North Carolina Business Corporation Act Section 55-1-40( 16), the term "person" includes both "individual and entity." An "entity" is further defined under North Carolina Business Corporation Act Section 55-1-40(9)(a) to include "any domestic or foreign: I. corporation; nonprofit corporation, professional corporation .... " Thus, LegalZoom may act as an incorporator well within the limits of North Carolina's Business Corporation Act. LegalZoom.com does not organize the corporation and only lites the corporate documents in an administrative capacity.

From that point, we package the tiled Articles of Incorporation into a corporate kit, which is supplied by a third-party vendor. The corporate kit includes a corporate seal, customized stock certificates and till-in-the blank forms for documents such as resolutions and corporate minutes.

As noted on the LegalZoom website, "LegaIZoom's document preparation service inc ludes a review of l customer] answers for completeness, spelling and grammar, as well as internal consistency or names, addresses and the like. At no time do we review (customers'J answers for l<!gal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation." (See IVww.legalzoolll.com/ufliversa//disclailller.hfm/). /"ypographical errors arc the "common mistakes" for which LegalZoom can perform reviews. Only when customers provide inaccurate or incomplete information docs LegalZoom alert the customer to their error.

For example, if a person provides an incorrect address or social security number, l.egalZoom cannot catch this mistake. On the other hand, if a person provides inconsistent or incomplete information, such as stating that there arc three shareholders, but only provides the names for two of those shareholders, LegalZoom will follow up and have the customer provide correct information. LegalZoom does not apply the law to the facts of a particular customer's situation or advise a customer that his selection of a particular form is either well- or ill-advised in order to address his particular situation.

3

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A natural comparison that some third parties have used in describing LegalZoom's services is to more antiquated scrivener services that were once popular. Additionally, LegalZoom provides general factual information regarding commonly-encountered legal issues (i.e., tiling fees, court or government agency addresses and general notice requirements). LegalZoom is diligent to ensure that it docs not step over the line in the manner described above.

Your letter in turn also indicated concern that LegaIZoom.com's website compares "the price for its services to that of an attorney even though there is no substantiation to the comparison." LcgalZoom.com maintains that the company simply provides the consumer with an opportunity to save money by preparing their own legal documents. The pricing comparison is put forth to demonstrate the money the consumer may save should they opt to proceed without an attorney and prepare the document themselves. LcgalZoom docs not make any claim that it offers the same service as an attorney offers.

LegalZoom's price point llses the findings of a nationwide Icgal study to estimate the cost of having an attorney prepare similar documents. Each time that we refer to the survey's average hourly rate of $228 per hour, we note that this is "lbJased on an average hourly rate of $2401hour (2004 Survey of Law Firm Economics, Altman Weil Pensa Publications)."

CONCLUSION

In conclusion, LcgalZoom serves as a general resource tor legal intormation. Our proprietary legal document preparation service is an online version of off-the-shelf legal software widely available throughout the United States and is a tool that our customers use to prepare their own legal documents. Our website repeatedly states that LegalZoom not a substitute for the advice of an attorney, and we routinely refer customers to attorneys when they require legal advice.

Thank you for giving us the opportunity to clarify our business practices. If you have any questions or would like any additional information, please do 110t hesitate to contact me at (323) 962- 7052.

Sincerely,

LcgaIZoom.com, Inc.

.CO"I

BY~-~ Charles E. anlJ)enthai Vice President and General Counsel

Enclosure

4

.Hemher, 5;tate /Jar oj California ulld Jlussachllsells Board oj Bar Overseers

Attachment A

The North Carolina State Bar AUTHORIZED PRACTICE COMMITTEE

Mr. Brian Liu LegaIZoom.com. lnc.

AUG 2 ~ ?fl."1

589 N. Larchmont Ave., 2nd Floor L.os Angeles, CA YU004

Dear Liu:

Re: Alleged unauthOllzed practice of law Our file number: 03APOOJ 5

Barbara B. Weyher Chair

On J uty 24. 2003, the Authorized Practic • .' Committee met and r.:-,nsldered th~ results of its investigat;oll made intn your activities in the ahove referenced matter. As jOll \\'ill r~call, yOU

were informcd of the allegations before the Committee and given an 0PP0rlUI1;,Y tu rcs;:>ond. '(;Ill

responded, and the Committee carefully considered both the ,infomlation re,er.-ed by it and your n:sponse.

Based up~m all of the information available, the Committee voted to dismiss this complaint because the evidence was insufficient to support a finding ofprobablc cause that you were engaged in the unauthorized practice of law. Although the matter was dismissed, the Committee reminds you that it is the unauthorized practice oflaw for anyone, other than an active member of the North Carolina State Bar. to provide legal advice or servi('~s to any other person, firm. or ctJrporation.

Thank you for your cooperation in this matter. Plea'ie feel free to contact the Committee's cOI,nsel, Jennifer A. Porter, if you have any questions.

208 Fayetteville Street Mall Post Office Box 25908 R.lleigh, NC 27&11 (919) 828-4620 Fax (919) 834-8156

Attachment B

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We review the answers you provide for completeness and other comrron mistakes, prepare your incorporation document. and file the Articles of IncorporatIon with the Secretary of State. We even create custom,zed bylaw. and orQanilOtional minut ....

, 3) final Wrap-Up: ,,--. whMl we rece,ve tha f,led Articles of Incorporation, we wili send tnem to you .lonQ .. ,t!> your other leQal documents. Thereafter, Simply follow our fino I ·nstructions to wrap up the Incorporation process.

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Attachment B

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Disclaimer

L.9~IZoom is not Ii l4Iw flrmJ and the employ •• s of Le~alZoom .are not .ilctin9 as your .. ttorney, Leg.IZoom does not pr~ctlc. law .and does not gl\l* legal advice. This sIte IS not IOtended to cr. ate an .ttorn.y~dj.nt r.l .... tlonthipl and by usin9 L.9 .. jZoom~ no ~ttorn.y·cli.nt r.l.tlonsl·up 1;111 b. cr •• t.d with L.9.IZoom. InJt .... d, you .r. r .. preunbno yours.lf in any leoal matter you undert.k. throuoh L"QalZoom's leoal document service. LegollZoomJs document preparation s.ryice Includes a re'li~W' of your ~ns." .. rs for completen.ss J :spellinQ .and Qr.mmar, ., well •• intern.1 consistency or n.ames, .ddr.s.ls and the like. At no time do w. review your anlwer, for leQal sufficiency, dra .. IQ9,,1 condusions, provld. leo.1 "d·,lce or apply the I." to the £oet. of yeur partJcul.r situation, Thill website Is not .. sub.tltute for ttMt ...wica of an .. ttomey.

Furth.rmore. the leQj}1 Inform.atlon on thiS sit. IS not;: I.Q.I ~d..,ice and IS not guar.ant •• d to b. corr.ct~ compl.te or t..Ip·to--d.te. Billcavse the IlIw chllnQe .. rllPidlv, L.9~IZoom CJ;l"\not QUllrllnt •• th.t .11 th. information on the site IS compl.t.ly current. Th. I.w Is: diff.rent from jurisdiction to Jurisdiction .. and is also ~ubject to Int.rpr.t~tion bv diff.rent courts. Th. lliw is .. person .. 1 m~tter .... nd no g*n.,.1 Inform~tion or 1-9111 tool ilk. the kind LtQ.IZoom proyid.f c;)n fit every clrcumst~nc •. Th.r.fore .. if you n •• d le9~1 .. d .... ic. for your specific problem l or if your specific problem IS too complt>< to be .addrelsed by our tooll~ you should consult .a licensed .attorney In your .lir ••.

This site -And some of th. ilrtlcles on this sit. contijln links to other resourCeS and businesses on the Internet. Those lIoks .r. provld.d as cit.tlons .nd iIIids to help yov Identify and loc ... t. oth.r Intemet resources that may b. of inter. st . .lind ~r. not Intend.d to state or Imply th~t LegalZoom sponsors, is .. £fileat.d or assod.t.d ~jth. or is le9 .. !ly authorJlffd to us. IIny tr~dt n.me l r.gisterlll!:d tr.dem.ark, 101;10, leg .. 1 or offici.1 s •• I. or cOPYrighted symbol th.tJt may be r.flected in the links.

Leg-iIZoom is not responsibl. for Any loss. injury, daim. li~bilitYI or d.rrr~9. r.l.t.d to vour us .. of thiS site or any site linked to thij sit@1 \Vhethl!'r from errors or omissions in the content of our sIte or !Jny other linked sites, ~rom the site being dOljljn or from any other use of the sit ... In short, your us. of the SIt. is .at your o.",n risk.

Attachment C

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The North Carolina State Bar Authorized Practice Committee

Mr. Charles E. Rampenthal LegaIZoom.com, Inc. 7083 Hollywood Blvd., Suite. 180 Los Angeles, California 90028

May 5, 2008

208 Fayetteville Street (27601)

Post Office Box 25908 Raleigh, North Carolina 27611

Telephone (919) 828-4620

Fax: (919) 834-8156 Web: www.ncbar.gov

LETTER OF CAUTION Cease and Desist

Re: Allegation of Unauthorized Practice of Law File number: 07 APOOll

Dear Mr. Rempenthal:

On April 23, 2008, the Authorized Practice Committee met and considered the results of its investigation into Legalzoom' s activities in the above referenced matter. As you will recall, Legalzoom was informed of the allegations before the Committee and given an opportunity to respond. You responded on behalf of Legalzoom and appeared before the Committee at its meeting. The Committee carefully considered both your response and the other information received by it.

Based upon all of the information available to it, the Committee believes these are the pertinent facts in this matter: LegalZoom is a California company that offers to prepare legal documents to the public through a web-based system. Among the documents Legalzoom prepares or offers to prepare are articles of incorporation, wills, trusts, divorce pleadings, and deeds. LegalZoom represents that it prepares the articles of incorporation and "customized bylaws and resolutions" for its business formation customers. The legal documents are prepared through LegalZoom' s website where, once the customer purchases the service, the customer is presented a questionnaire that the customer completes online. LegalZoom transcribes the responses onto a form template that Legalzoom has determined is appropriate for the customer's legal document and in a form or manner determined by Legalzoom or through software developed by or on behalf of Legalzoom. The customer is presented with a finished document that is represented to be legall y sufficient for the customer's needs without review or edit and has been approved by an attorney. In the case of the articles of incorporation, Legalzoom files the document with the North Carol ina Secretary of State without any prior del i very of the document to the customer. The template used for North Carolina corporations is the template offered by the Secretary of State. LegalZoom has selected or prepared the template for each type of document selected by its customers. LegalZoom holds itself out as providing legal document preparation services and that its documents are prepared by attorneys and experts and that its documents are "dependable." LegalZoom is providing its services to North Carolina customers, is identified as the incorporator on North Carolina articles of incorporation, and has filed the articles of incorporation on behalf of at least four customers in North Carolina.

Anthony S. di Santi, Chair Joshua W. Willey, Jr., Vice-Chair

EXHIBIT

6

The North Carolina General Statutes prohibit individuals or entities other than North Carolina licensed attorneys at law from providing or offering to provide legal services in North Carolina to other persons, firms, or corporations. Legal services specifically include organizing corporations and the preparation or aiding in the preparation of/egal documents, including wills, deeds, and court pleadings. Business corporations may not provide or offer to provide legal services or the services of attorneys, even if the services are performed by attorneys. N.C. Gen. Stat. §§ 84-2.1,4, and 5. The Committee concluded that there is probable cause to believe that LegalZoom's conduct constituted the unauthorized practice of law in violation of these statutes. Accordingly, it voted to issue this Letter of Caution to notify you of its decision and to demand that you stop engaging in your activities now.

The Committee considered your argument that LegalZoom was acting merely as the "incorporator" and that an "incorporator" could prepare and file these articles of incorporation for others. The Committee believes that the term "organize" corporations in N.C. Gen. Stat. § 84-4 includes performing the legal acts necessary for the establishing the corporation. The fundamental legal act required under Chapter 55 of the General Statutes is the preparation, execution, and filing of the articles of incorporation. Not only does LegalZoom not have any interest in the corporation for which it is acting as "incorporator," such an interpretation of the statutes would render the prohibitions in Chapter 84 meaningless as it would allow anyone to prepare, execute, and file the articles of incorporation for another. The Committee does not believe that is the correct interpretation of the statutes.

The Committee also considered your argument that LegalZoom wasn't giving any legal advice in connection with the preparation of these documents. The Committee disagrees. Legal advice includes the selection of terms and clauses within a legal document as well as the selection of which template to use. Accordingly, legal advice is inherently given by one who prepares a legal document for another. Once the customer has selected the type of document available through Legalzoom, the content is determined by LegalZoom. Regardless, the North Carolina statutes do not permit legal document preparation services even if they are not accompanied by "legal" advice. This argument does not resolve the primary problem with Legalzoom's service - its offer to prepare legal documents and its representation that its services will satisfy the customer's legal needs.

The Committee also considered your argument that LegalZoom is similar to a scrivener. The Committee disagrees. Scrivener services are normally defined as merely typing or writing the words dictated by another. LegalZoom is not simply transcribing information as dictated by the customer or providing the customer with a legal form. By gathering information from the customer in an abstract torm using responses to a questionnaire and using that information to generate the completed legal document based on the content and nature of those responses, Legalzoom has exercised legal judgment concerning the preparation of that document, even if that judgment is part of an automated software design system. Further, the software has been designed in accordance with the judgment of Legalzoom. There is no doubt that th is constitutes the practice of law. See In re Reynoso, 477 F.3d 1117 (9th Cir. 2007).

Legalzoom's conduct as described above is illegal in North Carolina and must end immediately. Specifically, Legalzoom may not prepare or offer to prepare legal documents to North Carolina residents or for use in North Carolina, including but not limited to articles of incorporation or organization, deeds, wills, trusts, or court pleadings, including divorce complaints. Legalzoom may not offer to provide any legal services in North Carolina or represent that its services have been reviewed by an attorney or are legally sufficient for the customer's legal needs. If you continue your activities, the State Bar may seek a court order to perpetually enjoin your unlawful conduct, as the Bar is authorized to do pursuant to North Carolina General Statute Section 84-37 and Chapter I, Subchapter D, Section .0200 through .0207 of the Rules and Regulations of the North Carolina State Bar. Please also be aware that the unauthorized practice of law can be prosecuted as a criminal misdemeanor offense pursuant to North Carolina General Statute Sections 84-7 and 84-8 (copies enclosed).

Please provide a response with evidence that you have complied with the Committee's decision within 15 days of your receipt of this letter.

Thank you for your cooperation in this matter. Please contact the Committee's counsel, David R. Johnson, if you have any questions.

ASD/lr

Sincerely,

Anthony S. di Santi, Chair Authorized Practice Committee

· f

Tli -lleo-a/zoom-- ~. .co~ Your Online Legal Soun:e

Anthony S. di Santi, Chair David R. Johnson, Deputy Counsel Authorized Practice Committee The North Carolina State Bar 208 Fayetteville Street Post Office Box 25908 Raleigh, North Carolina 27611

Re: Allegation of Unauthorized Practice of Law Your File No. 07APOOIl.

Dear Mr. di Santi and Mr. Johnson:

I am writing this letter in response to the Letter of Caution sent by Mr. di Santi to LegalZoom.com, Inc., on behalf of the Authorized Practice Committee of The North Carolina Stale Bar dated May 5, 2008 ("the Committee"). r am General Counsel of LegaJZoom.

The Committee's Letter of Caution asserts that LegalZoom is engaged in the unaulhorized practice of law by making its online legaJ document preparation services available to customers in North Carolina. As we understand the Letter of Caution. the only way for LegalZoom to comply would be to cease offering its services to any customer located in North Carolina.

We respectfully disagree that we are engaged in the unauthorized practice of law. We previously set out our position at length in letters to the Committee's counsel dated April 17. 2008 and February 13,2007 and personally at the meeting held in Raleigh on April 23, 2008. We would, however, like to draw the ComJ1littec's attention to the [olJowing specific points in response to the Letter of Caution.

I. The Committee previously found no evidence of wrongdoing. The Committee conducted an investigation into LegalZoom's practices in 2003, which included LegalZoom's incorporation services. The Committee dosed its investigation with the conclusion that "the evidence was insutlicient to support a tinding of probable cause that rLegalZoom is] engaged in the unauthorized practice of law." LegaJZoom has always been an Internet business with its services freely open to inspection online. LegalZoom's services have been available to North Carolina consumers prior to 2003, and our practices have not changed since 2003. Indeed, LegalZoom has been joined by many other companies that provide the same self-help services ~ . • t.h.e _____

IIIIIII•

Internet and through software packages. EXHIBIT

7

,-

2. LegalZoom provides incorporation services. not organization services. The Letter of Caution concentrates primarily on LegaJZoom's services in assisting customers in preparing articles of incorporation. As you know, we have retained North Carolina counsel A.P. Carlton. He has prepared an opinion letter regarding the scope of N.C. Gen. Stat. § 84-4, which restricts the act of "organizing" a corporation to members of the North Carolina Bar. Mr. Carlton's opinion letter is attached. He concludes that "incorporating" a corporation and "organizing" a corporation are distinct acts under North Carolina law, and that LegalZoom only participates in "incorporatjo~" not the "organization" of corporations. Because § 84-4 only prohibits nonlawyers from organizing corporations, not incorporating them, Mr. Carlton concludes that LegaJZoom is not violating § 84-4. As noted by Mr. Carlton, this analysis is consistent with the provisions of the Model Business Corporation Act, as well.

3. The Letter of Caution appears to mistake the nature of LegaJZoom's services. In several places, the Letter seems to suggest that LegalZoom makes individualized determinations of a customer's legal needs. customizes legal forms to meet those needs, and has lawyers review completed legal forms for correctness and applicability. This is not how LegalZoom's services work.

LegalZoom does not select legal forms for customers. Its customers make their own decisions as to which fonns they believe they need. The process is automated - the customer goes to the LegalZoom website; decides what form to purchase; fills in information for the selected form; and a document is generated from standardized language based on the information and decisions made by the customer. LegalZoom does, of course, provide the standardized language that is used in the automated document-creation process. These forms are typically obtained from state agencies. This "selection," however, takes place prior to, and independent of, any customer seeking to generate a legal document. It is no different than the "selection" of one form from many potential forms that is made by the author of any legal textbook, legal form book, or do-ityourself legal document kit.

LegalZoom does not determinel"Which form is appropriate for individual customers. Again, the process is fixed and automated, just as in any form book with instructions or a do-it-yourself kit. LegalZoom does not exercise legal judgment based on the facts or circumstances of any given customer's needs. LegalZoom does have attorneys who prepare and review the standardized language that underlies the docwnent-creation software; however, LegaJZoom does not (and does not claim to) have attorneys who review the customer's documents after they are generated to determine if the forms meet the individual customer's needs. The prepared documents are checked for completeness and accuracy only, not legal sufficiency. This is clearly stated in nwnerous disclaimers throughout the website.

4. In re Reynoso does not apply to LcgalZoom's services. The only legal precedent cited in the Letter of Caution is In re Reynoso, 477 F.Jd 1117 (9 th Cir. 2007). The Letter argues that this

2

,,-I/eCTalzoom'· - ~' .com

single case demonstrates there is "no doubt" that LegalZoom' s services constitute the practice of law. For a number of reasons, this is a misreading of In re Reynoso.

First, the defendant's conduct in In re Reynoso was uniquely egregious and far different from LegalZoom. The defendant made false and fraudulent claims that his product allowed bankruptcy filers to find "loopholes" and "stealth techniques" to hide assets, to hide their bankruptcy from credit bureaus, to keep their bankruptcy off their credit report, and how reestablish good credit in months instead of years. LegalZoom makes no such false claims.

Second, and more importantly, In re Reynoso is an appeal from Bankruptcy Court, which has unique rules regulating "bankruptcy petition preparers." LegalZoom is not a bankruptcy petition preparer and does not provide bankruptcy services.

In re Reynoso has never been applied outside the bankruptcy context. This is particularly significant, because the case arose in a California bankruptcy court, and LegalZoom is based in California. If In re Reynoso stood for the proposition that LegalZoom's business model constituted the unauthorized practice of law, one would have expected California courts to followed In re Reynoso and California authorities to have taken action against LegalZoom. None have. LegalZoom is, and remains, a licensed, bonded and registered Legal Document Assistant under California law. Cal. Bus. & Prof. Code § 6400, et seq. Indeed, a case cited in In re Reynoso makes clear that providing forms, instructions for filling out forms, filling out the forms, and filing the forms is not the practice of law:

California law and the approach taken by other states with respect to divorce services teach that such services do not amount to the practice of law as long as the service offered ... was merely clerical, Le., the service did not engage in the practice of law if it made forms available for the client's use, filled the forms in at the specific direction of the client and filed and served those forms as directed by the client. Likewise, merely giving a client a manual, even a detailed one containing specific ad~, for the preparation of an unlawful detainer action and the legal incidents of an eviction would not be the practice of law if the service did not personally advise the client with regard to his specific case.

People v. Landlords ProfeSSional Services, 215 Cal. App.3d 1599, 264 Cal. Rptr. 548 (Cal. 1989).

5. LegalZoom has never been found to be engaged in the unauthorized practice of law. LegalZoom offers its services in 50 states. No authority - federal, state, or local - has determined that LegalZoom is engaged in the practice of law. In fact, just today LegalZoom received a letter from the New Jersey Committee on the Unauthorized Practice of Law closing a similar investigation and dismissing the complaint. The Committee would be breaking new legal ground in attempting to enjoin LegalZoom's services in North Carolina. Indeed, an injunction

3

z,1leualzoom'· - ~. .com

against LegalZoom would have broad consequences to a significant and long-established legal self-help business, including online document preparation services, self-help software vendors and legal document kit publishers whose products can be found for sale all across North Carolina.

There is a long line of cases holding that the sale of legal fonns and instructions and do-ityourself legal docwnent kits is not the unauthorized practice of law, and holding that the sale of such produces and services is protected by the First Amendment. E.g., New York County Lawyers' Association v. Dacey. 21 N.Y.2d 694, 287 N.Y.S.2d 422, 234 N.E.2d 459 (1967); Oregon State Bar v. Gilchrist, 272 Ore. 552, 538 P.2d 913 (1975); State Bar v. Cramer, 399 Mich. 116, 249 N.W.2d 1 (1976); Florida Bar v. Brumbaugh, 355 So.2d 1186 (Fla. 1978). LegalZoom's services are simply a more modem version of these same products, presented to the customer in a more efficient way through the use of the internet. There is not a single state in the United States that prohibits the sale of legal software or the operation of document preparation websites. The Committee's position would put North Carolina alone in the nation. In all frankness, we believe an effort by The North Carolina State Bar to define "preparation" of documents and "practice of law" to cover the publication of web-based self-help legal software would be anti-competitive and would invite scrutiny under the antitrust laws.

In conclusion, as we read the Committee's Letter of Caution, there is no way for LegalZoom to comply without simply making its services unavailable to North Carolina customers. We believe this would be a great disservice to North Carolina residents, many of whom have found LegalZoom to provide a cost-effective, efficient, self-help alternative to hiring legal counsel. If we are wrong about the scope of the Letter of Caution, we would welcome a response as to whether there are specific changes that LegalZoom could make in its service offerings that would address the Committee's concerns.

CC: Peter Kennedy, Esq. A.P. Carlton, Esq.

4

Sincerely,

LegaJZoom.com, Inc.

B~ Vice President and General Counsel

Member, Siale Bar of California and Massachusetts Board of Bar Overseers

ALLEN AND PINNIX, P.A.

333 Fayetteville Sl Suite 1200

Alfred P. Carlton, Jr.

P.O. Drawer 1270 Raleigh. N.C. 27602 (919) 755-0505 (0) (919) 829-8098 (fax)

Attorney at Law (919) 749-8229 (e)

[email protected]


June 13,2008

Re: Allegation of Unauthorized Practice of Law Your File No. 07 APOOll.


We have been asked by our client, LegalZoom.com, Inc. ("LegaIZoom"), to prepare an analysis of whether N.C. Gen. Stat. § 84-4, which provides that it is unlawful for any person or association of persons not an active member of the North Carolina State Bar to "organize" a corporation, applies to the services offered by LegalZoom.com, Inc. In our opinion, LegalZoom's services do not constitute the "organization" of a corporation under § 84-4, and therefore do not constitute the unauthorized practice oflaw.

There is a clear, distinct and substantive difference between "organizing" a corporation and "incorporating" a corporation. We have prepared a brief analysis of this difference and its relationship to N.C. Gen. Stat. § 84-4. Since there is no case law interpreting the meaning of these terms in the context of both N.C. Gen Stat. § 84-4 and Article 2, Chapter 55 of the General Statutes, we must look to the statutory text and the official comments to Chapter 55 as well as legal dictionary definitions and the Model Business Corporations Act (the foundation for North Carolina Law) for their meanings.

The plain text of N.C. Gen Stat. § 84-4 does not contain any definition of the term "organize" beyond the prohibition of organization, and it does not contain any reference to "incorporating" as a prohibited act.

~ EXHIBIT ~

~ \9 8 j

June 13,2008 letter to Anthony di Santi and David Johnson Page 2 of4

However, Black's Law Dictionary defines "incorporation" as "[t]he act or process of fonning or creating a corporation." Black's Law Dictionary 907 (4th ed. 1968). N.C. Gen. Stat. § 55-2-01 provides that "[o]ne or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the Secretary of State for filing." In addition, according to N.C. Gen. Stat. § 55-2-03(a), "[c]orporate existence begins when the articles of incorporation become effective" and the articles of incorporation become effective when they are filed with the Secretary of State unless a delayed effective date is specified. N.C. Gen. Stat. § 55D-13; N.C. Gen. Stat. § 55-2-03 (official comment). Therefore, because all that is required to fonn a corporation is the delivery of articles of incorporation to the Secretary of State for filing, the act of "incorporating" a corporation is the deli very of articles of incorporation to the Secretary of State for filing. LegalZoom provides the service of filing articles of incorporation for its customers. While this may technically constitute "incorporating," it does not constitute "organization," which is defined differently.

In contrast to "incorporating," "organizing" a corporation typically involves affirmative acts that may include the election of directors, adoption of bylaws, appointment of officers, and issuance of shares. These acts are accomplished at an organizational meetingfollowing incorporation. See N.C. Gen. Stat. § 55-2-05(a) (and official comment, emphasis added). If a company is incorporated by an incorporator, the incorporator may appoint the initial director(s), or it may choose to organize the corporation. If the incorporator does not wish to organize the corporation, the incorporator instead must name the initial director(s), who will then be responsible for the organization of the corporation. Id. The initial director(s) are required to hold an organizational meeting for this purpose, at which they must elect additional directors (if necessary), adopt bylaws, appoint officers, and issue shares to the shareholders, among a variety of other corporate acts. Id. This organizational meeting does not have to be a formal meeting as such. Instead, the initial directors may take any action required or permitted to be taken at the organizational meeting without a meeting if the action taken is evidenced by one or more written consents describing the action talcen and signed by each director. N.C. Gen. Stat. § 55-2-05(b); N.C. Gen. Stat. § 55-8-21(a).

Although the acts of "incorporating" and "organizing" a corporation are two distinct acts, the statute authorizes that both acts may be carried out by the incorporator(s) or by anyone who may be an incorporator. However, if an incorporator's first and only acts are to appoint a director or directors, as is the case with LegalZoom, then the job of "organizing" is borne by the director(s). N.C. Gen. Stat. § 55-2-01; N.C. Gen. Stat. § 55-1-40(16). "Organizing" a corporation may also be carried out by the initial director(s) and any "natural person legally competent to act" may be a director. N.C. Gen. Stat. § 55-8-03(a); N.C. Gen. Stat. § 55-1-40(13). In short, there is no requirement in Chapter 55 that either the act of "incorporating" or the act of "organizing" a corporation be carried out by a lawyer.


The issue in question is whether an online legal forms vendor engages in the unauthorized practice oflaw by assisting consumers with incorporating a business, and providing forms that may be used by the initial director(s) of that company to organize their a business. Under N.C. Gen. Stat. § 84-4, it is unlawful for any person or association of persons not an active member of the North Carolina State Bar to "organize" a corporation. As stated above, the statute does not define the term "organize" and there is no case law addressing the meaning of this term. So we must look again to Chapter 55 for guidance. As noted above, after the initial directors are named or appointed, to "organize" a corporation in the context of Chapter 55 means the affinnative acts of adopting bylaws, appointing officers, and issuing shares at an organizational meeting, following incorporation. Chapter 55 does not require these acts to be performed by a lawyer, but whether or not a lawyer is required to perform them, LegalZoom does not perform this service. Instead, once LegalZoom, as "incorporator" has completed the filing on behalf of its customer, and appointed the initial director(s) as specifically requested by the customer, LegalZoom's services end. As a courtesy, LegalZoom informs each customer that the directors appointed must now engage in the organization ofthe company. Although LegalZoom makes forms available to assist the directors with organization, LegalZoom in no way performs these acts on behalf of the customer.

The North Carolina Supreme Court has held that N.C. Gen. Stat. § 84-4 "was not enacted for the purpose of conferring upon the legal profession an absolute monopoly in the preparation of legal documents;" rather, "its purpose is for the better security of the people against incompetency and dishonesty in an area of activity affecting general welfare." State v. Pledger, 257 N.C. 634, 637, 127 S.E.2d 337,339 (1962). For this reason, "[ a] person, firm or corporation having a primary interest, not merely an incidental interest, in a transaction, may prepare legal documents necessary to the furtherance and completion of the transaction without violating G.S. 84-4." [d. Therefore, where a member of the public purchases from a vendor forms that may be used to incorporate hislher business and subsequently, as a party in interest, perhaps as a director, performs the affirmative acts of "organizing" the corporation without the assistance ofthe vendor, the vendor has not violated N.C. Gen. Stat. § 84-4.

Our analysis of North Carolina law is consistent with, and supported by, a review of the Model Business Corporation Act. As with North Carolina law, under the Model Business Corporation Act the act of "incorporating" a corporation is separate from the acts constituting "organizing" a corporation. Model Bus. Corp. Act §§ 2.01, 2.05. The act of "incorporation" consists of signing the articles of incorporation and delivering them to the secretary of state for filing. Model Bus. Corp. Act § 2.01, official comment. "Organization" of the corporation takes place after "incorporation" and consists of holding an organizational meeting, electing directors if needed, appointing officers, adopting bylaws, and carrying on other business. Model Bus. Corp. Act § 2.05(a). As an incorporator, LegalZoom appoints the initial directors as instructed by the customer and provides no further service for that customer. Once LegalZoom's services as incorporator are complete, it takes none of the actions that constitute "organization" of


the corporation; these actions are left up to the customer, who is legally authorized to do so without the use of an attorney.

In summary, the automated document preparation and filing service provided by LegalZoom does not constitute the "organizing" of a corporation, under both North Carolina law and the Model Business Corporation Act. LegalZoorn's services therefore are not in violation of N.C. Gen. Stat. § 84-4.

Best regards,

~?~~t\. Alfred P. Carlton, Jr. L~ ~~ Allen and Pinnix, P .A.

The North Carolina State Bar Office of Counsel

Mr. Alfred Carlton Jr. PO Drawer 1270 Raleigh, NC 27602

June 17,2008

Re: Alleged unauthorized practice of law Our file number: 07APOOli

Dear Mr. Carlton:

208 Fayetteville St. (27601) Post Office Box 25908 Raleigh, North Carolina 276u Telephone (919) 828-4620 Fax: (919) 834-8156 Web: www.ncbar.gov

Thank you for your response in the above referenced matter. We will review the information as soon as possible.

Thank you for your cooperation.

DRJ/lr

Sincerely,

~;t7<- 91L-David R. Johnson Deputy Counsel

Anthony S. di Santi, Chair Joshua W. Willey,Jr., Vice-Chair

~ EXHIBIT ~

~ 9 :;I

Secretary of the North Carolina State Bar c/o Fern Gunn Simeon, Deputy Counsel PO Box 25908 Raleigh, NC 27611

Dear Mr. Simeon,

July 14,2010

Please find attached LegaIZoom.com, Inc.'s Initial Registration of Prepaid Legal Services Plan for our basic legal access plan (LegalZoom Advantage Plus Plan).

Attached are the following additional documents for your review:

1. Member agreement (Supplemental Terms of Service for Legal Plans)

2. Attorney agreement (Firm Panel Agreement)

3. Sample marketing language for a business subscription

Please note that we are in discussions with firms to be providers for our plan, but do not intend to sign contracts with any firms until we are properly qualified to do business within the State of North Carolina. We have retained an attorney with a great deal of experience in the American Prepaid Legal Services Institute to assist us with that firm recruitment.

We currently plan to offer our plan at $12.99/month for personal subscriptions and $19.99/month for business subscriptions. LegalZoom will develop further marketing materials upon approval of our plan and will submit all materials as required.

Please contact me immediately should your office require additional information.

Sincerely,

James Peters, Director, Legal Product Development LegaIZoom.com, Inc. Direct: 323-790-1352 Email: [email protected] CA State Bar No. 228224

EXHIBIT

10

J

The North Carolina State Bar Office ofCounsc)

:'V! r. J amcs Pctcr') Di I t.~ctur Lcgal Prouuct Development Ll'gal/oom,com. Inc. 70in Ilolly\\t.h1J Blvd, Suitc 180 Los :\ngl:il's, C,\ 9()()~X

f·!~· f_,:~~;:L/.,(.tYI \I..J\dlil;,~!, ~)ttl'; P:·tI1 (Jur till: numb~'r: IOPP04

208 Fayetteville Sf. ~27bt.1I) Post Office Box l')908

Raleigh, North C.lruiina Z:,tJli

Tt·lt:phont' (.)!<)) 3 ~8-4620 Fax: (')19) tj',4-tll'i{'

\'/"'(1: . .v' ... ·\lJ.flCbJr.g:\.IV

J n:cci\\:u your kttcr or .I lily I .. J, :::0 I 0 anu the initial rl'gistfatioll st;Ltl'lIlt.:1l1 or L:~,al/I)(}lll ,\;JvClPt:.Igt.' P I us Plan (!:..:n:aikr. Ll'gaIZ,1()l11 i\ PPI, 1\ lier rev i..:wi ng the in 1J ial r\.:g i:-.tr~tl iun statcm .... nt and th,..: pl.:'1 ll1aktiab. [ ha\\.' S,',Hl": t.:nnct.:rIlS \\'h;ch : wil! shan: \\il/1 tIlt..' :\ldil!II!Zed PuctiL': t 'I 1l1iIIlitlL:l' (il''':!L:aj';·:, ( 'dIll11Iirrl.'l: l. al lis !il',\! lIiL'l'ting Oil Ol..'tt.J;..,rr 27. ]0 I 0,

Fir-';t. til, in![ial n.'gislrmion s,ateillt.:l1t n:L/uir',,:s (!lat ~Mll s'.Ibmit d bl u( the ll'llnc~. auures~)..:s. aml telephune n~allbers oLdl North Carolina licl:nsed athmlcys who !i:iVC dgreed to parti.:ip4lll: in thc 1';;1J1 You Jill not sllbmil that list. I understand that you uo nut intef!,i!o /ta\e any partl<.:ipating a!lorne!~ sigll (ontracts lIntil yuu are "pruperl) qualified to do business WIlhll1 the .,tate uf North Carolina:' Ilowev.:r. the initial registration stateml:11l asks that you list these Jttornc),s who have agrco:d to prdvide the Icgul serVI\.:es: '>l1ch agreement docs not ncccssarily 1I1::an that the attorney has mad\..' a (t.)ntractuai c0I11Plitll11.:nt \\ illl ihe plall. The Committee requircs thal North Carolina licensed attorn~ys \dlO \\ill provide the Ieg:al seJ'\'ices be iuentified beflHe the Con:l1litl.ee \oks to register the plan to

t.l!)~!'atl· in 'J"rth (, 'arolll1.L

Second. thl' ('otnIl1ittee nc..:ds to see executed and n.)lari:t.eu L'e:-lilicalilll1 forms from each altortll.'\ \\ htl IlC1S agle-.:u to p<lrticipall.' in the pLHI. Ihese dfliuavits or L:crtitiu!iulls n~ust he sLlomitted St) that th': COl11rnittl:t' can insure that the attorney understand his e1hil..'<l1 d-,I igatiol1s as a providl:r or legal sen ic,-s in a prl:palu legal sr;;rvic':s plail.

I hird. the CUl\1mittl:c 1l1lt:,t rl:\iew :-(}ur Plarkding matcrial. '(flU indicated Ihal j.egaiLoom \\ill dl..'\e!op inor..: t11ar!~ding materials upun approval or thl~ )1Ian. (i'kas..: nul\.' then thL: 'Junh Carolina '-'laic ndf' du.:::; not appro'.'!..' I)/'\.'paid legal services plans. but rl'!:!-i:,ter~; t~~1:ll1.) I he C()I!lmilll'~' I'L'L',!S :10

:-,\.:c :he 111<Irk,'l1I1g nUlcrtals yell presenlly 11<1\/": 'IV'.1iiabIe,

K,uhenll" E, J .. "" CUUt".~ ;\, Ruot FdnlUll,on, F,'rn (;unn Simeun. David ~, J"hr.,;on, !,''It,,{,,r:\ Purta,

!,Lorgar"t T. Cloutier, Ni('hol~ P. McLlUghlin, CJrm,.n Hoyme Bd!ltlUn,

ton"n P.D, Uten, I. .. "nor Bail~y IluJg", \Ndli.tm >1. hred!, Jr., B.lrry S, .\!c"-!<!ill,

D"iJUty C')tlIlSt.J

EXHIBIT

11

i. 1 did not S~\! a m\.:mb~rship plan tor those individllais who pbulo purdwsc Lcgal/tllJ1l1 .\PP I s~m the membership information for L~'gaJ/,)ul11 Buslm:ss t\d\Jlltagc Pro m..:mb-:rship. but I saw 1'1(1 slIni!;lr dDCUI1lC:lt for indi .. iJt:als who plan [0 pun.:husc this b,!~ic dC;':~SS plan

I nt,tH:cd 111 th~ dCCllmell! cntit!cJ. "Supplemental krills or S<,;.r\ ic\.' for I.egal PLms" tint ;\ 11lCrllhl'r l)f Ltgal/nom APi> is abo cntitkd to n:c~iH.~'1 I (J~'n Jiscount oIT";,:~rtain l.~gal/otJl11 products." It IS my understanding that those Lqwlll)om !Jroducts include k:;.11 documents thaI Legal/nom oilers. In 200X, the Authnri/ed Practic~ Committee mf(lrrnd i.eg<JI/omn thal it cuuld not pn:pare or orter tu prepare kgal docllmcnts to North Carolil;d residents or ttlr lise in North Carolina. It appears frum the material you submitted for Lcg.aIZoo'11 APi> that Lcgal/onl11 continues to conduct business in a way that th~ ,\uthoril.cd PnJcun: Commit let:' prohihiteJ in its ,\fay 5. 2008 ceasc • .md cksist kiter. Yllil

a 1'1.' ,)lTcring plan mcmhers till opponunit) [0 get a l\l% discoUIl[ oif thl.! pm;e oj fLogal lltlcl&men{s prepa:-\!J by Legul/oom. This service in Y,Hlr plan viol<!tes the very eSscn~;: 01 a prcpaid I-:gul ,>sv ices plan. which is that a North Carolina lic\.'llsed ~tttorn~y mLlst pm'ide til\': :egal servi:.:cs Pkase respond to that C()!1ccrn.

WIH!ld apprn:iate yuur responses to these conccrns by Octllbcr 15.2010. I:ed free tt) ,;olltact 111~' if you have .my quesliuns.

h:rn (".lnn Simeon Ikpu!y (,lUll:;..:!

-d'ifIJi @P! zoom" . com

October 14, 2010

VIA FEDERAL EXPRESS

Fern Gunn Simeon, Deputy Counsel North Carolina State Bar Office of Counsel P.O. Box 25908 Raleigh, NC 27611

RE: LegalZoom Advantage Plan File No. lQPP04

Dear Ms. Simeon:

I am Senior Counsel for LegalZoom. As noted in James Peters' letter, I am responding to the second concern raised in your letter dated September 30,2010.

As you may know, in 2003 the North Carolina State Bar Authorized Practice Committee opened an inquiry into LegalZoom's online self-help legal document preparation services. On August 23, 2003, the Committee wrote to LegalZoom that the Committee had "carefully considered" the information received by it and provided by LegalZoom, and "[b]ased on all of the information available, the Committee voted to dismiss the complaint because the evidence was insufficient to support a finding of probable cause that [LegalZoom was] engaged in the unauthorized practice of law."

In January 2007, although LegalZoom's business practices had not changed, the Committee opened a second inquiry, raising a specific concern about LegalZoom being named as the incorporator of corporations formed by its customers in North Carolina. LegalZoom responded to the Committee's inquiry with a detailed letter from its general counsel, Charles Rampenthal, confirming that legalZoom's business model had not materially changed since 2003. Additionally, Mr. Rampenthal traveled to Raleigh and attended the Authorized Practice Committee hearing that was held on April 23, 2008. He was forthcoming about LegalZoom's business practices and responded to questions from Committee members.

As your letter notes, the Committee voted to respond with a "letter of Caution" - and issued the same on May 5, 2008. That letter stated that the Committee had reached a contrary conclusion to its 2003 letter, and that the Committee this time had concluded that "there is probable cause to believe that LegalZoom's conduct constituted the unauthorized practice of law." The letter provided LegalZoom notice of the Committee's conclusion and its demand that LegalZoom "stop engaging it [its] activities now."

EXHIBIT

12

LegalZoom responded to the May 5, 2008 Letter of Caution in detail, explaining that the Committee's 2003 conclusion was correct, and that its 2008 conclusion was based on mistaken assumptions about LegalZoom's business practices and the applicable law. LegalZoom's North Carolina counsel, AP Carlton, also provided a legal opinion explaining that, under North Carolina law, the automated document preparation and filing service provided by legalZoom does not constitute the "organizing" of a corporation, and therefore is not the unauthorized practice of law. Because the Committee did not respond to LegalZoom's June 2008 responses, or take any further action, LegalZoom continued to provide its services in North Carolina, as it continues to do in each of the 50 states.

For your reference, I have included the Committee's 2003 letter closing its investigation of LegalZoom, LegalZoom's response to the Committee's January 2007 letter, LegalZoom's response to the May 2008 Letter of Caution, and Mr. Carlton's legal opinion.

I have consulted again with Mr. Carlton regarding the concern that you raised. He has confirmed to me the scope of the Bar's Authorized Practice Committee's statutory authority. As Mr. Carlton explains it, the Committee was certainly within its statutory authority to make a finding of no probable cause or probable cause, and to "demand" action consistent with its probable cause finding. By its terms, however, the Letter of Caution did not prohibit any activity. Mr. Carlton confirms that he can find no authority for the prohibition of any LegalZoom activities. Rather, the Committee's Letter of Caution is based only upon a finding of probable cause, is advisory in nature, has been responded to by LegalZoom in the attached letters, and in over two years the Committee has not acted beyond the Letter of Caution.

Given these points, the outstanding Letter of Caution should have no effect on the pending application for registration of legalZoom's Advantage Plus Plan. Mr. Carlton is available to discuss these issues with you, and I would encourage you to call him if you have further questions.

Sincerely,

Kenneth Friedman Senior Counsel

Enclosures

2

Attachment A

The North Carolina State Bar AUTHORIZED PRACTICE COMMmEE

Mr. Brian Liu LegaIZoom.com. Inc.

AUG 2 ~ 111.'11

589 N. Larchmont Ave., 2nd Floor Los Angeles. CA Y0004

Dear Liu:

Re: Alleged unauthorized practice of law Our file number: 03APOO 15

Barbara 8. Weyher Chair

On .luly 24. 200.'.l, the Authorized Pral;tic;: Committee met and c,',nsidered th~ results of its investigal;olllnade into your activities in the ahove referenced matter. As yOU will recall, JOt!

were informed of the allegations before the Committee and given an oppormn';;:Y to rcs;>Ol1tl. '.';111

responded, and th~ Committee carefuily consincred 90th the information reccr ..... ed by it and your r~sponse.

Based upon all of the information available, the Committee voted to dismiss this complaint because the evidence was insufficient to support a finding ofprobablc cause that you were engaged in the unauthorized practice of taw. Although the matter was dismissed, the Committee reminds you that it is the unauthorized practice of law for anyone. other than an active member of the North Carolina State Bar. to provide legal advice or servk~s to any other person, firm, or curporation.

Thank you for your cooperation in this matter. Please feel free to contact the Committee's cOlmsel, Jennifer A. Porter, if you havl.~ any questions.

RSW/pe,1

208 Favetteville Street j\.1all Post Office Box 25908 Raleigh, NC 17611 (919) 828-4620 Fax (919) 834·8156

I zoom '" . com

Y(lur Onlinc Lc~nl Source

VIA OVERNIGHT MAlL David R. Johnson Deputy Counsel The North Carolilla State Aar Authorized Practice Committee 208 fayetteville Street p.o. Box 25908 Raleigh, North Carolina 2761 I

Dca .. Mr. Johnson:

February 13,2007

This leller is written in response to your correspondence dated January 30, 2007 concerning the NOr1h Carolina State Bar Allegation of Unauthorized Practice of Law Inquiry File NUl11ber 07 ;\POO ( regarding our internet site, www.Lcga/Zoom.coOJ.

We would first like to note that your State Bar has already investigated our website and the State Bar Committee found on July 26, 2003 that there was 110 evidence to support that www.T.egaIZoom.com was engaged in the lInallthorii'.ed practice of law. We have enclosed a prior correspondence from your A uthorized Practice Committee on July 26, 2003 regarding file number 03AI>00 15 to that cffccl. (see Attachment A).

We are happy, however, to provide you with a more comprehensive explanation of the il1corporatiotlS ~crvice!; provided hy ollr sire and ollr general hllsiness prnc1ices to further allay any concerns. I hope this response provides you with the information you require.

BACKGROUND OF LEGALZOOM.COM

LcgalZoom.com, Inc. ("LegaIZoom") was founded in 2000 to provide an online legal portal and to give visitors a general understanding of the law, as well as to provide an automated software soilition to individuals who choose to prepare their own legal documents. To that extent, the sitc publishes general information on legal issues commonly encountered.

Lcga/Zoom.com is not a law firm and does not hold itself out as such. Neither the website /lor its cmployees provide legal advice or guidance. We do not apply the law to the faCls or a visitor's particular situation and we do 1101 provide legal representation. LcgalZoom.colll is (l

bonded Legal Document Assistant registered under California Business & Professions Code §§ 6400, ct seq., registration No. LDA #0 I 04 (Los Angeles County) and is certified as a Legal Document Prepal'cr in Arizona pursuant to Rule J I and A rizona Code of Judicial Administration §7-20S. Lega/Zoom.colll is a leading legal self-help documentation service competing with a number of other companies providing similar business resources and services in NOl1h Carolina

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and many of the 50 States, including Nolo (www.J1olo.com). 13 ilfilings (www.l1orlhcaroina.bizfilings.com) and Intuit's MyCorporation.colll (www.mycorporation.com).

LEGALZOOM.COM DOES NOT FURNISH LEGAL ADVICE

The wcbsite contains llumerOllS disclaimers to inform our visitors that LegalZoom is not a law finn and does not give legal advice. Throughout the site, we clearly and repeatedly encourage our visitors to seek an attorney for more intonnation. For example, we state that "This web site should not be used as a substitute for the advice of an attorney," and we urge our visitors to "consult professional legal counsel In his or her stare regarding tbe applicability of any pOints of law discussed at this Site to any specific problem." Similar language can be found ill multiple places on ollr website including our disclaimer page, full terms and conditions page, and each of our product summary pages (see Attachment n for examples).

For visitors seeking legal advice and guidance, LcgalZoom directs visitors to an attorney localor service called Findlaw.com. (see Attachmellt C for an example) The consumer is prompted to provide their legal issue as well as their location in order to locate an attorney. On the rare occ~lsion that we receive a telephone call or e-mail requesting legal :idvice or guidance. we refer Ihese individuals to www.FindJaw.com.

LEGALZOOM.COM DOES NOT FURNISH LEGAL SERVICES

Your leIter indicates concern that LegalZoom furnishes legal sel'vices 01' legol document preparation services to its consulIlers ill violation of North CarDlina General Statute Section 84-4. LegalZoom.com mainhlins that the website docs not provide legal services or legal advice to its consumers. Instead, the website provides a number of selt~help services for its cllstomers who choose to handle their own legal mutters without an attorney.

LcgalZoom has dcvelopcd its own proprictary document assembly sol\ware based 011

branching technologies called "LcgaIZip." A consumer is able to read through various referencc areas in ollr "law libI'HrY." From either these reference areas or the home page, the consumer may select to prepare his or her own legal documcnt or f01'1I1 from a specific list of docllments. Onee the consumer !lns selected fl documcnt, LegalZoom's web-bnsed softwUI'C prompts the individllnls to complete a questionnaire which is cu~tomized based on the customer's previously provided allswerS. For example, a consumer from North Carolina is not prompted to answer questions spccilic (0 California residcnts. The information provided by the consumer is then auto-populated into till-in-the blank forms and documents. The "Legal-Zip" software esscntially offers the consumer the ability to crcate his or her own legal form based on information provided in response to standardized questionnaires, but it does not select or recommend particular I()rms lor any consumer.

Like commonly available legal document assembly so/lware available in many o/licc supply stores (such as Staples Ilnd OfficeMax), LegalZoom.com's "LegaIZip" software is automated and standClrdizcd. Each customer who checks the same boxes will receive a document with the same langlwge. LegalZoom docs not provide any individualized advice 01' counseling to its cllstomers regarding their legal issues or the documents that are prepared bHsed on the

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customer's information and choices. We thell print the final document on high-quality bond paper and send the document 10 our customers by mail.

With corporatc formation services, the consumer's answers arc similarly auto-populated into guv\:rl1lm:nt approved forms (3uo.:h as Form B-Ol, Artido.:s of Jm;oqJl.Jralioll for BU3ille~3

Corporation, published by the North Carolina Secretary of State). The consumer then uses this same software to creale or "customize" their own bylaws and resolutions. In othcr words, the so/tware allows the customer to write Iheir own bylaws lIsing a "LcgaIZip" standardizcd temphlte from the freedom of their home computer. The website's software is a utility for a consumer to ul'gllnil.i:: his or her own curporatioll.

Lcg,J/Zoom.com then delivers the completed form to the Secretary of Slate for tiling. Although a tegalZoom employee does sign the articles of incorporation as an incorporator, according to NOith Carolina Business Corporation Act Sections 55-) -40 and 55-2-0 I, a corporation may in fact act liS lIJI incorporator for an individual and I1le th~ articles of incorporation. According to North Carolina Business Corporate Act Sect ion 55-2-0 I, "one or more persons Illay act as the incorporators of a corporation by delivering articles of incorporation (0 the Secretary of Stale for tiling." This stntute would appear to limit the incorporator to an individual human being. However, under North Carolina Business Corporation Act Section 55-1-40( 16), the terlll "Jl~I'S()II" illcludes both "individual and i::nlilY." An "i::lltity" is further defined tinder North Carolina Business Corporation Act Section 55-1-40(9)(a) to include "any domestic or foreign: I. corporation; nonprofit corporation, professional corporation .... " Thus, LegalZooll1 may act as an incorporatOl' well within the limits of North Carolina's Business Corporation Act. LegalZoom.com does not organize the corporation and only files the corporate documents in an adminislflllivc cupuci ty.

From that point, we package the filed Anic/es of Incorporation into a corporate kit, which is supplied by a third-party vendor. The corporate kit includes a corporate seal, customized stock cCl1iticatcs and fill-in-the blank forms for documents such as resolutions and corporate minutes.

As noted on the LegalZoom website, "LcgaIZoolll's doculllcnt prcparation service includes a review of (customer] answers for completeness, spelling and grammar, as well as internal consistency of names, addresses and the like. At no time do we review [customers'] answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of yOllr pat1icular situation," (See www.legalzoom.comlzmiversalldisc!aimer.hfmlj. Typographical errors are the "common mistakes" for which LegalZoom can perform reviews. Only when customers provide inaccurate or incomplcte information does LegalZool11 alert the cllstomer 10 their error.

For example, if a person provides an incorrect address or social security number, LcgalZooll1 Cllllilot catch this mistake. On the other hand, if a person provides inconsistent or incomplete information, such <IS stating that there are three shaJ'(~llOldcl's, but only provides tile names for two of thosc shareholders, LegalZoom will lo/low lip and have the clistomer provide corrcct information. LegalZoom does 110t apply the law to the facts of a particular customer's situation or advise a customer that his selection ora particular form is either wcll- or ill-advised ill order to address his pill1icular situation.

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A natural comparison thaI ~ome third parties have used in describing LegalZool11's services is (0 more antiquated scrivener services that were once popular. Additionally, LegalZoom prov ides general factual in formation regarding commonly-encountered legal is!>ucs (i.e., filing fees, cOUli or government agency addresses and general notice requirements). LcgalZoom is dil igcl1l to ensure (hal it docs not slep over the linc in the manner described above.

Your letter in turn also indicated concern that LegalZool11.coll1 's website compares "the price for its services to that of an attorney even though there is no substantiation to the comparison." LcgalZoolll.coll1 maintains that the company simply provides the consumer with all oppol1l1nity (0 ~ave money by preparing their own legal documents. The pricing comparison is put forth (0 demonstrate the money the consumer may save should they opt to proceed without an attorney and prepare the document themselves. LegalZoorn docs not make any claim thaI it offers the same service as an attomey offers.

tegalZoom's price point uses the flndings of II nalionwide legal study to cSlimalC the cost of having an attorney prepare similar documents. Each time that we refer to the survey's average hourly rute of $228 pCI' houl', we note thaI th is is "[ bJused 011 un average hourly rate of $240/hour (2004 Survey of Law Finn Economics, Altman Weil Pensa Publications)."

CONCLUSION

In conclusioll, LegolZoom serves as a gcnernl resource for legal intormntion. Our proprietary legal document preparation service is an onlinc version of off-the-shelf legal software widely available throughout the United Slates and is a tool that our customers use to prepare their OWJl legal documents. Our website repeatedly slates that LcgalZoom not a substitute for the advice of all attorney, and we routinely refer customers to attorneys when they require legal advice.

lhank you for giv ing us the opportunity to clarify our business practices. If you have any questions or would like any additional information, please do 110t hesitate to contact me at (323) 962-7052.

Enclosure

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Sincerely,

LcgaIZoom.com, hIe.

By: \...."....--.d!::=:;;:~2:z::~$;;;:::::=-= Charles E. ilmpenthal Vice Presidcnt and Gcncrlll Counsel

Me",hel'. SI(I/e nul' 0/ California IIlld

Ma.\·sac/tliselfs Board 0/ Bar Overseers

.com

Attachment A

The North Carolina State Bar AUTHORIZED PRACTICE COMMtlTEE

Mr. Brian Liu LcgalZoom.com, Inc. 589 N. Larchmont Ave., 2nd Floor L.os Angele5. CA YU()04

Dear Liu:

Re: Alleged unautholized practice of law Our file numb~r: 03APOOl5

Barbara B. Weyhe( ChaIr

On July 24.2003. the Authorized Practic;.' Committee met and <:\:insidered th~ results of Its invesfigat;oll made i ntH your activities in Ihe ahove referenced matter. As .lou wi II n.~ca", jOlt

were inf()rmcd of the ,tllf!gations hefore the Committee and given an opporculI;,y to respond. '/;'(1

responded, and the Committee carefuily considered 90th the .information rc(cried by it and YUI!r l\:sponse.

Based uP\)O all oflhc information aVailable, the Committee voted to dismiss this complaint hecause the evidence was insufficient to support a finding ofprobablc t;au::;e that YOIl

were engaged in the unauthorized practice of law. Although the matter was dismissed, the Committee reminds you that it is the unauthorized practice of law for anyone, other than an active memher of the North Carolina State Bar. to provide legal advice or servl(\~S to any other ~crs()n. finn. or corporation.

Thank YOH for your cooperation in this matter. Please feel free to contact the Committee's {;ollnsel. Jennifer A. Porter, if you ha ... c any queslions.

CH3W/pr.:t

208 Faveltevil/I! Street Mall Posl Office Box 25908 Raleigh, NC 17611 (919) 628-4620 Fax (919) B34-B156

Attachment B

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We rO'viDW tho ~nswo"s you provid. for completono,s ond other common mlStokos l prop.(O ,our InC(,I(iJUfotion <locum.nlf and fil. tho Articles of IncorporellOn "ith tho Secretary of Stot •. We even ere,,..e customtled byl.""" Md oroonintional minutos. o flnol Wrop-Up,

When .. e r.coi.e the t,led Article. of Incorporation, .. e will cot\d tl'Iom to )'0 U 410nQ wIth ),,0'" otho,.. 10901 document •. Thereafter, simply (ollow our tlMI 4nstructions to wrap uP the incorporbtion proeou.

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Attachment B

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Disclaimer

Le9,azoom 1$ not .. t .. \iII flrm~ ,and the emplov •• r Qf Log"IZoom ar. not .-ctln9 as. your .ttorntV, log.IZoom do .. not prbetlc. low ond does not 9iYe 1.901 .d.ico, Tnl •• ito is not IntonQl'd to create .. n .ttorn.v~"j .. nt r.I.Uonshtp, ~nd by uslnq Le9 .. fZoom~ noO .ttorntv· cll.nt relotionshlp will b. " .. t.d with log.'Zoom, Insto.d. you n. representing you".lf In &fly legol M4tt.t you UI1dortok. throUQh legalZoom's '.g.' docum.nt servlco. LIQ.JZoom', doctJment prep.ultion s.r~jc. 'ndud., a r.etyiew- of your answ~rs for <omplit.n.u. SP,Wn9 .nd Q,"mmlr, oilS 1,1,11 .s Internet consistency of n.a",.s .... ddr.u •• and the Ilk •. At no tim. do \I. f.vi.1I vour .IIntw.Yi to, !lito .... ,ufflclency, dr .... l.g~1 conclusion •• prol."d. 1.\1.1 .dvlce or applv the I .... \0 the f;oc\$ of your p.rtlcul.r "tu.tion, TIll. web.ita I. not _ • ..bot/tute fo .. th. "dvlco of .:In l'lttom·v·

Fvnhermor •• tn. leQ~1 Inform.Uon on Ihl. ,it. iJ not 109'" advlc_ .nd II not 9v." .. nt •• d ~o b. (:0,.,4«. c-ornplot. or I,Jp·tQ-d~' •. 6'1t',a", •• the l~.., (hOln.g •• ,.~pidly, lOQ.IZoom conno! gu.rant .. tn.t .11 the Information on the ,It. I. campillt.ly ClJrrent. Th. I."" Is different from JUlisdlctlon to Juri,dictlon" And is ~IJO subJQct to !nhup,.etatlon by d~ffor.nt covrt •. T1-t. I."" 1$ • p.,.on61 m.tt., .... ,.,d 1'\0 9*",.".1 Inform.tion Of 1-9.1 toollik.. the kind L..q.IZoom provide. can fit eve,., circum,t.n(4t. Th.r%r., if you ne.d 10Q.1 .dolce for your ,peci/le problom, or If your specific prf..Jblu,YI I:. tuo (f;Hnphuc to b. ~dd,* .. ttd bv fJur tuoh. you Iho'Uld conjult a Ilcen,.d ittomlV In your ar ••.

'Jhlt ,Ite .nd $0,..,0 Qf tho .arttd •• on thl' Site conte.n link' to othto' reSOurce, ~nd business., on the Internet. Thos. link s .r. pro'w'lded ., clt.ation, .and .,ds to help 'loy id.ntlfv ~nd 10(1'. oth.r Int.rnet ,.'0-1.1((.' t.h~t may bo of Inte'.~ti Ind ... r ..... ot intended to ,t.te or imply th.t L_g.oIZoom ,ponsors f !s affiliated 0'· -sssodated ",ith, Qr If 1Q9"UV olvthori,cd to ute tn'l tr.d. nan",.; re9istorlld tnd .. m.rk f 1090, 11:9.' Qr official fe.l, or copYri9ntod <vmbol tl>.t m.V b. r.flected in th" link •.

L'91IZoom', not ,cJ.pon,!ble for tny lou, in.jurv, dalm, !i,&blfity, or d~m'9' r.l .... t.d to your u ,. of this ~ite or ~nv sito linkad to this sit •• IIhether from errors or omission s In the content of our sit. 01 any other ItnkQd sites. from the Slt& be-Ino do .... n or from ~nv other \JS~ of tn_ ,It •• In ,nort l YOUf USe of the sit. is It your 0""'" rirk.

Attachment C

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Anthony S. di Santi, Chair David R. Johnson, Deputy Counsel Authorized Practice Committee The North Carolina State Bar 208 Fayetteville Street Post Ortice Box 25908 Raleigh, North Carolina 27611

Re: Allegation of Unauthorized Practice of Law Your File No. 07 APOO 11.


YOlll' Online Legal Source

1 am writing this letter in response to the Letter of Caution sent by Mr. di Santi to LGgalZoom.com, Inc., on behalf of the Authorized Practice Committee of The North Carolina State Bar dated May 5,2008 ("the Committee"). I am General Counsel of LegalZoom.

The Committee's Letter of Caution asserts that LegalZoom is engaged in the unauthorized pracLiGe of law by making its online legal document preparation services available to customers in North Carolina. As we understand the Letter of Caution, the only way for LcgalZoom to comply would be to cease offering its services to any customer located in North Carolina.

We r!;speclfully disagr~e that we ilre engaged in the unauthorized practice of Jaw. We previously sct OLlt our position at length in letters to the Committee's counsel dated April 17, 2008 and February 13, 2007 and personally at the meeting held in Raleigh on April 23, 2008. We would, however, like to draw the Committee's attention to the following specific points in response to the Letter of Caution.

I. The Committee previouslyj9und no evidence gf WI'9J}gdoing. The Committee conducted an investigation into LegalZoom's practiGes in 2003, which included Legal7oom's incorporation services. The Committee closed its investigation with the conclusion that "the evidence was ir.sufficiGnt to support a finding of probable cause that [LegalZoom is] engaged in th(' unauthorized practice of law." LegalZooll1 has always been an internet business with its services freely open to inspection online. LegalZoom's services have been available to North Carolina consumers prior to 2003, and our practices have not changed sinee 2003. Indeed, LegalZoom has been joined by many other companies that provide the same self-help services using lhe internet and through software packages.

2. LegalZoom provides incorporation services, not organization services. The Letter of Caution concentrates primari lyon LegalZoom' s services in assisting customers in preparing articles of incorporation. As you know, we have retained NOlth Carolina cotmse1 A.P. Carlton. He has prepared an opinion letter regarding the scope of N.C. Gen. Stat. § 84-4, which restricts thc act of "organizing" a corporation to members of the North Carolina Bar. M1'. Carlton's opinion letter is attached. He concludes that "incorporating" a corporation and "organizing" a corporation are distinct acts under North Carolina law, and that LegalZoom only pmticipates in "incorporation," not the "organization" of corporations. Because § 84-4 only prohibits nonlawyers from organizing corporations, not incorporating them, Mr. Carlton concludes that LegalZoom is not violating § 84-4. As noted by Mr. Carlton, this analysis is consistent with the provisions of the Model Business Corporation Act, as well.

3. The Letter of (;.~ution appears to mistake the nature of LegalZoom's service~. In several places, the Letter seems to suggest that LegalZoom makes individualized determinations of a customer's legal needs, customizes legal forms to meet those needs, and has lawyers review completcd legal forms {or correctness and applicability. This is not how LcgalZoom's services work.

LegalZoom docs not select legal fonns for customers. Its customers make their own decisions as to which forms thcy believe they need. The process is automated - the customer goes to the LegalZoom website; decides what form to purchase; fills in information for the selected form; and a document is generated from standardized language based on the information and decisions made by the customcr. LegalZoom does, of coursc. provide the standardized language that is used in the automated document-creation process. These tonns are typically obtained from state agencies. This "selcction," howevcr, takes plaee prior to, and independent of, any customer seeking to generate a legal document. It is no different than the "selection" of one form from many potential forms thaI is made by the author of any legal textbook, legal form book, or do-ityourself legal document kit.

LegalZoom does not determine which form is appropriate lor individual customers. Again, the process is fixed and automated, just as in any form book with instructions or a do-it-yourself kit. LcgalZoom does 110t exercise legal judgment based on the facts or circumstances of any given customer's needs. LegalZoom does have attorneys who prepare and review the standardized language that underlies the document-creation software; however, LegalZoom does not (and does not claim to) have attorneys who review the customer's documenls after they are gcnerated to determine if the forms meet the individual customer's needs. The prepared documents are checked foJ' completeness and accuracy only, not legal sufficiency. This is clearly stated in numerous disclaimers throughout the website.

4. In re Reynoso does not ap-ply to LegalZoom's services. The only legal precedent cited in [he Letter of Caution is In re Reynoso, 477 F.3d 11 J 7 (9th Cir. 2007). The Letter argues that this

2

single case demonstrates there is "no doubt" that LegalZoom's services constitute the practice of law. For u number of reasons, this is a misreading of In re Reynoso.

First, the defend,tnl's (,;onduct in In re Reynoso was uniquely egregious and far different from LegalZoom. The defendant made false and fraudulent claims that his product allowed bankruptcy filers to find "loopholes" and "stealth techniques" to hide assets, to hide their bankruptcy from credit bureaus, to keep their bankruptcy off their credit report, and how reestablish good credit in months instead of years. LegalZoom makes no such false claims.

Second, and more importantly, In re Reynoso is an appeal from Bankruptcy Court, which has unique rules regulating "bankruptcy petition prepal'el's." LegalZoom is not a bankruptcy petition preparer and does not provide bankruptcy services.

In re Reynoso has never been applied outside the bankruptcy context. This is particularly significant, because the case arose in a California bankruptcy court, and LegalZoom is based in California. If In re Reynoso stood for the proposition that LegalZoom's business model constituted the unauthorized practice of law, one would have expected California courts to followed In re Reynoso and California authorities to have taken action against LegulZoom. None have. LegalZoom is, and remains, a licensed, bonded and registered Legal Document Assistant under California law. Cal. Bus. & Prof. Code § 6400, el seq. Indeed, a case cited in In re Reynoso makes clear that providing forms, instructions for filling out forms, filling out the forms, and filing the forms is not the practice of law:

California law and the approach taken by other states with respect to divorce services teach that such services do not amount to the practice of law as long as the service offered ... was merely clerical, i.e., the service did not engage in the practice of law if it made forms available for the client's use, filled the forms in at the specific direction of the client and filed and served those forms as directed by the client. Likewisc, merely giving a client a manual, even a detailed one containing specific advice, for the preparation of an unlawful detainer action and the legal incidents of an eviction would not be the practice of law if the service did not personally advise the client with regard to his specific case.

People v. f-andlords Professional Services, 215 Cal. AppJd 1599, 264 Cal. Rptr. 548 (Cal. 1989).

5. 14egaiZoom has never been found to be engaged in the unauthorized practice of law. LegalZoom offers its services in 50 states. No authority - federal, state, or local - has determined that LegalZoom is engaged in the practice of law. In fact, just today LcgalZoom received a letter from the New Jersey Committee on the Unauthorized Practice of Law closing a similar investigation and dismissing the complaint. The Committee would be breaking new legal ground in attempting to enjoin LcgaJZoom's services in North Carolina. Indeed, an injunction

3

against LegalZoom would have broad consequences to a signitlcant and long-established legal self-help business, including online document preparation services, self-help software vendors and legal document kit publishers whose products can be found for sale all across North Carolina.

There is a long line of cases holding that the sale of legal forms and instructions and do-ityourself legal document kits is not the unauthorized practice of law, and holding that the sale of such produces and services is protected by the First Amendment. E.g., New York County Lawyers' Association v. Dacey, 21 N.Y.2d 694, 287 N.Y.S.2d 422, 234 N.E.2d 459 (1967); Oregon Stale Bar v. Gilchrist, 272 Ore. 552, 538 P.2d 913 (1975); State Bar v. Cramer, 399 Mich. 116, 249 N. W.2d 1 (1976); Florida Bar v. Brumbaugh, 355 So.2d 1186 (Fla. 1978). LegalZoom's services are simply a more modern version of these same products, presented to the customer in a more efficient way through the use of the internet. There is not u single state in the United States that prohibits the sale of legal software or the operation of document preparation websites. The Committee's position would put North Carolina alone in the nation. In all frankness, we believe an effort by The North Carolina State Bar to define "preparation" of documents and "practice of law" to cover the pUblication of web-based self-help legal software would be anti-competitive and would invite scrutiny under the antitrust laws.

In conclusion, as we read the Committee's Lctter of Caution, there is no way for LegalZoom to comply without simply making its services unavailable to North Carolina customers. We believe this would be a great disservice to North Carolina residents, many of whom have found LcgalZoom to provide a cost-effective, efficient, self-help alternative to hiring legal counsel. If we are wrong about the scope of the Letter of Caution, we would welcome a response as to whether there are specific changes that LegalZoom could make in its service offcrings that would address the Committce's concerns.

cc: Peter Kennedy. Esq. A.P. Carlton, Esq.

4

Sincerely,

LcgaIZoom.com, Inc.

"~""9~'--'"'-''' B~./ C~-C~.::~:~ ·(;~es"·E.R~;~·p~nthal-

Vice President and General Counsel

Member. Stale !Jar of Cali[ot'Nia and Massachusetts Board of Bar Overseers

· ,

ALLEN AND PINNIX, P.A.

333 Fayetteville Sl Suite 1200 P.O. Drawer 1270 Raleigh, N.C. 27602 (919) 755-0505 (0) (919) 829-8098 (fax)


June 13,2008

Re: Allegation of Unauthorized Practice of Law Your File No. 07APOOIl.


Alfred P. Carlton, Jr. Attomey at Law

(919) 749-8229 (e) [email protected]

We have been asked by our client, LegaJZoom.com, Inc. ("LegalZoom"), to prepare an analysis of whether N.C. Gen. Stat. § 84-4, which provides that it is unlawful for any person or association of persons not an active member of the North Carolina State Bar to "organize" a corporation, applies to the services offered by LegaIZoom.com, Inc. In our opinion, LegaiZoom' s services do not constitute the "organization" of a corporation under § 84-4, and therefore do not constitute the unauthorized practice of law.

There is a clear, distinct and substantive difference between "organizing" a corporation and "incorporating" a corporation. We have prepared a brief analysis ofthis difference and its relationship to N.C. Gen. Stat. § 84-4. Since there is no case law interpreting the meaning of these terms in the context of both N.C. Gen Stat. § 84-4 and Article 2, Chapter 55 of the General Statutes, we must look to the statutory text and the official comments to Chapter 55 as well as legal dictionary definitions and the Model Business Corporations Act (the foundation for North Carolina Law) for their meanings.

The plain text ofN.C. Gen Stat. § 84-4 does not contain any definition of the term "organize" beyond the prohibition of organization, and it does not contain any reference to "incorporating" as a prohibited act.

J June 13, 2008 letter to Anthony di Santi and David Johnson Page 2 of4

However, Black's Law Dictionary defines "incorporation" as "(t]he act or process of fonning or creating a corporation." Black's Law Dictionary 907 (4th ed. 1968). N.C. Gen. Stat. § 55-2-01 provides that "[0 Jne or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the Secretary of State for filing." In addition, according to N.C. Gen. Stat. § 55-2-03(a), "(c]orporate existence begins when the articles of incorporation become effective" and the articles of incorporation become effective when they are filed with the Secretary of State unless a delayed effective date is specified. N.C. Gen. Stat. § 55D-13; N.C. Gen. Stat. § 55-2-03 (official comment). Therefore, because all that is required to fonn a corporation is the delivery of articles of incorporation to the Secretary of State for filing, the act of "incorporating" a corporation is the delivery of articles of incorporation to the Secretary of State for filing. LegalZoom provides the service of filing articles of incorporation for its customers. While this may technically constitute "incorporating," it does not constitute "organization," which is defined differently.

In contrast to "incorporating," "organizing" a corporation typically involves affirmative acts that may include the election of directors, adoption of bylaws, appointment of officers, and issuance of shares. These acts are accomplished at an organizational meeting/allowing incorporation. See N.C. Gen. Stat. § 55-2-05(a) (and official comment, emphasis added), If a company is incorporated by an incorporator, the incorporator may appoint the initial director(s), or it may choose to organize the corporation. If the incorporator does not wish to organize the corporation, the incorporator instead must name the initial director(s), who will then be responsible for the organization of the corporation. [d. The initial director(s) are required to hold an organizational meeting for this purpose, at which they must elect additional directors (if necessary), adopt bylaws, appoint officers, and issue shares to the shareholders, among a variety of other corporate acts. [d. This organizational meeting does not have to be a formal meeting as such. Instead, the initial directors may take any action required or permitted to be taken at the organizational meeting without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each director. N.C. Gen. Stat. § 55-Z-05(b); N.C. Gen. Stat. § 55-8-21 (a),

Although the acts of "incorporating" and "organizing" a corporation are two distinct acts, the statute authorizes that both acts may be carried out by the incorporator(s) or by anyone who may be an incorporator. However, if an incorporator's first and only acts are to appoint a director or directors, as is the case with LegalZoom, then the job of "organizing" is borne by the director(s). N.C. Gen. Stat. § 55-Z-01; N.C. Gen. Stat. § 55-1-40(16). "Organizing" a corporation may also be carried out by the initial director(s) and any "natural person legally competent to act" may be a director. N.C. Gen. Stat. § 55-8-03(a); N.C. Gen. Stat. § 55-1-40(13). In short, there is no requirement in Chapter 55 that either the act of "incorporating" or the act of "organizing" a corporation be carried out by a lawyer.

J

June 13, 2008 letter to Anthony di Santi and David Johnson Page 3 of4

The issue in question is whether an online legal forms vendor engages in the tmauthorized practice of law by assisting consumers with incorporating a business, and providing forms that may be used by the initial director(s) of that company to organize their a business. Under N.C. Gen. Stat. § 84-4, it is unlawful for any person or association of persons not an active member ofthe North Carolina State Bar to "organize" a corporation. As stated above, the statute does not define the term "organize" and there is no case law addressing the meaning ofthis term. So we must look again to Chapter 55 for guidance. As noted above, after the initial directors are named or appointed, to "organize" a corporation in the context of Chapter 55 means the affirmative acts of adopting bylaws, appointing officers, and issuing shares at an organizational meeting, foHowing incorporation. Chapter 55 does not require these acts to be performed by a lawyer, but whether or not a lawyer is required to perform them, LegalZoom does not perform trus service. Instead, once LegalZoom, as "incorporator" has completed the filing on behalf of its customer, and appointed the initial director(s) as specifically requested by the customer, LegalZoom's services end. As a courtesy, LegalZoom informs each customer that the directors appointed must now engage in the organization of the company. Although LegalZoom makes forms available to assist the directors with organization, LegalZoom in no way performs these acts on behalf of the customer.

The North Carolina Supreme Court has held that N.C. Gen. Stat. § 84-4 "was not enacted for the purpose of conferring upon the legal profession an absolute monopoly in the preparation of legal documents;" rather, "its purpose is for the better security of the people against incompetency and dishonesty in an area of activity affecting general welfare." Stale v. Pledger, 257 N.C. 634, 637, 127 S.E.2d 337, 339 (1962). For this reason, "(a] person, firm or corporation having a primary interest, not merely an incidental interest, in a transaction, may prepare legal documents necessary to the furtherance and completion of the transaction without violating G.S. 84-4." Id. Therefore, where a member of the public purchases from a vendor forms that may be used to incorporate hislher business and subsequently, as a party in interest, perhaps as a director, performs the affirmative acts of "organizing" the corporation without the assistance of the vendor, the vendor has not violated N.C. Gen. Stat. § 84-4.

Our analysis of North Carolina law is consistent with, and supported by, a review of the Model Business Corporation Act. As with North Carolina law, under the Model Business Corporation Act the act of "incorporating" a corporation is separate from the acts constituting "organizing" a corporation. Model Bus. Corp. Act §§ 2.0 1,2.05. The act of "incorporation" consists of signing the articles of incorporation and delivering them to the secretary of state for filing. Model Bus. Corp. Act § 2.01, official comment. "Organization" of the corporation takes place after "incorporation" and consists of holding an organizational meeting, electing directors if needed, appointing officers, adopting bylaws, and carrying on other business. Model Bus. Corp. Act § 2.05(a). As an incorporator, LegalZoom appoints the initial directors as instructed by the customer and provides no further service for that customer. Once LegalZoom's services as incorporator are complete, it takes none of the actions tbat constitute "organization" of


the corporation; these actions are left up to the customer, who is legally authorized to do so without the use of an attorney.

In summary, the automated docwnent preparation and filing service provided by LegalZoom does not constitute the "organizing" of a corporation, under both North Carolina law and the Model Business Corporation Act. LegalZoom's services therefore are not in violation of N.C. Gen. Stat. § 84-4.

Best regards,

~~-cl-P~C\f\ . Alfred P. Carlton, Jr. ~ ~rrq Allen and PiIUlix, P.A.

zoom' . com

October 14, 2010

VIA FEDERAL EXPRESS

North Carolina State Bar Office of Counsel AnN: Fern Gunn Simeon, Deputy Counsel PO Box 25908 Raleigh, NC 27611

RE: LegalZoom Advantage Plan File No. 10PP04

Dear Mr. Simeon,

I received your letter dated September 30, 2010. I hope this response provides the further information required for registering our plan.

First, the following attorney/firm has agreed to be our initial primary provider in North Carolina:

Jason A. McGrath McGrath Law, PLLC

225 Bentley Oaks lane Char/otte, N.C. 28270

Tel. 704.848.6767

Second, you noted that you only saw a membership plan for Business Advantage Pro. We have more than one plan, but the terms of each are included in the single "Supplemental Terms" document, provided with our application. I apologize for any confusion. A quick rundown might help clarify.

1. The Business Advantage Pro and legal Advantage Pro are the plans that include basic attorney access (additional benefits that are called out by section 3.d.)

2. The difference between the plans is in terms of general coverage (3.d.i.) a. The Business Advantage Pro plan allows the Primary Member to consult on personal

matters or matters related to his/her business b. The legal Advantage Pro plan covers the Primary Member, spouse and dependents for

personal matters. They may consult on personal matters only, not matters related to their business.

EXHIBIT

13

In addition, please find attached the following documents for your review:

1. Copy of certification for McGrath Law, PLLC

2. Addition sample marketing materials from LegalZoom.com

I have referred concern number two in your letter to our Senior Counsel, Kenneth Friedman. His separate response is enclosed.

Sincerely, '\

James Peters, VP - Legal, Attorney Services Division LegaIZoom.com, Inc. Direct: 323-790-1352 Email: jpeters@lega/zoom.com

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.\Jovember 18. 2010

:\1 r. James Peters I)jret:tor Legal Product Development LegaIZoom.wm, Int:. 70X3 Iiollywood Blvd. Suite I SO I.os Angdes. l'/\ l)002S

R ... :: ~ .<:&JL~(~;)~·:I \/.'" :m:.!::;:: Plll$ Pbrl

()UI" lile number: IOPP04

I)ear Mr. Peters:

208 Fayetreville St. (27601)

Post Office Box 25908

Raleigh, North Carolina :n611

Telephone (919) 828-4620

Fax: (919) 834-8156 W .. h. www.1cbar.guv

The .'\uthorizL'd Pral.:ticc COITlmiltcc of the North Carolina State Bar t:onsidercd the initial registration statCfl1I."IlI ,)J I.\..'gal/oom Advantage Plus Plan (hcn:after. Legal/oonl APP) at its (ktob.:r 27.201 I) mcc\lllgl hI,.' AuthOrized Practit:e Committee declined to register Legal/oom J\pp as it had ~'e\'er,,1

l;(Jnl;L'fIlS about the plun as offered.

I· j rsl. the Committee was collt:erncd that a primary bendit that Legal/oorn APP offered plan partit:ipants \vas a discount on preparation of legal documents through the Legal/oom website. The Committee has previously informed LegalZoom that legal document preparation through its website violates ~orth Carolina law concerning the unauthorized practice of law. Further, the delinition of a prepaid legal services plan in North Carolina requires that a North Carolina lkensed attorney provide all of the sl!rvi(;es under the plan. The legal documents prepared through the Legal/oom website are kgal SCfvi\.:CS that an: nut performed by a North Carolina lit:ensed attorney, \vhich contravenes thc ddinition of a prepaid legal services plan. The Committee t.:Ould not register your plan since u l;ompom:nt of it does not satisfy the ddinition of a prepaid legal service plan and violates our unauthorized practice statutes.

Sc\:ond. from your Jetter of October 14. 20 I O. it appears that y()U want to operate more than one plan in North Carolina. Those plans arc The Business Advantage Pro emd the Legal ;\d\antage Pro Plan. The COl11mittee requires that each individual plan must bt: registert:d L1ndcr its specific namc so that \\e can at:t:ount for the plan in our rt:cords.

Fin,lIly, the CommitteI.' \\as concerncd that ;'OLl submitted thc name ur only onc atrorn..:y who would "c'rVl' as the "initial primary rl'llvlder" for all potential plan mernhcrs in Nnrth Carolina, FunhennOfl'. yuu did nut ~ublTlit all attorney c\!'rlifin!t;on !'()flll for tht: partH:ipaling atlurnl:Y 111<':l1tlOl1cd ill your kltl.'r

Katherine E. Jean, Coulls.i :\. Root Edmonson, F<>rn Gunn Simeon, David R. Juhnson,Jennifer J\. Porter,

1'v1argaret T. Cloutier, Nichol .. P. Mcl.aughlin, (;armen Hoyrne Bannoll, Brian P.O. Oten, Leanor Bailey !lodge, William N. Farrell, Jr., Barry S. McNeill,

Deputy Counsel EXHIBIT

14

The Authorizcd Practke Committec will mt:~t again on hlnuary 19.201 I. You may providl.! a \\rittcn n.'sron~l' to the Clllnmltll'l;!'S com:c:rns no latt:r than December 10.2010, If you wish to uppear oc\on: the (·ult1millL'1.! at its Janu:.try 20 II mCl.!ting. plcase let me knu\\ by Januury 7. 20 II,

I r you hu\ C dlly qUl'~tiol1s. kd fn:c IU contact me:,

Sincerely.

1 I Wi-'1\.

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Fern Gunn Simeon Deputy Counsel

FGS!lr

North Carolina State Bar Office of Counsel ATTN: Fern Gunn Simeon, Deputy Counsel

PO 130x 25908 Raleigh, NC 27611

RE: LegalZoom Advantage Plan File No. lOPP04

Dear Ms. Simeon,

December 29, 2010

I received your letter dated December 17, 2010 and, although our plans will not be considered for registration until April, I wanted to maintain communications wIth you to let you know that we are addressing your concerns expressed in your November correspondence. I am pleased to provide you with the following changes that, I believe, wIll take care of these issues.

First, you expres~ed concern regarding the inclusion of discounts on other LegalZoom services in the plan. While those discounts were certainly not the primary value in the original plan concept, we have removed those components of the plans. The services provided by the current plans (attached) are provided directly by the firm attorneys.

Second, you are correct in that we have two plans (a business oriented plan and a personal plan) that were each detailed in one plan document. Per your requirements I have split those plans apart and have included the terms of each (the legal Advantage Plus and Business Advantage Pro plans). If needed, I will submIt separate initial regIstration forms and an additional registration fee in advance of the Committee's April meeting.

finally, you expressed concern wIth the fact that we had "only one attorney" who would serve as our preliminary provider firm. North Carolina attorneys will provide all of the services under the plans. Mr. McGrath is still interested in establishing his firm as a provider for the plans. We have obtained the certification for Mr. McGrath dnd one ddditional attorney, Robert Jennmgs, with additional attorney certifications forthcoming. The original, notarIZed certificates are attached. We will continue to spe<lk to North Carolina attorneys who are interested in prOVIding tor our plans dnd will submit the remaIning certificates prior to the cutoff for the Apnl meeting.

I sincerely hope thdt these reVIsions allay the CommIttee's concerns and allow for registration of the plans in April. I will remain in contact with your office to make sure we provide everything you reqUIre.

Since

-r1,P~ . -U~ Legal, Attorney ServIces Division

LegaIZoom.com, Inc. Dffect: 323-790-1352 [email protected]

EXHIBIT

15

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Business Advantage Pro Subscription Contract

This is a legal agreement (the "Agreement") between us, legaIZoom.com, Inc. ("legaIZoom"), and you,

(CUSTOMER NAMEl. detailing the terms of your use of the Business Advantage Pro legal plan (the "legal

Plan") and its benefits, described below, for a fixed te,m (the "Term"). This Agreement is effective as of

the date you accept its terms by purchasing a subscription to the legal Plan (a "Subscription") or

accepting a free trial thereof (the "Effective Date"). If you sign up for the Legal Plan, you accept these

terms, conditions, limitations, and requirements. Please read this Agreement carefully.

THIS AGREEMENT - TOGETHER WITH ALL UPDATES, ADDITIONAL TERMS, LICENSES, AND ALL OF

lEGALZOOM'S TERMS, RULES, AND POLICIES - COlLECTIVELY CONSTITUTE THE "AGREEMENT" BETWEEN

YOU AND LEGALZOOM. YOU MUST ACCEPT AND ABIDE BY THESE TERMS AS PRESENTED TO YOU:

CHANGES, ADDITIONS, OR DELETIONS ARE NOT ACCEPTABLE AND LEGALZOOM MAY REFUSE ACCESS TO

ANY OR ALL OF AN ADVANTAGE PROGRAM FOR NONCOMPLIANCE WITH ANY PART OF THIS

AGREEMENT.

To use the Legal Plan, you must obtain access to the World Wide Web, either directly or through devices

that access web-based content, and pay any service fees associated with such access. You are

responsible for providing all eqUipment necessary to make such connection to the World Wide Web,

including a computer and Internet access.

1. Plan Membership. We reserve the right to accept or refuse membership in our discretion. You may

not transfer or assign your Subscription or related benefits; provided, however, that the primary

member of a Legal Plan (the "Primary Member") may elect to extend coverage to employees of his or

her business (together with the Primary Member, each a "Plan Member" and collectively the "Plan

Group"). The "Effective Date" for each Plan Member other than the Primary Member shall be the date

on which the Primary Member elects to extend coverage to such Plan Member.

2. Limitation of Availability. The Legal Plan may not be accessible, in whole or in part, in all areas, and

LegalZoom does not guarantee the accessibility, in wrole or in part, of the Legal Plan to all users. If

you're not sure whether or not full or partial access to the Legal Plan is available in your area, you can

email us at [email protected] or call us at 877-657-8787.

3. Benefits of the Legal Plan.

a. A Subscription provides the following benefits (collectively, the "Plan Benefits"):

(i) Telephone consultations with a participating firm (the "Firm"), during normal business hours,

of up to one half (1/2) hour each, limited to one consultation per Plan Group for each new legal

matter. Under the Legal Plan, members may consult only about matters related to their business

and may not consult about personal matters unrelated to their business. If the Firm determines

after the initial consultation that a telephone call or a letter would be of further assistance to a

Plan Member, such Firm, in its sole discretion. may provide, at no additional charge, either: (a)

one letter of up to two (2) pages; or (b) one (1) telephone call during normal business hours on

the Plan Member's behalf. Telephone consultations may not include discussion of any of the

following:

1. Tax-related matters;

2. Patent-related matters;

3. Violent felonies; or

4. legal issues arising from actions or occurrences in which the Plan Member was

impaired by drugs or alcohol.

(ii) Review by the Firm of legal documents of up to ten (10) pages, limited to review of one (1)

document per Plan Group for each new legal l1atter. The Firm shall provide one (1) telephone

consultation, during normal business hours, about the reviewed document and a written

summary of such consultation.

(iii) Once during each membership year, the Primary Member is entitled to a legal check-up (the

"legal Check-Up). The Legal Check-Up is intended to provide the Primary Member with an (a)

assessment of his or her legal profile and recommendations based on significant issues or gaps

or (b) update of a previous legal Check-Up considering changes in life, circumstances, legal

profile, and applicable law. The Legal Check-t..'p includes a telephone consultation, during

normal business hours, of up to one (1) hour to discuss the Primary Member's legal portfolio,

potential updates over the previous year, and recommendations. The Firm shall provide a

written summary of the consultation and any recommendations to the Primary Member's legal

documents or strategies. The Legal Check-Up becomes available to a Primary Member only after

six (6) months of membership in the Legal Plan;

(iv) If a Plan Member engages the Firm for services that are not included in the Plan Benefits

described in subsections (a)(i) - (a)(iii) above, the Firm shall provide such legal services at a

twenty-five (25%) discount from such Firm's standard rates for representation, as such rates are

reported to legalZoom;

(v) Nothing in the legal Plan or this Agreement limits the right of a Plan Member to retain, at his

or her own expense, an unaffiliated attorney 3dmitted to practice in the state in which the legal

services are to be provided. LegalZoom is not obligated to pay for any such sen/ices.

b. Please note that legalZoom Lawyer Referral Service is certified by the State Bar of California to

operate in los Angeles, Orange, San Francisco, San Bernardino, and San Diego Counties (#127). lawyer

referral services that are certified follow certain rules that will protect you. LegalZoom does not provide

legal services. Attorneys made available through the Legal Plan are third-party independent contractors

who agree to provide legal services directly to you, nct through LegalZoom, via a separate retention

agreement between you and the attorney. Their contact information is provided as advertising. The

. attorneys have agreed to provide complimentary, thirty-minute consultations related to subject matters

about which they represent that they are qualified in jurisdictions where they are admitted to practice.

A conflict check will apply. They may require you to meet at their office or another location convenient

to them or may require a telephonic consultation. LegalZoom will not select an attorney for you.

Further, LegalZoom makes no guarantee that an attorney will be available in your jurisdiction, able to

speak to a specific topic about which you may inquire, located in a convenient location, or that any

advice offered by an attorney will be complete or accurate. LegalZoom makes no assertion about the

qualities of the cooperating attorneys.

4, Exclusionsj Conflicts.

a. The following items and matters are specifically excluded from the Legal Plan, and are not considered

or treated as Plan Benefits:

(i) Any action that directly or indirectly involves LegaIZoom.com, Inc. or any of its affiliates,

directors, agents, or employees;

(ii) Any acti on that directly or indirectly involves any Firm providing legal services under the Legal

Plan; provided, however, that a Firm may, at i!s sole discretion and risk, represent a Plan

Member in a matter in which another affiliated Firm is representing another party as legal

counsel;

(iii) For employer-sponsored Legal Plans, any action by a Plan Member of such program that directly

or indirectly involves his or her employer sponsor;

(iv) Any adversarial action by a Plan Member that directly or indirectly involves any other Plan

Member in any Plan Group;

(v) Any action based on acts or occurrences that are alleged to have occurred or conditions that

were reasonably anticipated or foreseeable before the Plan Member's enrollment that did or

may give rise to a lawsuit by or against such Plan Member; provided, however, that the Firm

may, in its sole discretion and at its own risk, disregard this exclusion;

(vi) Any action that resulted in the prior recruitment or retention by the Plan Member of another

attorney; provided, however, that the Firm may, in its sole discretion and at its sole risk,

disregard this exclusion;

(vii) Any matter involving the laws of jurisdictions outside of the United States or its subdivisions;

(viii) Any appeal to an appellate court (i,e., not a trial court); provided, however, that the Firm may,

in its sole discretion and at its sole risk, disregard this exclusion;

Ox) Any matter that, in the Firm's opinion, is frivolous in nature or objective; or

(xl Any case matter or requested service that is determined by the Firm to lack sufficient merit to

warrant pursuit, or that the Firm decides has been raised an inordinate or unreasonable

number of times without a change in circumstances.

b. If the interests of the Primary Member of a plan Group are adverse to those of another Plan Member

in that same Plan Group, only the Primary Member is entitled to receive the applicable Plan Benefits.

5. NOT INSURANCE. The Legal Plan offered through LegalZoom is not a contract of insurance or

indemnification insurance plan. LegalZoom is not an insurance company and does not guarantee legal

representation in every situation. The Legal Plan provides LegalZoom's customers with free and

discounted legal services from member Firms. LegalZoom does not reimburse or indemnify any Plan

Member or pay any Firm for attorney fees or expenses. LegalZoom makes no payments to Firms in

Alabama, Arizona, Arkansas, Florida, Georgia, and Illinois.

6. Use.

a. General Practices. You acknowledge that LegalZoom may establish general practices and limits

concerning use of the Legal Plan, including without limitation the maximum number of

complimentary attorney consultations you m3Y receive in a given period of time related to one

or all subjects.

b. Excessive Use. Without limiting its rights under Section 11(a) below, LegalZoom has the right

(but not the obligation) to terminate your Legal Plan for excessive use, which means usage over

a period that far exceeds the average level of usage of similarly situated Plan Members, or for

unreasonable or harassing contact with Firm 3ttorneys.

c. Right to Change Practices. You acknowledge that LegalZoom reserves the right to change these

general practices and limits at any time, in its sole discretion, with or without notice.

d. Responsibility for Misuse. You are responsible for all expenses incurred or other actions that

rr:ay occur through your use of a legal Plan. You must immediately alert us of any fraudulent,

unauthorized, illegal, or suspicious use of a Legal Plan or any other breach of security or

unauthorized or illegal activity that you reasonably suspect.

7. Authority to Enter Agreement. If you are entering into this Agreement on behalf of a company or

other legal entity, you represent that you have the legal authority to bind such entity to these terms, in

which case the terms "you" or "your" shall refer to such entity. If you do not have such authority or if

you do not agree with this Agreement, you may not s,gn up for or use the Legal Plan. If after your

purchase we find that you do not have authority to bind the entity for which you ordered, you will be

personally responsible for the obligations in this Agreement and the order you placed, including without

limitation, the payment obligations. We are not liable for any loss or damage resulting from our reliance

on any tnstruction, notice, document, or communicaron reasonably believed by us to be genuine and

orlginattng from an authorized representative of your company. If there is reasonable doubt about the

authenticity of any such instruction, notice, document, or communication, we may, but are not obliged

to, require additional authentication from you.

8. Payment.

a. Legal Plan Subscription Fees.

You will be charged in accordance with the billing terms in effect at the time the fee or charge becomes

payable. For any Legal Plan that you purchase that is charged in full upon purchase, you agree that for

each renewal Term for such Subscription, the amount due for the next Term will be due and

immediately payable in full as of the first day of that Term. For each Legal Plan, your charge remains for

each Term no matter if you utilize any Plan Benefits during that Term. In other words, EVEN IF YOU DO

NOT USE THE LEGAL PLAN YOU WIll BE RESPONSIBLE FOR ANY SUBSCRIPTION FEES UNTil YOU

CANCEl YOUR SUBSCRIPTION OR IT IS OTHERWISE TERMINATED. For more information regarding

canceling your Subscription, see the "Termination or Cancellation" section below.

b. Billing.

To allow payment for the initial Term, valid credit card information is due at the time of purchase.

Your Subscription will renew automatically at the end of the initial Term (the" Billing Date") and at the

end of each Term thereafter unless and until you give notice of your intention to terminate your

Subscription pursuant to the terms of this Agreement. The length of a Term corresponds with the

Subscription purchased. A 6-month Subscription has a six-month Term, a 3-month Subscription a three

month Term, and a monthly Subscription has a one-month Term .. If you do not give us notice of such

intention, your credit card will be charged for the renewal Term of your Subscription on your Billing

Date. If your purchase date is on the 29th through 31st day of any month, your Billing Date for renewals

in months with fewer days will fall on the last day of t,e month. LegalZoom may adjust your Billing Date

in subsequent Terms without notice. This will be reflected by a charge to your account on a pro-rated

basis according to the number of days that have passed since the Billing Date of your latest renewal

charge. Unless otherwise notified in advance by LegalZoom pursuant to this Agreement, the renewal

charge will be equal to the original purchase price for the Subscription.

You agree to pay LegalZoom the fees associated with your Subscription. A schedule of fees for the

SubScriptions is set forth below:

Monthly Business Advantage Pro subscription: $14.99 per month

3-month Business Advantage Pro subscription: $35.97 every 3 months

6-month Business Advantage Pro Subscription: $62.94 every 6 months

c. Notice of Automatic Renewal.

We may send a reminder email to the email address of record for your account approximately one week

before your Billing Date. You acknowledge and agree that this notice is provided as a courtesy only, and

we are not obligated or required to provide such notice. You acknowledge and agree that your failure to

read or inability to receive the email does not create any liability on the part of legalZoom or any third

party service provider.

d. Promotional Trial Memberships.

We sometimes offer certain customers various trial or other promotional memberships, which are

subject to this Agreement except as otherwise stated in the promotional offers. Trial memberships

cannot be canceled, but trial members can at any time choose not to upgrade to regular membership at

the end of the trial period by emailing us at [email protected] or calling us at 877-657-8787. AT THE

COMPLETION OF A TRIAL MEMBERSHIP, UNLESS YOU CHOOSE TO CANCEL, YOUR LEGAL PLAN

SUBSCRIPTION WILL RENEW AUTOMATICALLY AND YOUR CREDIT CARD WILL BE CHARGED TO BEGIN

YOUR INITIAL TERM.

e. Attorney Fees.

Fees for non-complimentary attorney services provided pursuant to a Subscription shall be paid directly

to the providing Firms. Participating Firms and attorneys are not employees or agents of LegalZoom, and

have no financial obligation to legalZoom.

9. Changes to Subscriptions.

a. General Changes.

legalZoom may change, modify, add, remove, suspend, cancel or discontinue any aspect of a

Subscription, including the functionality, content, and/or availability of any features, at any time in

legalZoom's sole discretion; provided, however, that any such change, modification, addition, removal,

suspension, cancellation, or discontinuation will become valid only on approval by an executive officer

of LegalZoom and if such approval is endorsed on or attached to this Agreement. We may also impose

limits on certain features and services or restrict your access to your Subscription without notice or

liability at any time.

b. Fee Adjustments.

legalZoom may increase its fees for any Subscription effective the first day of a renewal Term by giving

you notice of the new fees at least thirty (30) days before the beginning of the renewal Term. If you do

not cancel your subscription pursuant to Section 11, you shall be deemed to have accepted the new fee

for that renewal Term and any subsequent renewal Terms (unless the fees are increased in the same

manner for a subsequent renewal Term). Reductions in fees become effective on the next renewal Term

without any pro rata reduction for the period covered under the prior fee schedule.

10. Internet Delays. Your use of the Subscription may be limited or delayed based on problems inherent

in the use of the Internet and electronic communications. legalZoom is not responsible for any delays,

delivery failures or other damage resu Iting from such problems.

11. Termination or Cancellation.

a. By LegalZoom.

b. By Subscriber.

i. LegalZoom may terminate your use of your Subscription in its sole discretion;

provided, however, that, as your sole remedy, we will refund to you any prepaid

fees actually paid specifically related to the current Term of that Subscription or

part thereof.

ii. If payment is not made on the Billing Date, as described in Section 8 above, you

will have a fifteen (15) day grace period (in Texas and Massachusetts, this grace

period will be thirty-one (31) days) to correct the credit card information on file

and post a payment to your account. If after the expiration of this grace period

you have not made any payment on your Subscription, your non-payment may

result in suspension of service and subsequent termination of your Subscription.

iii. Your right to use a Subscription is subject to any limits established by LegalZoom

or by your credit card issuer. If payment cannot be charged to your credit card

or your charge is returned for any reason, including through a charge back,

LegalZoom reserves the right, in its sole and absolute discretion, to suspend or

terminate your access and account, thereby terminating this Agreement and all

obligations of LegalZoom hereunder. If a charge made to your credit card is

declined, LegalZoom may make a second attempt to bill that card three (3) days

after the Billing Date. If the second attempt to bill your card is successful, your

Plan Benefits will remain in full, with no change to your Billing Date or

subsequent billing cycles. If tre second attempt to bill your card is unsuccessful,

a third attempt to bill that card will be made three (3) days after the second

attempt. If the third attempt to bill your card is successful, your Plan Benefits

will be reinstated in full, with no change to your Billing Date or subsequent

billing cycles.

After you have executed this I\greement, you have ten (10) days in which to

examine it. If during this pericd you decide that you are not satisfied with the

Agreement, you may return the Agreement to us and have any prepaid amounts

refunded. If the Agreement is returned and you have not sought legal services

pursuant hereto within this time period, the Agreement shall be void from the

beginning and the parties sha,1 be in the same pOSition as if this Agreement had

not been issued.

11 You will have the right to cancel your Subscription by providing at least five (5)

days' notice before the start cf the next renewal Term for such Subscription.

After such cancellation, your Subscription will remain active until the end of

then-applicable Term.

c. Services After Termination.

After termination of your Subscription, either by you or by LegalZoom, you will not be able to access the

corresponding Plan Benefits; provided, however, that3ny access rights to a Legal Plan granted you

through a separate channel (e.g., through another Subscription) will remain in full force and effect

unless and until separately terminated or cancelled.

12. Dispute Resolution. In the event of a dispute, the parties will agree on an impartial attorney who will

settle such dispute and the decision of such attorney will be binding on all of the parties to the dispute.

A Plan Member has the right to file a complaint with his or her state's bar association concerning the

conduct of an affiliated attorney under the Legal Plan.

13. Professional, Independent Attorney Judgment. Attorneys performing legal services for Legal Plan

members under the terms of this Agreement are not agents or employees of LegalZoom. Any attorney

rendering legal services to Plan Members under the Legal Plan shall maintain the attorney-client

relationship with the Plan Member, and is solely responsible to the Plan Member for all legal services

provided. It is within the sole discretion of the attorney to determine whether claims or defenses

pertaining to any matter under this Agreement present a frivolous or otherwise unmeritorious claim or

defense. Participating attorneys reserve the right to make independent professional judgments

regarding such presentations. LegalZoom will in no way influence or attempt to affect the rendering of

professional services of the participating attorneys.

14. NO GUARANTEE. NO EMAIL COMMUNICATION IS INTENDED TO PROVIDE OR SUBSTITUTE FOR

ACCOUNTING, LEGAL, BUSINESS, TAX, OR OTHER PROFESSIONAL ADVICE OR SERVICES. THEY ARE

OFFERED FOR INFORMATION PURPOSES ONLY. ANY EMAIL COMMUNICATIONS AND THE INFORMATION

CONTAINED IN ANY OF THESE ARE NOT AND SHOULD NOT BE CONSTRUED OR RELIED ON AS LEGAL

ADVICE. COMPLIANCE WITH ALL LAWS AND REGULAT:ONS REMAINS YOUR SOLE AND ABSOLUTE

RESPONSIBILITY. BEFORE TAKING ANY BUSINESS OR LEGAL ACTION BASED ON INFORMATION FROM

ANY EMAil COMMUNICATION, YOU SHOULD CONSULT WITH A FINANCIAL OR LEGAL PROFESSIONAL TO

VERIFY DEADLINES AND DETERMINE WHETHER SUCH A.CTIONS ARE APPROPRIATE FOR YOU BASED ON

YOUR PERSONAL OR BUSINESS NEEDS. NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,

ARE GIVEN REGARDING THE LEGAL OR OTHER CONSEQUENCES RESULTING FROM THE USE OF THE

SUBSCRIPTION.

15. Indemnification. You agree to protect, defend, indemnify, and hold LegalZoom harmless from and

against any and all claims, causes of action, liabilities, judgments, penalties, losses, costs, damages, and

expenses (including attorneys' fees and all related costs and expenses of litigation at arbitration, or at

trial or on appeal, if any, whether or not litigation or arbitration is instituted) suffered or incurred by us,

including without limitation any claim for personal injury or property damage arising from:

I. this Agreement;

ii. any Subscription provided to you;

iii. your use of any Subscription;

iv. your consultation with an attorney made available by LegalZoom; and

v. any violation by you of any federal, state or local laws, statutes, rules, or

regulations.

For purposes of this Agreement, the indemnified parties include LegalZoom and its affiliates,

subsidiaries, parents, shareholders, members, successors, assigns, representatives, franchisees, officers,

directors, agents, attorneys, and employees.

16. limitation of Liability. LEGALZOOM SHALL NOT BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY

LOSS OR INJURY ARISING OUT OF OR CAUSED, IN WHOlE OR IN PART, BY NEGLIGENT ACTS OR

OMISSIONS IN MAKING AVAILABLE ATIORNEY CONSULTATIONS. YOU AGREE AND ACKNOWLEDGE THAT

THE TOTAL AMOUNT OF OUR LIABILITY, IF ANY, FOR ANY AND ALL CLAIMS, CAUSES OF ACTION,

DAMAGES, LOSSES, OR JUDGMENTS ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE

SUBSCRIPTION OR ATIORNEY CONSULTATION SHALL NOT EXCEED $100.00, WITHOUT REGARD TO THE

NATURE OF THE CLAIM, LOSSES, OR DAMAGES INCURRED. LEGALZOOM IS NOT LIABLE FOR ANY OTHER

LOSS, CLAIM, DAMAGE, OR INJURY ARISING OUT OF, RElATED TO, OR IN ANY CONNECTED WITH THIS

AGREEMENT OR THE PROVISION OF ANY SUBSCRIPTION PURSUANT TO THIS AGREEMENT.

17 Internal Revenue Service (IRS) Circular 230 Tax Ad'lice Disclosure. To ensure compliance with

requirements imposed by the IRS under Circular 230, we inform you that any U.S. federal tax advice

contained in any communication from LegalZoom (including information provided by a Firm or an

attorney offering a free consultation) is and was not intended or written to be used, and cannot be used,

for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing,

or recommending to another party any matters addressed therein.

18. Additional Notices.

a. The Legal Plan is provided and administered by LegaIZoom.com, Inc., 101 N. Brand Blvd., 10th

Floor Glendale, CA 91210.

b. Notice to Texas Residents: LegalZoom's Legal Plan and all sales representatives of such plans

are licensed and regulated by the Texas Department of LicenSing and Regulation, which can be

contacted by telephone at (800)-803-9202 or by emai, at CS.LegaI.Service.Contracts@license .state.tx.us.

c. Notice to Mississippi Residents: No statements by a Plan Member, his or her employees, or

other members of his or her Plan Group in the Legal Plan application shall void this Agreement or be

used in any legal proceeding hereunder, unless such application or an exact copy thereof is included in

or attached to this Agreement.

d. Notice to Indiana Residents: A Legal Plan advisory group meets regularly to evaluate the

operation of the Legal Plan and suggest improvements. The Legal Plan complies with Indiana Supreme

Court Admission and Discipline Rule 26. However, satisfaction of the conditions under that rule shall not

be construed as an approval of the Legal Plan by the Supreme Court of Indiana.

(Remained of Page Intentionally Left Blank)

Legal Advantage Plus Subscription Contract

This is a legal agreement (the "Agreement") between us, LegaIZoom.com, Inc. ("LegaIZoom"), and you,

(CUSTOMER NAME)' detailing the terms of your use of the Legal Advantage Plus legal plan (the "Legal

Plan") and its benefits, described below, for a fixed term (the "Term"). This Agreement is effective as of

the date you accept its terms by purchasing a subscription to the Legal Plan (a "Subscription") or

accepting a free trial thereof (the "Effective Date"). If you sign up for the Legal Plan, you accept these

terms, conditions, limitations, and requirements. Please read this Agreement carefully.

THIS AGREEMENT - TOGETHER WITH ALL UPDATES, ADDITIONAL TERMS, LICENSES, AND ALL OF

LEGALZOOM'S TERMS, RULES, AND POLICIES - COLLECTIVELY CONSTITUTE THE "AGREEMENT" BETWEEN

YOU AND LEGALZOOM. YOU MUST ACCEPT AND ABICE BY THESE TERMS AS PRESENTED TO YOU:

CHANGES, ADDITIONS, OR DELETIONS ARE NOT ACCPTABLE AND LEGALZOOM MAY REFUSE ACCESS TO

ANY OR ALL OF AN ADVANTAGE PROGRAM FOR NONCOMPLIANCE WITH ANY PART OF THIS

AGREEMENT.

To use the Legal Plan, you must obtain access to the World Wide Web, either directly or through devices

that access web-based content, and pay any service fees associated with such access. You are

responsible for providing all equipment necessary to make such connection to the World Wide Web,

including a computer and Internet access.

1. Plan Membership. We reserve the right to accept or refuse membership in our discretion. You may

not transfer or assign your Subscription or related benefits; provided, however, that the primary

member of an Legal Plan (the "Primary Member") may elect to extend coverage to his or her spouse,

domestic partner, or dependents (together with the Primary Member, each a "Plan Member" and

collectively the "Plan Group"). The "Effective Date" for each Plan Member other than the Primary

Member shall be the date on which the Primary Member elects to extend coverage to such Plan

Member.

2. Limitation of Availability. The Legal Plan may not be accessible, in whole or in part, in all areas, and

LegalZoom does not guarantee the accessibility, in wrole or in part, of the Legal Plan to all users. If

you're not sure whether or not full or partial access to the Legal Plan is available in your area, you can

email us at [email protected] or call us at 877-657-8787.

3. Benefits of the Legal Plan.

a. A Subscription provides the following benefits (collectively, the "Plan Benefits"):

(i) Telephone consultations with a participating firm (the "Firm"), during normal business hours,

of up to one ha If (1/2) hour each, limited to one consultation per Plan Group for each new legal

matter. Under the Legal Plan, members may not consult about matters related to their bUSiness.

If the Firm determines after the initial consultation that a telephone call or a letter would be of

further assistance to a Plan Member, such Firm, in its sole discretion, may provide, at no

additional charge, either: (a) one letter of up to two (2) pages; or (b) one (1) telephone call

during normal business hours on the Plan Member's behalf. Telephone consultations may not

include discussion of any of the following:

1. Tax-related matters;

2. Patent-related matters;

3. Violent felonies; or

4. Legal issues arising from actions or occurrences in which the Plan Member was

impaired by drugs or alcohol.

(ii) Review by the Firm of legal documents of JP to ten (10) pages, limited to review of one (1)

document per Plan Group for each new legal matter. The Firm shall provide one (1) telephone

consultation, during normal business hours, about the reviewed document and a written

summary of such consultation.

(iii) Once during each membership year, the Primary Member is entitled to a legal check-up (the

"legal Check-Up). The Legal Check-Up is intended to provide the Primary Member with an (a)

assessment of his or her legal profile and recommendations based on significant issues or gaps

or (b) update of a previous legal Check-Up considering changes in life. circumstances, legal

profile, and applicable law. The legal Check-Up includes a telephone consultation, during

normal business hours, of up to one (1) hour to discuss the Primary Member's legal portfolio,

potential updates over the previous year, and recommendations. The Firm shall provide a

written summary of the consultation and any recommendations to the Primary Member'S legal

documents or strategies. The legal Check-Up becomes available to a Primary Member only after

six (6) months of membership in the legal Plan;

(iv) If a Plan Member engages the Firm for services that are not included in the Plan Benefits

described in subsections (a)(i) - (a)(iii) above, the Firm shall provide such legal services at a

twenty-five (25%) discount from such Firm's standard rates for representation, as such rates are

reported to LegalZoom;

('I) Nothing in the legal Plan or this Agreement limits the right of a Plan Member to retain, at his

or her own expense, an unaffiliated attorney admitted to practice in the state in which the legal

services are to be provided. legalZoom is not obligated to pay for any such services.

b. Please note that legalZoom lawyer Referral Service is certified by the State Bar of California to

operate in Los Angeles, Orange, San Francisco, San Bernardino, and San Diego Counties (#127). Lawyer

referral services that are certified follow certain rules that will protect you. LegalZoom does not provide

legal services. Attorneys made available through the legal Plan are third-party independent contractors

who agree to prOVide legal services directly to you, not through LegalZoom, via a separate retention

agreement between you and the attorney. Their contact information is provided as advertising. The

attorneys have agreed to provide complimentary, thirty-minute consultations related to subject matters

about which they represent that they are qualified in jurisdictions where they are admitted to practice.

A conflict check will apply. They may require you to meet at their office or another location convenient

to them or may require a telephonic consultation. LegalZoom will not select an attorney for you.

Further, LegalZoom makes no guarantee that an attorney will be available in your jurisdiction, able to

speak to a specific topic about which you may inquire, located in a convenient location, or that any

advice offered by an attorney will be complete or accurate. LegalZoom makes no assertion about the

qualities of the cooperating attorneys.

4. Exclusions; Conflicts.

a. The following items and matters are specifically excluded from the Legal Plan, and are not considered

or treated as Plan Benefits:

(il Any action that directly or indirectly involves '_egalloom.com, Inc. or any of its affiliates,

directors, agents, or employees;

(ii) Any acti on that directly or indirectly involves any Firm providing legal services under the Legal

Plan; provided, however, that a Firm may, at i:s sole discretion and risk, represent a Plan

Member in a matter in which another affiliated Firm is representing another party as legal

counsel;

(iii) For employer-sponsored Legal Plans, any action by a Plan Member of such program that directly

or indirectly involves his or her employer sponsor;

(iv) Any adversarial action by a Plan Member that directly or indirectly involves any other Plan

Member in any Plan Group;

(v) Any action based on acts or occurrences that are alleged to have occurred or conditions that

were reasonably anticipated or foreseeable before the Plan Member's enrollment that did or

may give rise to a lawsuit by or against such Plan Member; provided, however, that the Firm

may, in its sole discretion and at its own risk, disregard this exclusion;

(vi) Any action that resulted in the prior recruitment or retention by the Plan Member of another

attorney; provided, however, that the Firm may, in its sole discretion and at its sole risk,

disregard this exclusion;

(VII) Any matter involving the laws of jurisdictions outside of the United States or its subdivisions;

(Viii) Any appeal to an appellate court (i.e., not a trial court); provided, however, that the Firm may,

In its sole discretion and at its sole risk, disre5ard this exclusion;

(ix) Any matter that, in the Firm's opinion, is frivolous in nature or objective; or

(x) Any case matter or requested service that is determined by the Firm to lack sufficient merit to

warrant pursuit, or that the Firm decides has been raised an inordinate or unreasonable

number of times without a change in circumstances.

b. If the interests of the Primary Member of a Plan Group are adverse to those of another Plan Member

in that same Plan Group, only the Primary Member is entitled to receive the applicable Plan Benefits.

5. NOT INSURANCE. The Legal Plan offered through LegalZoom is not a contract of insurance or

indemnification insurance plan. LegalZoom is not an insurance company and does not guarantee legal

representation in every situation. The Legal Plan provides LegalZoom's customers with free and

discounted legal services from member Firms. LegalZoom does not reimburse or indemnify any Plan

Member or pay any Firm for attorney fees or expenses. LegalZoom makes no payments to Firms in

Alabama, Arizona, Arkansas, Florida, Georgia, and Illinois.

6. Use.

a. General Practices. You acknowledge that LegalZoom may establish general practices and limits

concerning use of the Legal Plan, including without limitation the maximum number of

complimentary attorney consultations you may receive in a given period of time related to one

or all subjects.

b. Excessive Use. Without limiting its rights under Section l1(a) below, LegalZoom has the right

(but not the obligation) to terminate your Legal Plan for excessive use, which means usage over

a period that far exceeds the average level of usage of similarly situated Plan Members, or for

unreasonable or harassing contact with Firm 3ttorneys.

c. Right to Change Practices. You acknowledge that LegalZoom reserves the right to change these

general practices and limits at any time, in its sole discretion, with or without notice.

d. Responsibility for Misuse. You are responsible for all expenses incurred or other actions that

may occur through your use of a Legal Plan. You must immediately alert us of any fraudulent,

unauthorized, illegal, or suspicious use of a Legal Plan or any other breach of security or

unauthorized or illegal activity that you reasonably suspect.

7. Authority to Enter Agreement. If you are entering into this Agreement on behalf of a company or

other legal entity, you represent that you have the legal authority to bind such entity to these terms, in

which Ci)se the terms "you" or "your" shall refer to such entity. If you do not have such authority or if

you do not agree with this Agreement, you may not sign up for or use the legal Plan. If after your

purchi)se we find that you do not have authority to bind the entity for which you ordered, you will be

personally responsible for the obligations in this Agreement and the order you placed, including without

limitation. the payment obligations. We are not liable for any loss or damage resulting from our reliance

on any instruction, notice, document, or communication reasonably believed by us to be genuine and

originating from an authorized representative of your company. If there is reasonable doubt about the

authenticity of any such instruction, notice, document, or communication, we may, but are not obliged

to, require additional authentication from you.

8. Payment.

a. Legal Plan Subscription Fees.

You will be charged in accordance with the billing terms in effect at the time the fee or charge becomes

payable. For any Legal Plan that you purchase that is charged in full upon purchase, you agree that for

each renewal Term for such Subscription, the amount due for the next Term will be due and

immediately payable in full as of the first day of that Term. For each Legal Plan, your charge remains for

each Term no matter if you utilize any Plan Benefits during that Term. In other words, EVEN IF YOU DO

NOT USE THE LEGAL PLAN YOU WILL BE RESPONSIBLE FOR ANY SUBSCRIPTION FEES UNTIL YOU

CANCEL YOUR SUBSCRIPTION OR IT IS OTHERWISE TERMINATED. For more information regarding

canceling your Subscription, see the "Termination or Cancellation" section below.

b. Billing.

To allow payment for the initial Term, valid credit card information is due at the time of purchase.

Your Subscription will renew automatically at the end of the initial Term (the "Billing Date") and at the

end of each Term thereafter unless and until you give notice of your intention to terminate your

Subscription pursuant to the terms of this Agreement. The length of a Term corresponds with the

Subscription purchased. A 6-month Subscription has a six-month Term, a 3-month Subscription a three

month Term, and a monthly Subscription has a one-month Term .. If you do not give us notice of such

intention, your credit card will be charged for the renewal Term of your Subscription on your Billing

Date. If your purchase date is on the 29th through 31st day of any month, your Billing Date for renewals

in months with fewer days will fall on the last day of the month. LegalZoom may adjust your Billing Date

in subsequent Terms without notice. This will be reflected by a charge to your account on a pro-rated

basis according to the number of days that have passed since the Billing Date of your latest renewal

charge. Unless otherwise notified in advance by LegalZoom pursuant to this Agreement, the renewal

charge will be equal to the original purchase price for the Subscription.

You agree to pay LegalZoom the fees associated with your Subscription. A schedule of fees for the

Subscriptions is set forth below:

Monthly Legal Advantage Plus subscription: $14.99 per month

3-month legal Advantage Plus subscription: $35.97 every 3 months

6-month Legal Advantage Plus Subscription: $62.94 every 6 months

c. Notice of Automatic Renewal.

We may send a reminder email to the email address of record for your account approximately one week

before your Billing Date. You acknowledge and agree that this notice is provided as a courtesy only, and

we are not obligated or required to provide such notice. You acknowledge and agree that your failure to

read or inability to receive the email does not create 3ny liability on the part of LegalZoom or any third

party service provider.

d. Promotional Trial Memberships.

We sometimes offer certain customers various trial or other promotional memberships, which are

subject to this Agreement except as otherwise stated in the promotional offers. Trial memberships

cannot be canceled, but trial members can at any time choose not to upgrade to regular membership at

the end of the trial period by emailing us at [email protected] or calling us at 877-657-8787. AT THE

COMPLETION OF A TRIAL MEMBERSHIP, UNLESS YOU CHOOSE TO CANCEL, YOUR LEGAL PLAN

SUBSCRIPTION Will RENEW AUTOMATICAllY AND YOUR CREDIT CARD WILL BE CHARGED TO BEGIN

YOUR INITIAL TERM.

e. Attorney Fees.

Fees for non-complimentary attorney services provided pursuant to a Subscription shall be paid directly

to the providing Firms. Participating Firms and attorneys are not employees or agents of LegalZoom, and

have no financial obligation to LegalZoom.

9. Changes to Subscriptions.

a. General Changes.

LegalZoom may change, modify, add, remove, susper:d, cancel or discontinue any aspect of a

Subscription, including the functionality, content, anc/or availability of any features, at any time in

LegalZoom's sole discretion; provided, however, that 3ny such change, modification, addition, removal,

suspension, cancellation, or discontinuation will become valid only on approval by an executive officer

of LegalZoom and if such approval is endorsed on or attached to this Agreement. We may also impose

limits on certain features and services or restrict your access to your Subscription without notice or

liability at any time.

b. Fee Adjustments.

LegalZoom may increase its fees for any Subscription effective the first day of a renewal Term by giving

you notice of the new fees at least thirty (30) days before the beginning of the renewal Term. If you do

not cancel your subscription pursuant to Section 11, \,ou shall be deemed to have accepted the new fee

for that renewal Term and any subsequent renewal Terms (unless the fees are increased in the same

manner for a subsequent renewal Term). Reductions in fees become effective on the next renewal Term

without any pro rata reduction for the period covered under the prior fee schedule.

10. Internet Delays. Your use of the Subscription may be limited or delayed based on problems inherent

in the use of the Internet and electronic communications. LegalZoom is not responsible for any delays,

delivery failures or other damage resulting from such problems.

11. Termination or Cancellation.

a. By LegalZoom.

b. By Subscnber.

i. LegalZoom may terminate your use of your Subscription in its sole discretion;

provided, however, that, as your sole remedy, we will refund to you any prepaid

fees actually paid specifically related to the current Term of that Subscription or

part thereof.

ii. If payment is not made on the Billing Date, as described in Section 8 above, you

will have a fifteen (15) day grace period (in Texas and Massachusetts, this grace

period will be thirty-one (31) days) to correct the credit card information on file

and post a payment to your account. If after the expiration of this grace period

you have not made any payment on 'lour Subscription, your non-payment may

result in suspension of servic~ and subsequent termination of your Subscription.

iii. Your right to use a Subscription is subject to any limits established by LegalZoom

or by your credit card issuer. If payment cannot be charged to your credit card

or your charge is returned for any reason, including through a chargeback,

LegalZoom reserves the right. in its sole and absolute discretion, to suspend or

terminate your access and account, thereby terminating this Agreement and all

obligations of LegalZoom hereunder. If a charge made to your credit card is

declined, LegalZoom may make a second attempt to bill that card three (3) days

after the Billing Date. If the second attempt to bill your card is successful, your

Plan Benefits will remain in full, with no change to your Billing Date or

subsequent billing cycles. If the second attempt to bill your card is unsuccessful,

a third attempt to bill that card will be made three (3) days after the second

attempt. If the third attempt to bill your card is successful, your Plan Benefits

will be reinstated in full, with no change to your Billing Date or subsequent

billing cycles.

After you have executed this Agreement, you have ten (10) days in which to

examine it. If during this period you decide that you are not satisfied with the

Agreement, you may return the Agreement to us and have any prepaid amounts

refunded. If the Agreement is returned and you have not sought legal services

pursuant hereto within this time period, the Agreement shall be void from the

beginning and the parties shall be in the same position as if this Agreement had

not been issued.

U You will have the right to cancel your Subscription by providing at least five (5)

days' notice before the start of the next renewal Term for such Subscription.

After such cancellation, your Subscription will remain active until the end of

then-applicable Term.

c. Services After Termination.

After termination of your Subscription, either by you or by LegalZoom, you will not be able to access the

corresponding Plan Benefits; provided, however, that any access rights to a Legal Plan granted you

through a separate channel (e.g., through another Subscription) will remain in full force and effect

unless and until separately terminated or cancelled.

12. Dispute Resolution. In the event of a dispute, the parties will agree on an impartial attorney who will

settle such dispute and the decision of such attorney will be binding on all of the parties to the dispute.

A Plan Member has the right to file a complaint with his or her state's bar association concerning the

conduct of an affiliated attorney under the Legal Plan.

13. Professional, Independent Attorney Judgment. Attorneys performing legal services for Legal Plan

members under the terms of this Agreement are not agents or employees of LegalZoom. Any attorney

rendering legal services to Plan Members under the Legal Plan shall maintain the attorney-client

relationship with the Plan Member, and is solely responsible to the Plan Member for all legal services

provided. It is within the sole discretion of the attorney to determine whether claims or defenses

pertaining to any matter under this Agreement present a frivolous or otherwise unmeritorious claim or

defense. Participating attorneys reserve the right to make independent professional judgments

regarding such presentations. LegalZoom will in no way influence or attempt to affect the rendering of

professional services of the participating attorneys.

14. NO GUARANTEE. NO EMAIL COMMUNICATION IS INTENDED TD PROVIDE OR SUBSTITUTE FOR

ACCOUNTING, LEGAL, BUSINESS, TAX, OR OTHER PROFESSIONAL ADVICE OR SERVICES. THEY ARE

OFFERED FOR INFORMATION PURPOSES ONLY. ANY EMAIL COMMUNICATIONS AND THE INFORMATION

CONTAINED IN ANY OF THESE ARE NOT AND SHOULD NOT BE CONSTRUED OR RELIED ON AS LEGAL

ADVICE. COMPLIANCE WITH ALL LAWS AND REGULATIONS REMAINS YOUR SOLE AND ABSOLUTE

RESPONSIBILITY. BEFORE TAKING ANY BUSINESS OR LEGAL ACTION BASED ON INFORMATION FROM

ANY EMAIL COMMUNICATION, YOU SHOULD CONSULT WITH A FINANCIAL OR LEGAL PROFESSIONAL TO

VERIFY DEADLINES AND DETERMINE WHETHER SUCH ACTIONS ARE APPROPRIATE FOR YOU BASED ON

YOUR PERSONAL OR BUSINESS NEEDS. NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,

ARE GIVEN REGARDING THE LEGAL OR OTHER CONSEQUENCES RESULTING FROM THE USE OF THE

SUBSCRIPTION.

15. Indemnification. You agree to protect, defend, indemnify, and hold LegalZoom harmless from and

against any and all claims, causes of action, liabilities, judgments, penalties, losses, costs, damages, and

expenses (including attorneys' fees and all related costs and expenses of litigation at arbitration, or at

trial or on appeal, if any, whether or not litigation or arbitration is instituted) suffered or incurred by us,

including without limitation any claim for personal injury or property damage arising from:

i. this Agreement;

ii. any Subscription provided to you;

iii. your use of any Subscription;

iv. your consultation with an attorney made available by legalZoom; and

v. any violation by you of any federal, state or local laws, statutes, rules, or

regulations.

For purposes of this Agreement, the indemnified parties include LegalZoom and its affiliates,

subsidiaries, parents, shareholders, members, successors, assigns, representatives, franchisees, officers,

directors, agents, attorneys, and employees.

16. Limitation of Liability. LEGALZOOM SHALL NOT BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY

LOSS OR INJURY ARISING OUT OF OR CAUSED, IN WHOLE OR IN PART, BY NEGLIGENT ACTS OR

OMISSIONS IN MAKING AVAILABLE ATIORNEY CONSULTATIONS. YOU AGREE AND ACKNOWLEDGE THAT

THE TOTAL AMOUNT OF OUR LIABILITY, IF ANY, FOR ANY AND ALL CLAIMS, CAUSES OF ACTION,

DAMAGES, LOSSES, OR JUDGMENTS ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE

SUBSCRIPTION OR ATIORNEY CONSULTATION SHALL NOT EXCEED $100.00, WITHOUT REGARD TO THE

NATURE OF THE CLAIM, LOSSES, OR DAMAGES INCURRED. LEGALZOOM IS NOT LIABLE FOR ANY OTHER

LOSS, CLAIM, DAMAGE, OR INJURY ARISING OUT OF, RELATED TO, OR IN ANY CONNECTED WITH THIS

AGREEMENT OR THE PROVISION OF ANY SUBSCRIPTION PURSUANT TO THIS AGREEMENT.

17. Internal Revenue Service !IRS) Circular 230 Tax Advice Disclosure. To ensure compliance with

requirements imposed by the IRS under Circular 230, we inform you that any U.S. federal tax advice

contained in any communication from LegalZoom (induding information provided by a Firm or an

attorney offering a free consultation) is and was not intended or written to be used, and cannot be used,

for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing,

or recommending to another party any matters addressed therein.

18. Additional Notices.

a. The Legal Plan is provided and administered by LegalZoom.com, Inc., 101 N. Brand Blvd., 10th

Floor Glendale, CA 91210.

b. Notice to Texas Residents: LegalZoom's Legal Plan and all sales representatives of such plans

Jre licensed and regulated by the Texas Department of Licensing and Regulation, which can be

contacted by telephone at (800)-803-9202 or by ema I at CS.LegaI.Service.Contracts@license .state. tx.US.

c. Notice to Mississippi Residents: No statements by a Plan Member, his or her employees, or

other members of his or her Plan Group in the Legal Plan application shall void this Agreement or be

used in any legal proceeding hereunder, unless such application or an exact copy thereof is included in

or attached to this Agreement.

d. Notice to Indiana Residents: A Legal Plan advisory group meets regularly to evaluate the

operation of the Legal Plan and suggest improvements. The Legal Plan complies with Indiana Supreme

Court Admission and Discipline Rule 26. However, satisfaction of the conditions under that rule shall not

be construed as an approval of the Legal Plan by the Supreme Court of Indiana.

(Remained of Page Intentionoffy Left Blonk)

Attorney Certification for Participation in Prepaid Legal Services Plan

I ! / I I" •• • • I ' ( , "~'LLLi\..:S.' am an attorney parnClpatmg In ~'1L.-=-_:". ::rYl., .. ,. ______ '

which is registered with the -North Caro lina State Bar as a prepaid legal serv ices plan. I am not an employ!;!!;!, director, or owner of the plan.

1 understand that registration does not constitute approval by the State Bar.

I certiry that I have read the provisions of Revised Rule 7.3(d) and understand my professional obligations regarding participation in the plan. I understand that I must investigate and have a good faith belief that the plan is being operated in compliance with the Rules of Professional Conduct and all other pertinent rules of the State Bar. The Rules of Professional Conduct require, among other things. that as an attorney participating in the plan, l can do the following: maintain professional independence; preserve the confidences of clients; avoid conflicts of interest; not improperly share fees; not aid the unauthorized practice of law; and comply with the rules on advertising and solicitation.

,j <1

I i j~COG,-r"-

~----------------~

1 ;

Attorney's printed name

Attorney's NC bar number

Attorney's address

?\iORTH CAROLINA

, ) -'--->~_ COUNTY

Sworn to and subscribed before me this the r- day of • Ie, .', •• 'I~V ,20~.

V1y commission expires:

Attorney Certification Form Rev Oct 2002.Joc

Attomc) Certification for Participation in Prepaid Lt'~al Scrvices Plan

1. Jason .-\. i'vJc(jrath_. am an artomcy participating in (.11': Legal 100m Lcgal i\dvanrage Plus ,lnd Business Ad\untage Pro plans~. which are registered with the :-':ortll Carolina State Bar as pn:paid legal servil.:es plans. I am not an employee. dircctDr. or owner or the plan.

J tJnderstand thal n:gistratioJl does nol constitute ,q1proval by the State Har.

I (eltl~Y thaI I h,l\e read tile pru\'i~iolls or Rcvis..:d Ruk 7 .. 1(d) and lllldcrst<llll1illY professional ublli-'-ati()ns regarding: participation in the plan. I understand that f Illust Invcstigate and have a guud faith hdld'that the plan IS being operated !n CDJ11pli,lllCC with the Rule." ufProfessional Condllct and all othcr pert inent 1'1.lks of the S tall.: Jar. The Rules uf Professional Conduct rCLjllln.:. among utller things. that as an attornc), particlpat:ng In the plan. lean do the following: ll1aintalll prof(:ssional IlldepeIHlcllc,:; presen.: tlt~ L'tHltidellees or c1i.:nts; aVOid contlicts llf

iJltcr~st: not impropcrly share r~es; not aid the 1I1l<1ulhoriz.:o practice of law; and cOlllply with the ruics on advertising i:nd solicitation.

S \\orn t() allli sllb~\.' ri bcd before l11e - ~ ~ . this the ~ day or Jl~.c-'~ , 20!~

/1 II /' ( '--r \ n.11 n iU 'flu~' i!f)..· -.....)' I \'rt"'J~..rT\J< '.1 ... J ./

'Jutarv)ublil'

Jason A. McGnth AtlOl'l1ey's printed nallle

38690 :\ttumcy's \.JC bar number

,i440 Tdringd(~I1_Way, Suite 205, Charlotte, NC 282:-i\ Horney' s address

7048486767

\ Iv (lllllllllSSlllll c\pin:s: I.''j ('·7!1miS3ion Expires Sepfen'l.b~ 10.2011


March 24, 20 I I

\C1r. jamc:s Pc:ters Director Legal Product Development LegaIZoom.com. Inc. 7083 I loll}\\ood Blvd .. Suite I iW \.os Angelc:s. CA ()0028

Rc: LcgalLoom ;\dvantage Plus Plan Our Ii Ie num ber IOPP04

Dear M r. Peters:

208 Fayetteville St. (27601)


Raleigh, North Carolina 27611

Telephone (919) 87.8-46;W Fax: (919) 834-8156 \Veb: www.ncbar.gov

Thank you for your ktter of December 29.20 I 0 rcgarding LegalZt'om Adv<lntagl.! Plus Plan. From your I kcember 29 letter. I understand that LegalLoom.com wishes to offer two plans in North Carolina: I.egal Advantagt.: Plus ami Business Advantage Pro. YllU will need to ~ubmit a separate initial registration forrn for Bu~incss Advantage Pro Plan and also remit an initial registration fcc in the amount 01 $100.00 for the Husiness Advantage Pro Plan. Please find enclosed an initial registration form for Husincss Advantage I'nl.

In yOllr December 29 lener, you indicated that you had removed the membership henetit regarding the 10% discount un LegalZoom legal documents from the Legal Advantage Plus and Businc~s Advant::lge Pm plans that rnay be: oCkrl'd in N0I1h Carolina.

I went ,)n the l.egal7.oom.com websites fix the two plal1s and sa\'. that the Lcgall.oom legal documents benefit is offered in the plans. Since you will nut olrer the Legal/oom legal docllllle:nts to ~()rth Cawlllla n:siclents who purchase lhe~e: plans. IlOw dll you intend to notify l\orth Carolina rcsicknts who go to these wt:bsites that a discount on the LcgalLoom It:gal documents is 110t a bt:l1dit '.11' the plans thl!Y purchase?

Please respond to thi ... letter by April 8. 2011. If you havt.: any Ljuestions. /C\..'1 free to COllWCt me.

Sincerely. , f\

, l-1/ I' -r-\V--fA/l'1, /~)tl....r'v"'_ \..;A...Ff'~

Fern (junn Simeon Deputy Counsel

I :m: losllrt:

f(JS/lr

Katlll:nnc L kan. Counsel \. Root Fdmonson. Fern (iunn Simeon, David R. Johnson, Jl.'l1nifcr A. !,orter. I'v1argar::t T. Cloutier.

i'J I<.:hllie P YkLaughlin. Carmen IloYll1e Bannon. Brian P I) Oten. Leanor Baiky llodge. WIlliam 'J. l'arrell, Jr., Barry S :V1cNeill· Deputy Counsel EXHIBIT Peter G. Bola<.: l'rust Account Compli:mu! Counsd

16

The North Carolina State Bar Oftice of Counsel

April 28,2011

Mr. James Peters Y ice Presidcnt, I.t:gal-,\ttorncy Service Division l.el!.aIZoom.com 101 North I3rand 13lvu .. I III! Floor C; Icndak. CA 91203

zo8 Fayetteville St. (z76ol)


Raleigh, North Carolina Z761I

Telephone (919) 8z8-46zo

Fax: (919) 834-81S6 Web: www.nebar.gov

Re: LegalZooJ1l ,\dvantagc Plus Plan- I OPP04 and Business Advantage Pro Plan II rr02

Dear Mr. Peters:

Thl: Authorized Practice Committee (hereaHer, Commiltcl:) considered the initial registration statements or Lcgal/oom Advantage Plus Plan and Business Advantage Pro Plan at its April 20, 20 I I meeting.

Uased upon your laSl response, the Committee had an additional conccrn regarding tht!sc two plans. Y (lU

indicated that your company would not offer the discount on LegalZoom prepared legal documents to "i~)rth Carolina n.:sidcnls who may purchase the plan. You further stated that there would be a notation un the \vcbsitt! for tht!se plans indicating lhal unlimited acct!ss to I.egalloom legal torms and the 10% dis<.:uunt ()n Legal/nom legal documents wert! bt!nelits that were not available in North Carolina.

The Committee wants tll know if you intend to continue to give North Carolina residents acct!ss to the I.egal/oom legal documt!nt service when they go to the website for these pre-paid plans. Additionally. will North Carolina residents be given access to the pre-paid plans from the documt!nl servict! pages?

Iht: COnll11 ittt:e voted to conti nue consideration of the LegalZoom Advantage Plus Plan and Business Advantage Pro Plan until the above referenced question is answen:d.

Pkast: respond to the Comm inet!' s concern within 30 days of the dute of this letter. I r you havt: any questions, fccl free to contact me.

Sincerely.

1 -L-

~ ,f)

\::,~)\,-,LA/",,-I I I. /J~0~

Fern (Junn Simeon Deputy Counsel

I·GS;!r

Katherine E. Jean, Counsel A. Root Edmonson. Fern Gunn Simeon, David R. Johnson, Jennilcr A. POrler, ,\t1argaret r. Cloutier,

?--:ichole P. McLaughlin, Carmen I10ymc Bannon, Urian P.O. Oten, Lcanor Bailey Hodge, \Villiam N. Farrell, Jr., Barry S. McNeill- Deputy Counsel Peter G. Bolac - Trust Account Compliance Counsel ~ EXHIBIT

~

~

~ 17

- j Til/1

::::l Ifzoom ,com

July 8,2011

VIA FEDEX

Fern Gunn Simeon, Deputy Counsel North Carolina State Bar Office of Counsel P.O. Bo)( 25908 Raleigh, NC 27611

RE: legalZoom Advantage Plan File No. lOPP04

Dear Ms. Simeon:

I write in response to your letter of April 28, 2011. In your letter, you state that "[tlhe committee wants to know if you intend to continue to give North Carolina residents access to the legalZoom legal document service when they go to the website for these pre-paid plans. Additionally, will North Carolina residents be given access to the pre-paid plan from the document service pages." The answers to these questions are both yes. legalZoom will market and sell its legal Advantage Plus and Business Advantage Pro plans (the "pre-paid plans") at www.legalzoom.com where its legal document service will remain available. Purchasers of many of the legal documents will have the option to include a purchase of the pre-paid plan.

Providing the pre-paid plans as a supplement to the legal document service provides a great benefit for consumers. The legalZoom document service is automated self-help. While all Americans, including residents of North Carolina, have the right to affordable and accessible legal protections, and the right to self-help services to help them accomplish their goals, some people need individualized advice from an attorney. That is where the pre-paid plans come in. The pre-paid plans provide access to locallylicensed attorneys to give legal advice when customers need it. LegalZoom has launched its pre-paid plans in 36 states without incident, and our goal is to provide coverage throughout the entire United States. Our customers appreciate the option to supplement their self-help resources with attorney advice.

Moreover, there is no legal basis to deny registration of the pre-paid plans based on the legal document service. Section .0301 of the North Carolina Regulations for Organizations Practicing law provides that "The North Carolina State Bar shall not approve or disapprove any prepaid legal services plan or render any legal opinion regarding any plan. The registration of any plan under these rules shall not be construed to indicate approval or disapproval of the plan." LegalZoom has provided al/ information required or requested for registration and is prepared to launch its pre-paid plans in North Carolina.

• 111,' EXHIBIT

18

Further, as we have discussed, the North Carolina State Bar Authorized Practice Committee has no grounds to object to the pre-paid plans based on the legal document services. While on May 5, 2008, the Committee issued its "Letter of Caution," legalZoom responded to the letter of Caution in detail, explaining that the Committee's 2003 conclusion was correct, and that its 2008 conclusion was based on mistaken assumptions about legalZoom's business practices and the applicable law. LegalZoom's North Carolina counsel, AP Carlton, also provided a legal opinion explaining that, under North Carolina law, the automated document preparation and filing service prOVided by legalZoom does not constitute the "organizing" of a corporation, and therefore is not the unauthorized practice of law. Because the Committee did not reply to legalZoom's June 2008 responses, or take any further action, legalZoom continued to provide its services in North Carolina, as it continues to do in each of the 50 states. By its terms, the letter of Caution did not prohibit any activity. Mr. Carlton confirms that he can find no authority for the prohibition of any LegalZoom activities. Rather, the Committee's letter of Caution is based only upon a finding of probable cause, is advisory in nature, and has been responded to by LegalZoom.

We look forward to the prompt registration of legalZoom's pre-paid plans.

Sincerely,

Kenneth Friedman

cc: AP Carlton

AP Carlton

From: Sent: To: Subject:

AP Carlton Wednesday, September 14, 20111:16 PM AP Carlton FW: LegalZoom

From: Anthony di Santi [mailto:[email protected]] Sent: Thursday, August 18, 2011 12:46 PM To: AP Carlton Cc: Tom Lunsford; Katherine Jean; David R. Johnson; Jim Fox; M. Keith Kapp ([email protected]); Bonnie Weyher Subject: LegalZoom

A.P.:

I am responding to the telephone message you left me today about your request for a meeting between the President of LegalZoom and the officers of the State Bar. After due consideration, the State Bar does not believe such a meeting would be productive at this time. I will provide a more detailed written response to your issues very soon. Thank you for your patience.

ASD

Anthony S. di Santi President The North Carolina State Bar 642 W. King Street PO Box 193 Boone, NC 28607 (828) 264-6126 Telephone (828) 264-7743 Telefax ad isa [email protected]

~ EXHIBIT ~

~ ; 19

CIRCUIT COURT OF COLE COUNTY, MISSOURI

TODD JANSON, GERALD T. ARDREY, ) CHAD M. FERRELL, and C & J ) REMODELING LLC, on behalf of ) themselves and on behalf of all others ) similarly situated, )

)

Plaintiffs, ) )

v. ) )

LEGALZOOM.COM, INC. ) ) )

Defendant. ) ) )

SERVE AT: United States Corporation ) Agents, Inc. ) 1521 Concord Pike#202 ) Wilmington, Delaware 19803 )

Jury Trial Demanded

AMENDED CLASS·ACTION PETITION

Plaintiffs Todd Janson, Gerald T. Ardrey, Chad M. Ferrell and C & J Remodeling, LLC,

on behalf of themselves and on behalf of all other similarly-situated consumers of

LegalZoom.Com, Inc. (flLegalZoom") by and through counsel, for their Amended Petition, state:

1. This action is brought by Plaintiffs against LegalZoom to recover for themselves

and for all others similarly situated ("the Plaintiffs' Class") all legal fees paid by Plaintiffs and

the Plaintiffs' Class to Legal Zoom. It is unlawful under Missouri law for LegalZoom to charge

and collect from its customers fees for the preparation of legal documents, and LegalZoom is

legally obligated to refund to the Plaintiffs and the Plaintiffs' Class all fees charged and collected

by LegalZoom on transactions within the State of Missouri, and in addition, to pay statutory

EXHIBIT

20

treble damages and costs, and all other damages to which Plaintiffs' and the Plaintiffs' Class are

entitled.

2. Plaintiffs Todd Janson, Gerald T. Ardrey, and Chad M. Farrell are individuals

residing in Missouri who were consumers of LegalZoom services.

3. Plaintiff C & J Remodeling LLC is a limited liability company organized and

existing under the laws of Missouri and was a consumer of LegalZoom services. Plaintiffs

Ardrey and Ferrell are the sole members of C & J Remodeling, LLC.

4. LegalZoom is a Delaware corporation that does business throughout Missouri and

in Cole County.

FACTS COMMON TO ALL COUNTS

5. Through its website, LegalZoom offers services that are normally provided by

lawyers. LegalZoom advertises throughout the United States, and in Missouri, using the internet,

television ads, and radio ads.

6. Through its advertisements, LegalZoom encourages customers to go to its web

site, www.legalzoom.com. where customers, for a fee, are offered a variety of customized legal

services, including, but not limited to the drafting of wills, trusts, powers of attorney, real-estate

deeds, deeds of trust, contracts, business-entity formation documents, intellectual property

filings, divorce pleadings, and other documents affecting secular rights (hereafter "legal

documents ").

7. LegalZoom holds itself out to the general public as a money-saving alternative to

lawyers. On its website, LegalZoom states:

Save time and money on common legal matters! Created by top attorneys, LegalZoom helps you create reliable legal documents from your home or office. Simply answer a few questions online

states:

and your documents will be prepared within 48 hours. * We even review your answers and guarantee your satisfaction.

8. Under the banner "about us" that appears on the LegalZoo::n website, LegalZoom

LegalZoom was founded by attorneys who have worked at some of the most prestigious law fmns in the country. We have used our expertise to simplify the law and make it accessible for everyone.

When we started practicing law, our friends and family members immediately asked us for help with common legal matters like drafting a will, incorporating a business or filing a small claims action. We found that while many people have legal needs, most of them don't want to spend the time, or the money (over $266 per hour), to see an attorney.

That's why we created LegalZoom -- to help you quickly and affordably create estate planning documents, start a business, register a trademark and more -- from the convenience of your home or office.

To make LegalZoom the best legal document service on the web, we assembled a team of legal experts, including retired judges and law school professors. All of our forms were developed by experienced attorneys, so you can be sure that our documents are dependable.

Most importantly, we are always thinking about you, our customer. Our satisfaction guarantee is second to none, and our helpful customer service representatives are available by phone.

Thank you for visiting LegalZoom. We look forward to helping you with your legal needs.

9. Once customers choose a document type, they complete an online questionnaire

that LegalZoom uses to generate a fmalJegal document.

10. Through its online questionnaire, LegalZoom obtains information from its

customers that it utilizes in the preparation of legal documents.

11. LegalZoom has been investigated by the North Carolina State Bar related to

complaints that it was practicing law without a license. In May 2008, the North Carolina State

Bar's Unauthorized Practice Committee summarized the charges and LegalZoom's business

model as follows:

Among the documents LegalZoom prepares or offers to prepare are articles of incorporation, wills, trusts, divorce pleadings, and deeds. LegalZoom represents that it prepares the articles of incorporation and 'customized bylaws and resolutions' for its business formation customers. The legal documents are prepared through LegalZoom's website where, once the customer purchases the service, the customer is presented a questionnaire that the customer completes online. LegalZoom transcribes the responses onto a form template that LegalZoom has determined appropriate for the customer's legal document and in a form or manner determined by LegalZoom or through software developed by or on behalf of LegalZoom. The customer is presented with a finished document that is represented to be legally sufficient for the customer's needs without review or edit and has [not] been approved by an attorney.

12. The Committee sent LegalZoom a cease-and-desist letter and finding there was no

doubt that LegalZoom's actions constitute the practice of law.

13. Plaintiff Janson saw one or more of LegalZoom's ads and decided to use its

services for a Last Will and Testament. Within a short time, Plaintiff Janson received a Will via

e-mail and regular U.S. Mail. Attached to his Will, Plaintiff Janson also received a letter from

LegalZoom giving him information about his "customized Last Will & Testament." (emphasis

added). In exchange for the preparation of his Will, LegalZoom charged and Plaintiff Janson

paid LegalZoom the sum of $121.95 for the preparation of his Will.

14. LegalZoom's transmittal documents give instructions to Plaintiff Janson about

how he can modify his Will. LegalZoom specifically advises Plaintiff Janson, "With LegalZoom,

if you return to revise your Will, we will automatically create a new will for you." (emphasis

A

added). LegalZoom informed Plaintiff Janson of the effect of "Payable Upon Death Accounts

and Joint Property" and how such designations would affect instructions Plaintiff left in his Will.

15. In January 2008, Plaintiffs Ardrey and Ferrell sought to form a Missouri limited

liability company. In late January 2008, Plaintiffs Ardrey and Ferrell contacted LegalZoom via

its website, LegalZoom.com. At the request of Plaintiffs Ardrey and Ferrell, LegalZoom

prepared the Articles of Organization of Plaintiff C & J Remodeling. In exchange for the

preparation of the entity-formation documents, LegalZoom charged and Plaintiffs Ardrey, Ferrell

and C & J Remodeling paid LegalZoom approximately $249.

16. LegalZoom is neither a duly licensed attorney nor a professional corporation,

limited liability company, or limited liability partnership authorized to engage in the practice of

law or do the law business in the state of Missouri.

17. Section 484.010.1, RSMo., provides that the "practice of law" is "the appearance

as an advocate in a representative capacity or the drawing of papers, pleadings or documents or

the performance of any act in such capacity in connection with proceedings pending or

prospective before any court of record, commissioner, referee or any body, board, committee or

commission constituted by law or having authority to settle controversies."

18. Section 484.010.2, RSMo., provides that the "law business" is "the advising or

counseling for a valuable consideration of any person, firm, association, or corporation as to any

secular law or the drawing or the procuring of or assisting in the drawing for a valuable

consideration of any paper, document or instrument affecting or relating to secular rights or the

doing of any act for a valuable consideration in a representative capacity, obtaining or tending to

obtain or securing or tending to secure for any person, fIrm, associati:m or corporation any

property or property rights whatsoever."

19. Section 484.020.1, RSMo, provides that, "No person shall engage in the practice

of law or do law business, as defined in section 484.010, or both, unless he shall have been duly

licensed therefor and while his license therefor is in full force and effect, nor shall any

association, partnership, limited liability company or corporation, except a professional

corporation organized pursuant to the provisions of chapter 356, RSMo, a limited liability

company organized and registered pursuant to the provisions of chapter 347, RSMo, or a limited

liability partnership organized or registered pursuant to the provisions of chapter 358, RSMo,

engage in the practice of the law or do law business as defined in section 484.010, or both."

20. Section 484.020.2, RSMo, provides that the criminal penalty for the unlawful

practice of law shall be a misdemeanor, and the civil penalty shall be that the perpetrator "shall

be subject to be sued for treble the amount which shall have been paid him or it for any service

rendered in violation hereof by the person, firm, association, partnership, limited liability

company, or corporation paying the same within two years from the date the same shall have

been paid.

21. As set forth in detail below, LegalZoom has engaged and continues to engage in

the unlawful practice of law in the State of Missouri, and is therefore subject to suit for treble the

amount of fees paid to it.

CLASS-ACTION ALLEGATIONS

22. Plaintiffs bring this action pursuant to Rule 52.08 of the Missouri Rules of Civil

Procedure and Section 407.025.2 RSMo. on behalf of themselves and the following proposed

Plaintiffs' Class: All persons or entities in the state of Missouri that paid fees to LegalZoom for

the preparation of legal documents from December 18, 2004 to the present.

23. The proposed Plaintiffs' Class consists of hundreds and possibly thousands of

individuals and/or entities and, therefore, is so numerous that joinder is impracticable.

24. Plaintiffs' claims are typical of the proposed Plaintiffs' Class because Plaintiffs

and all members of the proposed Plaintiffs' Class have sustained damages as a result of

LegalZoom drawing, procuring of, and/or assisting with the drafting of papers, documents, and

instruments affecting the secular rights of the Plaintiffs without first obtaining a license to

practice law in the state of Missouri.

25. There are numerous questions of law and fact common to the class that

predominate over any questions affecting only individual class members, including but not

limited to the following:

a. whether LegalZoom charged fees to Missouri customers for the preparation of

legal documents;

b. whether LegalZoom's preparation of legal documents fot a fee constitutes, the

practice of law or doing of the law business as those terms are used in Section 484.020.1, RSMo;

c. whether LegalZoom's preparation of legal documents for a fee is a deception and

unfair practice in connection with the sale of merchandise in trade or commerce, as those terms

are used and defined in the Missouri Merchandising Practices Act, Section 407.010 et seq.,

RSMo;

d. whether LegalZoom should be enjoined from continuing to operate its business in

the state of Missouri; and

e. whether LegalZoom acted with sufficient malice to justify the imposition of

punitive damages.

26. Plaintiffs will fairly and adequately represent and protect the interests of the

members of the class. Plaintiffs have no claims antagonistic to those of the class. Plaintiffs have

retained competent and experienced counsel in complex class actions, mass tort and complex

commercial litigation. Counsel is committed to the vigorous prosecution of this action.

27. The prosecution of separate actions by the Plaintiff and individual members of the

class against LegalZoom would create a risk of inconsistent or varying adjudications on the

common issues of law and fact related to this action.

28. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy. No unusual difficulties are anticipated in the management of

this case as a class action.

29. The expense and burden of litigation would substantially impair the ability of the

class members to pursue individual cases to protect their rights given the relatively small amount

of each individual claim. In the absence of a class action, LegalZoom will continue to improperly

and possibly illegally perform services for valuable consideration that are considered illegal

within the state of Missouri.

30. Class certification under Rule 52.08(b)(1) is appropriate because adjudications

with respect to individual members of the class would as a practical matter be dispositive of the

interests of other class members not parties to the adjudications.

31. Class certification under Rule 52.08(b )(2) is appropriate because LegalZoom has

acted or refused to act on grounds generally applicable to the class, thereby making appropriate

final injunctive relief or corresponding declaratory relief with respect to the class as a whole in

that LegalZoom has continued to carry on a business that is improper and possibly illegal in the

state of Missouri.

o

32. Class certification under Rule 52.08(b)(3) is appropriate because the common

issues of fact and law alleged herein are common to the class and predominate over any

questions affecting only individual members, thereby rendering the class action superior to all

other available methods for the fair and efficient adjudication of this conn·oversy.

33. Class certification is also appropriate pursuant to Missouri law because

LegalZoom has acted andlor refused to act on grounds generally applicable to Plaintiff and the

class, thereby warranting appropriate injunctive andlor declaratory relief.

COUNT I - UNLAWFUL PRACTICE OF LAW

34. Plaintiffs adopt by reference the allegations contained in paragraphs 1 through 33.

35. Plaintiffs paid LegalZoom for the preparation of legal documents through

LegalZoom's website at www.legalzoom.com.

36. LegalZoom is neither a duly licensed attorney nor a professional corporation,

limited liability company, or limited liability partnership authorized to engage in the practice of

law or do law business in the state of Missouri.

37. By accepting valuable consideration for the preparation of legal documents,

LegalZoom violated Missouri law in that it engaged in the unauthorized practice of law and

specifically carried on a "law business" as that term is defined in Missouri statutes. See,

§484.010.2 RSMo.

38. Pursuant to § 484.020.2 RSMo., a party that engages in the unauthorized practice

of law is liable for three times the fee paid as a penalty for the unlawful practice of law or the

doing of the law business.

{\

39. Plaintiffs and the Plaintiffs' Class are entitled to receive three times the amount of

the fees paid to LegalZoom for the preparation of legal documents for the period of December

18, 2007 to the present.

WHEREFORE, Plaintiffs Todd Janson, Gerald T. Ardrey, Chad M. Ferrell and C & J

Remodeling, LLC, individually, and on behalf of each member of the proposed Plaintiffs' Class,

pray the Court grant the following relief:

a. Enter an order certifying this action as a plaintiffs' class action, and appointing

the named Plaintiffs as representatives of the Plaintiffs' Class;

b. Enter an order appointing Banimus, Frickleton, Robertsoll & Gorny and Butsch

Simeri Fields LLC as co-lead counsel for the Plaintiffs' Class, and appointing Cook, Vetter,

Doerhoff & Landwehr, PC, Randal O. Barnes & Associates, and Steven E. Dyer as associate

counsel for the Plaintiffs' Class;

c. Enter judgment in favor of Plaintiffs and the Plaintiffs' Class, and against

LegalZoom, for actual damages in the sum of the fees charged to the Plaintiffs and each member

of the Plaintiffs' Class;

d. Enter judgment in favor of Plaintiffs and the members of the Plaintiffs' Class and

against LegalZoom, for treble damages in the sum of three times the fees charged to the named

Plaintiffs and each member of the Plaintiffs' Class within two years before the date of the filing

of the petition;

e. Enter judgment awarding counsel for the Plaintiffs' Class reasonable attorney fees

and directing all expenses of this action be paid by LegalZoom. and to require LegalZoom to pay

the costs and expenses of class notice and claim administration; and

1(\

f. Award the Plaintiffs' Class prejudgment interest, post-judgment interest, costs,

and any further and additional relief as to which it may be entitled.

COUNT II - MONEY HAD AND RECEIVED


41. LegalZoom received money intended to be used for the benefit of Plaintiffs

through the provision of legal services.

42. The money paid by Plaintiffs was not used for their benefit because LegalZoom is

not authorized to engage in the lawful practice of law in the State of Missouri.

43. LegalZoom has not returned the money to Plaintiffs.

44. Plaintiffs and all those similarly situated who paid LegalZoom for the preparation

of legal documents without proper authorization are entitled to have their money returned to

them.

WHEREFORE, Plaintiffs Todd Janson, Gerald T. Ardrey, Chad M. Ferrell and C & J

Remodeling, LLC, individually, and on behalf of each member of the proposed Plaintiffs' Class,

pray the Court grant the following relief:

a. Enter an order certifying this action as a plaintiffs' class action, and appointing


b. Enter an order appointing Bartimus, Frickleton, Robertson & Gorny and Butsch




1 1

c. Enter judgment in favor of Plaintiff and the members of the Plaintiffs' Class, and

against LegalZoom, for actual damages in the sum of the fees charged to the named Plaintiffs

and each member of the Plaintiffs' Class;

d. Enter judgment awarding counsel for the Plaintiffs' Class reasonable attorney fees

and directing all ex.penses of this action be paid by LegalZoom, and to require LegalZoom to pay


e. A ward the Plaintiffs' Class prejudgment interest, post-judgment interest, costs,

and any further and additional relief as to which it may be entitled.

COUNT III - MISSOURI MERCHANDISING PRACTICES ACT - MONEY DAMAGES

45. Plaintiffs adopt by reference the allegations contained in paragraphs I through 44.

46. The Missouri Merchandising Practices Act was enacted to prohibit and protect

persons from deceptive, fraudulent and unfair conduct.

47. The preparation and sale of legal documents constitutes a deception or unfair

practice in connection with the sale or advertisement of merchandise in trade or commerce

within the meaning of Chapter 407 RSMo. See § 407.010(4), RSMo.

48. LegalZoom violated the Missouri Merchandising Practices Act by falsely enticing

customers through representations about the legality and validity of the services they were

performing and accepting money in return from those customers. More specifically, LegalZoom

suggested that its customers did not need to consult a lawyer in order to receive a variety of legal

services and documents which LegalZoom provided when, in fact, Missouri law specifically

prohibits anyone other than a licensed attorney from accepting money in return for preparation of

legal documents. This conduct is a violation of § 407.020, RSMo.

,,,

49. The aforementioned violations of the Missouri Merchandising Practices Act,

Chapter 407 RSMo., have caused Plaintiffs substantial and ascertainable loss of money or

property and other damages.

50. Plaintiffs have been forced to hire attorneys to enforce their rights under the

Missouri Merchandising Practices Act.

51. LegalZoom's conduct in this case shows reckless disregard for its acts and is

outrageous in that it knowingly violates Missouri law by practices law without a license, which

subjects them to punitive damages.

WHEREFORE, Plaintiffs, individually, and on behalf of each member of the proposed

Plaintiffs' Class, pray the Court grant the following relief:

a. Enter an order certifying this action as a Plaintiffs' class action, and appointing






c. Enter judgment in favor of Plaintiff and the members of the Plaintiffs' Class, and

against LegalZoom for actual damages in the sum of the fees charged to the named Plaintiffs and

each member of the Plaintiffs' Class;

d. Enter judgment in favor of Plaintiffs and the members of the Plaintiffs' Class and

against LegalZoom for punitive damages in a sum sufficient to punish LegalZoom for its

misconduct and to deter it from such misconduct in the future;

1')

e. Enter judgment awarding counsel for the Plaintiffs' Class reasonable attorney fees

and directing all expenses of this action be paid by LegalZoom, and to require LegalZoom to pay


f. Enter judgment awarding Plaintiffs prejudgment interest, post-judgment interest,

costs, and any further and additional relief as to which they may be entitled.

COUNT IV MISSOURI MERCHANDISING PRACTICES ACT - INJUNCTIVE RELIEF


53. LegalZoom continues to charge class members and other Missouri consumers for

services which it is prohibited to perform.

54. The charging of money for services which are prohibited to be performed by

someone other than a licensed attorney is a violation of § 407.020, RSMo,

55. Section 407.025 RSMo permits the. Court to enter injunctive relief to stop

LegalZoom's violations of the law by requiring them to stop practicing law within the state of

Missouri without a valid license.

56. Unless enjoined from doing so, LegalZoom will continue to collect money from

Missouri consumers for a service that it is specifically prohibited from performing.

57. Plaintiffs have no adequate remedy at law for the conduct that has yet to occur in

that damages can only address fees that LegalZoom has already collected for the sale of its legal

advice and services but cannot address LegalZoom's ongoing collection of fees for its

engagement in the practice of law within the state of Missouri.

58. Plaintiffs have no adequate remedy at law to stop the collection of such fees.

1 ..t

59. Plaintiffs seek injunctive relief to relieve them and other Missouri consumers

from the ongoing burden of paying LegalZoom for services that it is prohibited from charging

under Missouri law.

WHEREFORE, Plaintiffs. individually, and on behalf of each member of the proposed

Plaintiffs' Class, pray the Court grant the following relief:

a. Enter an order certifying this action as a Plaintiffs' class action, and appointing



Simeri Fields LLC as co-lead counsel for the Plaintiffs' Class, and appointing Cook, Vetter;



c. Enter a permanent injunction against LegalZoom enjoining LegalZoom from

practicing law or doing the law business in the State of Missouri;

d. Enter judgment awarding counsel for the Plaintiffs' Class reasonable attorney fees

and directing all expenses of this action be paid by LegalZoom, and to require LegalZoom to pay


e. Enter judgment awarding the Plaintiffs' Class costs, and any further and

additional relief as to which they may be entitled.

Edward D. Robertson, Jr., # 27183 Mary Doerhoff Winter, # 38328 BARTIMUS, FRICKLETON, ROBERTSON & GORNY 715 Swifts Highway Jefferson City, MO 65109 Telephone: 573-659-4454 Facsimile: 573 659-4460 chiprob@ earthlink.net [email protected]

David T. Butsch, # 37539 James J. Simeri, #52506 BUTSCH SIMERI FIELDS LLC 231 S. Bemiston Ave., Ste. 260 Clayton, MO 63105 Telephone: 314-863-5700 Facsimile: 314-863-5711 [email protected] silleri @bsflawf11TI1.com

Matthew A. Clement, #43833 Karl A. Schulte, #57739 COOK, VETTER, DOERHOFF & LANDWEHR, PC 231 Madison Jefferson City, Missouri 65101 Telephone: 573-635-7977 Facsimile: 573-635-7414 [email protected] [email protected] [email protected]

and

Randall O. Barnes, #39884 RANDALL O. BARNES & ASSOCIATES 219 East Dunklin Street, Suite A Jefferson City, Missouri 65101 Telephone: 573-634-8884 Facsimile: 573-635-6291 [email protected]

Steven E. Dyer, #45397 LAW OFFICES OF STEVEN DYER 10850 Sunset Office Drive, Ste. 300 St. Louis, MO 63127 Telephone: 314-898-6715 jdcpamba@ gmail.com

Attorneys for Plaintiffs

North Carolina Lawyers Weekly

Legislature attacks unauthorized practice of law

by Paul Tharp, Staff Writer

Published: June 24th, 2011

isn't every day a new cause of action comes

along, but June 16 was one of them.

That was the day both chambers of the North Carolina Legislature voted unanimously to pass

Senate Bill 349, which provides a private cause of action to consumers who can show they were

harmed by the unauthorized practice of law.

As of press time, the bill had not been signed into law by Gov. Bev Perdue, but a spokesperson

for the governor said it is one of several bills the governor is considering.

Some attorneys say the legislation provides an opportunity for attorneys to prosecute claims on

behalf of aggrieved clients, particularly those involved in real estate transactions.

Fayetteville real estate attorney Holden Reaves said the legislation could provide a means for

lawyers to combat "the rampant unauthorized practice of law that we've seen in this state,

especially in the area of residential real estate closings."

But the language of the bill encompasses far more than residential real estate, Reaves said.

"It is much broader," he said. "Companies like LegalZoom who, in my opinion, are engaged in

the unauthorized practice of law by preparing wills and setting up corporations for citizens in this

state. may be subject to actions based on this new law."

And those actions could be prosecuted on a class-action scale, Reaves said.

"Definitely any time a new law creates a private cause of action, there is an opportunity for

litigation attorneys," Reaves said.

EXHIBIT

21

But LegalZoom vice president and general counsel Chas Rampenthal told Lawyers Weekly that

LegalZoom "does not practice law and has never been found to be engaged in the practice of law

in any jurisdiction, including North Carolina."

Reaves emphasized that the intent of the law was to protect consumers harmed by the

unauthorized practice of law.

In the past, only district attorneys could prosecute persons or entities that engaged in the

unauthorized practice of law. Now anyone damaged by UPL can bring a cause of action against

an unauthorized practitioner.

But, Rampenthal said, "Ifthe law is used to limit a North Carolina consumer's choice to use

online legal software and other affordable self-help methods to create their own legal documents,

then it will harm far more than it will benefit."

He said if LegalZoom is targeted "in an anti-competitive manner, we will use all available

resources to vigorously defend the right of North Carolina consumers to access legal software

and create their legal documents. Legal documents should be more than just a privilege for the

wealthy."

Clarification stripped

In its original form, the bill would have clarified that attorneys were the only people allowed to

handle real estate closings. (See "Lawyers' bill would wrest control of closings" in April 25

edition of Lawyers Weekly). That language, however, was stripped from the bill as a concession

to the North Carolina Bankers Association. The Bankers Association wanted to ensure that its

members - banks and lending institutions - preserved the ability to close their own loans in

limited circumstances.

Bankers Association Executive Vice President and Counsel Paul Stock said the law was already

clear that only attorneys could close real estate transactions, and clarifying that may have had the

unintended consequence of affecting the ability of banks and lenders to close loans.

"I've learned in my experience that when you clarify something, it often turns out that ditferent

parties have different opinions about what was clarified," Stock told Lawyers Weekly.

"The problem is if there is a difference of opinion as to what needs to be clarified, then whatever

is clarified is seen as changing existing law," Stock said.

[n the end, proponents of the bill made a decision not to clarify the law regarding who can

conduct real property closings and instead focused on putting teeth into the enforcement of the

unauthorized practice of law, Stock said.

"There is no question that there are scofflaws out there who are not doing what they are

supposed to be doing," Stock said. "We had no problem getting out of the way once we

determined that the legislation was not going to be a burden for our members:'

The Senate bill was ratified June 17 and presented to the governor on June 20.

Filling a void

Raleigh attorney Benjamin R. Kuhn said the new law tills a void. "Before this, there was no way

for a consumer to make a claim based on the unauthorized practice of law for damages and

attorney fees."

But attorneys themselves are not immune from potential actions under the new law.

"Anybody who aids or abets someone in the commission of the unauthorized practice of law is

subject to a private cause of action," Kuhn said.

That means if an attorney aids a non-lawyer in the unauthorized practice of law, the attorney

could face potential liability.

Kuhn said the provision allowing attorneys who handle UPl claims on behalf of consumers to

collect attorneys' fees may encourage litigators to represent consumers in cases with otherwise

limited damages potential.

"This is a sea change in that it allows effective remedies for consumers who are harmed by

illegal UPl services," Kuhn said.

But even consumers who are not harmed have a right under the new law to be repaid for services

provided by an unauthorized practitioner.

"Unauthorized practitioners are prohibited from earning a fee while engaging in conduct

prohibited by Chapter 84 (of the General Statutes)," Kuhn said. "If someone earns fees while

committing UPl, that person has to give the fees back to the consumer."

Kuhn also noted that the law requires settlement agents who handle closing funds to pay interest

generated from escrow accounts to rOl TA, a non-profit program administered by the State Bar

"for the purpose of funding grants to providers of civil legal services for the indigent and to

programs that further the administration of justice," according to the program's website.

Attorneys are required by rule to remit all interest earned on client trust accounts to IOl T A.

"~ow any non-attorney who handles closings and earns interest on a trust account has to give the

interest to tOl TA," Kuhn said. That takes away the temptation to skim money from trust

accounts, he said.

Attorneys need to add value

Wilmington attorney 1. Keith Calder told Lawyers Weekly he hasn't put the new private cause of action arrow in his quiver, "But I intend to do so."

He said he continues to be dismayed and disheartened by the degradation of the real property practice in North Carolina "not only by laypeople but by attorneys who choose to take shortcuts and do not necessarily add value at the closing table or are even at the closing table."

Calder said the practice could be improved by attacking the unauthorized practice of law - by going after non-attorneys who are engaging in UPL and attorneys who are aiding and abetting UPL - but he also said that attorneys need to encourage and plead with their peers "to strive to

add value at the closing table."

Mentorship of younger, less experienced attorneys is just as important as litigating against those who are seen as degrading the real property practice, Calder said.

"Old school attorneys need to continue to reach out and mentor younger attorneys who may not have had an opportunity to be mentored or who have chosen a path that maybe they thought was the right path, but who may have been misinformed," Calder said. "Local attorneys I've mentored have given more back to me than I could ever have given them, and that's the reward every teacher gets."

Not far enough

Kannapolis attorney Clinton Forbis, who regrets the weakening of the bill's original intent to clarify that only attorneys can conduct real estate closings, said the bill does not go far enough to

protect consumers.

"That would have put settlement shops out of business," Forbis said (See "Lawyers left out: Settlement shops drive dirt lawyers out, costs and claims for consumers up" in 1 une 14, 20 10 edition of Lawyers Weekly). "We ended up getting a much watered down version, but this is a

good first step."

So-called settlement shops are real estate title and closing agencies that attorneys say skirt North Carolina law regarding the involvement of attorneys in real property closings.

Forbis said he thinks settlement shops are going to continue to find end runs around the law and continue to do business in some fashion, whether by flouting the law entirely or employing an attorney to sign off on title abstracts and reports.

If the legislation was the first step, "I think the second step would be a lawsuit that we can get

before the Court of Appeals or Supreme Court that gives the appellate court the basis to finally rule in unequivocal language that a closing is the practice of law, and there are no 'ifs,' 'ands' or 'buts' about the fact that closings have to be done by attorneys."

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Settlement Reached in Mo. Suit Against LegalZoom Chris Blank

The Associated Press

08-24-20 II

A possible agreement has been reached to settle a $5 million lawsuit against a vendor for online legal documents before the start of a trial scheduled to begin Monday in federal court in Missouri.

The class-action lawsuit claims California-based LegalZoom.com is not licensed to provide legal services in Missouri and is seeking reimbursement of three times what customers paid for the documents. It was filed by a Missouri resident who used LegalZoom to prepare a will, two others who used the service to organize a remodeling business and the business C&J Remodeling.

LegalZoom was created about a decade ago and provides legal documents such as wills, trademarks, and incorporation paperwork that are designed for the laws in each state. Customers answer questions online and the documents are created with computer software.

LegalZoom released a statement Monday saying a proposed settlement contains no admission of wrongdoing and would allow it to continue offering services in Missouri with certain changes to its business practices. The company said the terms were being negotiated and would be released after they've been approved by everyone involved in the case.

The company said the plaintiffs never asserted that the documents they purchased were defective. The firm said it continues to dispute the basis for the lawsuit, but the pending agreement would avoid a costly trial.

An attorney for the plaintiffs declined to discuss details of the proposed settlement with The Associated Press on Monday, but said the agreement involved compensation for Missouri

EXHIBIT

22

consumers who have used LegalZoom and would include changes to the company's business practices.

Online federal court records show that the parties involved in the lawsuit indicated during a teleconference on Aug. 12 that a possible agreement had been reached. The plaintiffs are to file a motion for preliminary approval of the settlement by Sept. 23, but those court records do not offer additional details about the terms of the possible agreement.

LegalZoom has said it offers people who want to represent themselves in legal issues an important tool by providing legal documents over the internet. Attorneys for the plaintiffs have said those legal documents do not address every aspect of state law and customers do not have any recourse if the documents are faulty.

LegalZoom is among the best known of an increasing number of companies that offer similar assistance. The business practices of LegalZoom have been challenged elsewhere, including in Alabama and North Carolina.

Copyright 2011 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

Copyright 20 II. ALM Media Properties, LLC. All rights reserved.

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