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Real Estate Lawyers respond to bar, LegalZoom settlement

Editor’s note: The following was submitted in response to the announcement of a consent judgment entered into by the North Carolina State Bar and LegalZoom following litigation between the parties regarding whether LegalZoom’s activities constitute  the unauthorized practice of law.

Dear Reader:

In a press release issued on October 23, 2015, the North Carolina State Bar stated it had entered into a Consent Judgment in its litigation with LegalZoom, pending in Wake County Superior Court.  The press release states, inter alia, that:

“Under the Consent Judgment, for two years or such shorter time as may elapse until the enactment of legislation revising the statutory definition of the practice of law, Legal Zoom has agreed to abide by the following consumer protection measures in its dealing with North Carolina consumers:

(a)   Legal Zoom shall provide to any consumer purchasing a North Carolina product (a North Carolina Consumer) a means to see the blank template or the final, completed document before finalizing the purchase of that document;

(b)   Any attorney licensed to practice in the State of North Carolina has reviewed each blank template offered to North Carolina Consumers, including each and every potential part thereof that may appear in the completed document.  The name and address of each reviewing attorney must be kept on file by LegalZoom and provided to the North Carolina Consumer upon written request;

(c)    LegalZoom must communicate to the North Carolina Consumer that the forms or templates are not a substitute for the advice or services of an attorney;

(d)   LegalZoom discloses its legal name and physical location and address to the North Carolina Consumer;

(e)   LegalZoom does not disclaim any warranties or liability and does not limit the recovery of damages or other remedies by the North Carolina Consumer; and

(f)     LegalZoom does not require any North Carolina Consumer to agree to jurisdiction or venue in any state other than North Carolina for the resolution of disputes between LegalZoom and the North Carolina Consumer.

The State Bar and LegalZoom have also agreed to work to obtain passage in the North Carolina General Assembly of House Bill 436, currently pending in House Judiciary Committee I.  If the General Assembly has not modified the definition of the practice of law as contemplated by HB 436 at the end of two years, the parties can agree to seek extension of the Consent Judgment or can resume the litigation.”

HB 436 is opposed by those of us who are most familiar with the new internet practices which this legislation attempts to address.

In particular, we note that a letter dated September 25, 2015, was delivered on behalf of the State Bar (signed by a past president) to all House members in the General Assembly during the most recent legislative session, stating that the State Bar and the North Carolina Bar Association supported the legislation.  While the leadership of these organizations seems to support this bill, we believe their support in no way reflects the sentiments of the vast body of North Carolina’s attorneys.  Let me assure you that there has been no general discussion of this bill among the 28,000 licensed attorneys in this state, nor has there been any among the 20,000 members of the voluntary North Carolina Bar Association, as was suggested in the September 25 letter.  And yet, the letter our legislators received would have them believe that there is broad support for this bill across the legal community.

The proposed HB436 promises fundamentally to alter the manner in which legal services have been provided in North Carolina from its beginning.  It is NOT a consumer friendly bill.  We believe that much of the attorney-client foundation on which our system rests will be destroyed if this bill goes forward.

In particular, the State Bar press release recites several means in which North Carolinians would continue to be safeguarded by this bill.  We strongly disagree point by point:

  1. The fact that a consumer is allowed to view an on-line legal document is essentially meaningless as a protective device.  An on-line provider is not selling vegetable seed or hardware.  They are selling documents which determine the disposition of the most important assets a consumer may own;
  2. The review of “templates” by a licensed North Carolina attorney does nothing to guaranty recourse for a user of a “template” which later proved to produce an ineffective document;
  3. There is no assurance that naming a “template-approving” attorney has the effect of creating an attorney-client relationship with an eventual user of the product.  In fact, we would argue just the opposite;
  4. Advising a consumer who has just paid for a document that he may nonetheless yet want to consult an attorney will have little or no protective effect for a consumer, while it very well MAY protect the internet template provider from liability.

No doubt it is true that the times are changing. But just because a California company believes that we in North Carolina should “get with it” is no reason for us to jump when they call.  And just because that company is litigating in North Carolina to get their way is no reason for us to roll over for them.

Yes, we in RELANC would agree that legislation could be designed to address some of the issues presented by new technologies.  There is so much to be discussed before we take steps to revolutionize the delivery of legal services in North Carolina.  This is NOT the product of that sort of discussion and seems more designed to end litigation than to better protect the citizens of North Carolina.  For all of these reasons, we therefore urge you to join RELANC in opposing this particular effort to revolutionize the provision of legal services to North Carolinians.

Yours truly,

Alan E. Ferguson, Chairman

Real Estate Lawyers of North Carolina

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