Customers who claim LegalZoom’s document-preparation services amount to the unauthorized practice of law won’t be able to take their case before a judge.

Customers who claim LegalZoom’s document-preparation
services amount to the unauthorized practice of law won’t be able to take their
case before a judge.

The Arkansas Supreme Court ruled earlier this month that a
mandatory arbitration clause in LegalZoom’s customer agreement must be
enforced, the ABA/BNA Lawyers’ Manual on Professional Conduct reports. The
ruling (PDF) reverses a judge’s decision that arbitration would encroach on
“the exclusive jurisdiction of the state courts to determine whether or not
something constitutes unauthorized practice of law.”

LegalZoom’s troubles may not be over, however. Although the
court ruled for LegalZoom on its bid to compel arbitration, “the arbitration
clause does not usurp the regulatory authority of our Committee on the
Unauthorized Practice of Law,” the court said.

“Given that the circumstances of this case involve
allegations of the unauthorized practice of law, we hereby direct the clerk to
forward a copy of this opinion to the Arkansas Supreme Court Committee on the
Unauthorized Practice of Law.”

The class action suit was filed in January 2012 by Jonathan
McIllwain, who paid $98.95 for a last will and testament. He claimed the
company’s unauthorized practice of law amounted to a violation of the state’s
deceptive trade practices law, and the company was unjustly enriched by
charging for conduct that is “per se illegal.”

LegalZoom has faced similar class actions in other states;
some are still pending, the ABA/BNA story says.

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