## Facts

- LegalZoom.com, Inc. operated a website offering consumers interactive software that generates legal documents based on user-provided answers.
- The North Carolina State Bar, through its regulatory authority over unauthorized practice of law (UPL), examined whether LegalZoom’s services constituted the “practice of law” under North Carolina law.
- LegalZoom filed an action in North Carolina state court seeking a declaration that its online document-generation model did not constitute the practice of law and could be offered to North Carolina consumers.
- The State Bar asserted a counterclaim alleging that LegalZoom’s activities constituted the practice of law under Chapter 84 and therefore amounted to unauthorized practice.
- After extended dispute, the parties settled and jointly requested entry of a consent judgment; they waived findings of fact and conclusions of law.
- The consent judgment permitted LegalZoom to operate in North Carolina under specified conditions aimed at consumer protection and transparency, and the court retained jurisdiction to enforce the judgment.

## Issues

1. Whether operating a website that uses interactive software to generate legal documents for consumers constitutes the “practice of law” under N.C. Gen. Stat. § 84-2.1.
2. Whether, and under what conditions, LegalZoom could continue providing its internet-based document services in North Carolina without engaging in unauthorized practice of law.

## Decision

- The court entered an agreed consent judgment resolving the action without adjudicated findings or legal conclusions.
- The parties agreed that the statutory definition of the “practice of law” in N.C. Gen. Stat. § 84-2.1 did not include LegalZoom’s operation of its interactive document-generation website, provided LegalZoom complied with specified conditions.
- The judgment imposed consumer-facing requirements, including:
  - a mechanism allowing consumers to preview blank templates or completed documents before purchase;
  - review of each template by an attorney licensed in North Carolina, with reviewer identifying information maintained and available upon request;
  - disclosures that the forms are not a substitute for an attorney’s advice or services; and
  - disclosures of LegalZoom’s legal name and physical location/address.
- The judgment contemplated a limited period during which LegalZoom would ensure compliance (tied to a two-year period or earlier legislative revision of the definition of practice of law).
- The court retained continuing jurisdiction over the parties and subject matter for enforcement.

## Legal Principles

- A consent judgment may resolve a UPL dispute by defining, by agreement and decree, conditions under which specified conduct will not be treated as the “practice of law” for purposes of the action.
- Under the judgment, interactive software that generates documents from consumer inputs was treated as outside N.C. Gen. Stat. § 84-2.1 so long as consumer-protection and transparency conditions were satisfied.
- Courts may retain continuing jurisdiction to enforce compliance with conditions set out in a consent judgment resolving regulatory disputes.

## Conclusion

The action ended in a consent judgment allowing LegalZoom’s interactive document-generation service to operate in North Carolina on the parties’ agreement that it was not the statutory “practice of law,” contingent on specified consumer-protection and disclosure requirements and enforceable through the court’s continuing jurisdiction.


LegalZoom.com, Inc. v. N.C. State Bar, No. 11 CVS 15111, 2015 NCBC 96 (N.C. Bus. Ct. Oct. 22, 2015)