LegalZoom Gives the Bar a Toothy Grin and a $10.5M Complaint

By Annie Dike, Esq.

You pull the backing off.  You place the strip on your teeth.  It tastes awful and you have to slurp a lot, but it’s just thirty minutes, twice a day for a week, then your teeth are magically restored to their previously pearly white condition.  It’s fantastic.  Why didn’t they start selling tooth-whitening strips sooner?  Because dentists fought like hell to stop them, that’s why.  High-paid professionals never like cheap, low-end competition.  It’s bad for business.  Many state bars have fought to keep consumer-centered legal service providers─such as LegalZoom─out for the same reason.  But, if the magic strips are any indication: times they are a-changin’.  Tooth whitening to will writing, the trend seems to be shifting toward over-the-counter, or should I say, over-the-computer products and services.

There was a time when tooth whitening was a luxury you could only have done at the dentist’s office.  When the wondrous little no-dentist-needed strips first came out, dentists claimed they constituted the unlicensed practice of dentistry, which is a criminal act.  Gasp.  With this righteous reasoning in hand, the North Carolina Board of Dental Examiners took steps to drive tooth whitening products out of the state, an action that quickly brought them before the Supreme Court to face allegations from the Federal Trade Commission for anticompetitive and unfair methods of competition.  Now, what does this squabble over tooth whitening have to do with will writing?  In the legal realm, LegalZoom is the less expensive, over-the-counter product and it, rightfully, saw a similarity between the North Carolina State Bar’s refusal to register LegalZoom as a legal-services provider with the state and that of the Dental Board in trying to push non-dentist tooth whiteners out of the market.

LegalZoom and the North Carolina Bar have been waging a fairly quiet battle for quite some time over the Bar’s claim that LegalZoom’s fill-in-the-blank, online template legal services qualified as the unauthorized practice of law.  As the organization that licenses and disciplines attorneys statewide, the Bar has repeatedly investigated LegalZoom for violating its prohibition on the unauthorized practice of law.  After clearing LegalZoom of such charges in 2003, the Bar launched another investigation in 2007 and issued a cease-and-desist letter to LegalZoom in 2008 claiming it was operating illegally in the state.  Seeing a kinship between the efforts of the Dental Board and the state Bar in their attempt at squelching non-professional competition, LegalZoom fanned the flame of the raging tooth whitening war in hopes of achieving an outcome that would serve as favorable precedent in its own crusade against the state Bar.

LegalZoom filed an amicus brief with the Supreme Court in the tooth whitening case attacking the risks professional licensing boards─packed with active, vested members of the same profession─pose to the free market.  “What constitutes the UPL [unauthorized practice of law] is notoriously poorly defined, often treated on a case-by-case basis, leaving state bars with broad discretion to choose targets for enforcement,” claimed LegalZoom in its brief to the Supreme Court.  LegalZoom’s position must have resonated with Justice Anthony Kennedy, who wrote the majority opinion, because SCOTUS found the Dental Board’s efforts to squelch the non-dentist tooth whiteners qualified as unlawful anticompetitive activity.  Cheers must have erupted at the LegalZoom headquarters when the opinion was released, because LegalZoom promptly filed an antitrust action against the North Carolina State Bar to the tune of $10.5 million, claiming the Bar’s refusal to register LegalZoom’s prepaid legal services in the state similarly constituted an anticompetitive and unfair trade practice.

While the unauthorized practice of any profession─law, dentistry, medicine, taxidermy─still, and will likely always be, prohibited, how “the practice” is defined precisely will be the key issue.  Expert testimony will be needed from professionals active in the practice to clearly define these parameters.  Lawyers to dentists, doctors to taxidermists, IMS ExpertServices finds the experts you need.  But, this antitrust angle in the legal services realm has certainly piqued our curiosity.  What do you think?  Should non-professional consumer-driven legal service providers be afforded fair game in the legal registry?  Even if you sense a twinge of unfair competition, do you sympathize with the North Carolina State Bar’s plight?  Do you feel will writing and tooth whitening should be undertaken only in the office of a licensed professional or are you okay with the thirty-minute OTC version?

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Annie Dike, Esq.

As a former trial and litigation attorney, Annie Dike has a keen eye for expert evidentiary issues and a clear voice for practical solutions.  Annie is a published author of both fiction, non-fiction, and a comprehensive legal practitioner's guide to hourly billing published by LexisNexis. Annie graduated from the University of Alabama School of Law cum laude.  While in law school, she served as Vice President of both the Bench and Bar Legal Honor Society and the Farrah Law Society and was a member of the Alabama Trial Advocacy Competition Team as well as Lead Articles Editor of The Journal of the Legal Profession.  Ms. Dike has published articles in The Alabama Lawyer and DRI MedLaw Update and has spoken on numerous legal issues at various conferences nationwide.

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