LegalZoom Cannot Legally Practice Law in New Jersey, Class Action Lawsuit Claims

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A proposed class action lawsuit claims LegalZoom.com is not a true “professional service corporation” under New Jersey law and thus has no authority to practice law in the state.

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The 10-page LegalZoom lawsuit says the legal services provider is a limited liability company under New Jersey’s Professional Service Corporation Act and cannot be considered a professional service corporation given that its owners include non-lawyers, which is prohibited by state law.

The suit summarizes that LegalZoom.com, though not a professional service corporation, nevertheless provides legal services, including compliance-related document filing and “other functions that meet the definition of the practice of law.”

The plaintiff, a New Jersey resident, shares that he bought from LegalZoom in 2018 a package that included business tax preparation, a “corporate kit,” a company minutes manager, annual reports, attorney consultations, access to a legal forms library, a compliance calendar, and other legal products and services. 

The filing states that LegalZoom, pursuant to its agreements with the plaintiff and other clients, has “engaged in the practice of law” by providing legal advice and services, ranging from preparing and filing legal documents to managing compliance disclosures, among others.

“LegalZoom directed the legal efforts associated with annual regulatory reporting for Plaintiff,” the proposed class action states. “LegalZoom has no right to provide legal services as a corporation or limited liability company.”

The New Jersey Professional Service Corporation Act is a state law that sets regulations for business entities consisting entirely of certified specialists who provide personal services for clients. Licensed professional service corporations in New Jersey can include public accountants, engineers, architects, physical therapists, legal professionals and physicians, among others. 

The LegalZoom lawsuit looks to cover all persons who had or have a New Jersey address and purchased any services or products from LegalZoom within the last six years.

The case also looks to represent all New Jersey residents who paid any money as a result of LegalZoom’s “engaging in the unauthorized practice of law.”

According to the lawsuit, the proposed class and subclass each consist of “hundreds if not thousands of persons.”

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