legalzoom.com, Inc. v. N.C. State Bar

LegalZoom.com, Inc. v. N.C. State Bar, 2015 NCBC 96.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY 11 CVS 15111

LEGALZOOM.COM, INC., )
)
Plaintiff, )
)
v. ) CONSENT JUDGMENT
)
NORTH CAROLINA STATE BAR, )
)
Defendant. )

THIS MATTER is before the Court on the parties’ joint request for entry of a consent
judgment. The Complaint in this action was filed by the Plaintiff LegalZoom.com, Inc.
(LegalZoom) against the Defendant The North Carolina State Bar (the State Bar) asserting the
right to provide its internet-based document services to consumers in North Carolina. The State
Bar filed a Counterclaim asserting that LegalZoom’s document services constitute the practice of
law as defined in Chapter 84 of the North Carolina General Statutes. LegalZoom and the State
Bar desire to settle all claims and issues raised in this action and, for that purpose, agree to the
continuing jurisdiction of this Court over them and over the subject matter of this action, and
waive the entry of findings of fact and conclusions of law. As evidenced by the signatures below
of counsel of record, the parties have settled the dispute and have agreed to the disposition of this
action by entry of this agreed Consent Judgment and to comply with the following terms:
1. The parties agree that the definition of the “practice of law" as set forth in
N.C.G.S. § 84-2.1 does not encompass LegalZoom’s operation of a website that offers
consumers access to interactive software that generates a legal document based on the
consumer’s answers to questions presented by the software so long as LegalZoom complies with
the provisions of Paragraph 2 below.
2. LegalZoom agrees that it must continue to ensure, for the shorter of a period of
two (2) years after the entry of this Consent Judgment or the enactment of legislation in North
Carolina revising the statutory definition of the “practice of law”, that:
(a) LegalZoom 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 a purchase of that document;
(b) An attorney licensed to practice law 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.
3. The parties have agreed to mutually support and use best efforts to obtain passage
by the North Carolina General Assembly of HB 436 in the form currently pending before the
House Judiciary Committee.
4. The Court will retain jurisdiction over this action for the purpose of ensuring
compliance and enforcing the provisions of this Consent Judgment for two (2) years from this
date. The parties may choose to extend the terms of this Consent Judgment by mutual
agreement. The Court’s jurisdiction may be terminated earlier upon joint notification by the
parties that the General Assembly has passed legislation which covers the matters addressed
herein. If no such legislation is passed, and if the parties do not jointly request that the terms of
this Consent Judgment be extended, the terms of this Consent Judgment shall terminate two (2)
years from this date and the parties will no longer be bound by any of the terms of this Consent
Judgment. Upon such termination of this Consent Judgment at the end of the two year period, the
parties shall be deemed to have preserved each of its claims and defenses in the present case and
shall not be deemed to have waived any of its arguments under the statute defining the practice
of law.
5. Upon entry of this Consent Judgment, LegalZoom may request registration of its
modified pre-paid legal services plans submitted to the State Bar for registration without
additional filing or registration fees. Upon registration of the modified plans by the State Bar,
LegalZoom shall, within ten (10) business days, file a Notice of Dismissal of the pending Federal
Court case, LegalZoom.com, Inc. v. North Carolina State Bar, et al., (No. 1:15-CV-439,
M.D.N.C.), without prejudice as to the State Bar and as to “official capacity” claims against the
individual defendants, and with prejudice as to “individual capacity” claims against the
individual defendants. The Notice of Dismissal shall reflect that each party bears its own
attorneys’ fees and costs. Also, within ten (10) business days of entry of this Consent Judgment,
LegalZoom shall file a voluntary dismissal without prejudice in LegalZoom.com, Inc. v. North
Carolina State Bar (No. 13 CVS 13755, Wake County).
6. Nothing in this Consent Judgment is intended or may be construed as an
admission by either party or constitute a finding or judgment by the Court that either party has
violated any statute, regulation, common law, or other legal obligation.
7. The parties must provide notice and a 30-day cure period and negotiate in good
faith to resolve any dispute relating to the interpretation or implementation of this Consent
Judgment before bringing any matter to the Court's attention for resolution, including but not
limited to any claim that the other party has violated or failed to comply with any term of this
Consent Judgment.
8. The parties to this action and no one else shall have standing to seek construction
or enforcement of this Consent Judgment. At the request of either party, after providing the
parties with notice and hearing, and upon entering written findings after hearing, the Court may
grant declaratory and all other relief necessary to construe or enforce this Consent Judgment.
9. This Consent Judgment embodies in full the terms of the agreement and
understanding between the parties related to the subject matter of this action and this Consent
Judgment.
10. The parties shall bear their own costs and expenses in this matter, including
attorneys’ fees.
SO ORDERED, this the 22nd day of October, 2015.

/s/ James L. Gale l
Hon. James L. Gale
Chief Special Superior Court Judge
for Complex Business Cases

CONSENTED TO AND AGREED:

/s/ R. Daniel Boyce /s/ Alfred P. Carlton, Jr.
R. Daniel Boyce Alfred P. Carlton, Jr.
Thomas J. Ludlam CARLTON LAW GROUP PLLC
NEXSEN PRUET, PLLC Counsel for LegalZoom.com, Inc.
Counsel for LegalZoom.com, Inc.

/s/ Peter D. Kennedy
Peter D. Kennedy
GRAVES DOUGHERTY HEARON
& MOODY, P.C.
Counsel for LegalZoom.com, Inc.

/s/ Alan W. Duncan ROY COOPER
Alan W. Duncan Attorney General of the State of North Carolina
Allison Van Laningham Mullins
Stephen M. Russell, Jr. By: /s/ I. Faison Hicks
MULLINS DUNCAN HARRELL I. Faison Hicks
& RUSSELL PLLC Special Deputy Attorney General
Counsel for the North Carolina State Bar North Carolina Department of Justice
Counsel for the North Carolina State Bar