North Carolina legislates that providing blank legal documents is not the practice of law but builds in consumer protection

On June 30, 2016, Ch. SL 2016-60, an amendment was added to modify North Carolina’s definition of “practice of law” (§ 84-2.2) in order to allow website providers – such as Legal Zoom – to offer interactive legal documents based on consumers’ answers to legal questions. Now the “practice of law” does not include websites offering this type of service, provided that (among other requirements):

  • a licensed North Carolina attorney reviews the blank document;
  • providers communicate that the documents are not a substitute for the advice of an attorney;
  • providers do not disclaim any warranties or liability, and do not limit the recovery of damages or other remedies by the consumer;
  • providers do not require consumers to agree to jurisdiction in any state other than North Carolina for the resolution of disputes;
  • there is a consumer satisfaction process in place. All consumers’ concerns involving the unauthorized practice of law made to the provider shall be referred to the North Carolina State Bar.
  • The web site providers subject to this section shall register with the North Carolina State Bar.

My takeaway: despite their claim that they are not practicing law, providers like Legal Zoom operate in competition with lawyers. However, unlike lawyers, who cannot disclaim or limit their liability, providers of legal documents  do routinely use  disclaimers or limitations of liabilities in their contracts. NC approach of allowing these providers to operate but requiring them to give warnings and prohibiting disclaimers and limitation of liability, is sound. Not only these providers are put in a position similar to lawyers (so re-balancing a possible unfair competition on their side) but — more importantly – consumers receive protection.

Courts in other jurisdictions faced with the issue of whether to enforce the limitations of liability contained in providers’  conditions could rely on NC legislation as a basis for invalidating providers’ limitations of liability on public policy ground. Those limitation of liability, in fact, prejudice consumers and should be enforceable.

House Bill 436 is available at…        Open Pdf

For more information, Nathan M. Crystal

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