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©2019 by Richard S. Granat

  • Richard Granat

Online Legal Document Providers - Bar Plans To Regulate


Online legal document providers would be regulated under a resolution proposed by the New York State Bar Association and the New York County Lawyers Association to the American Bar Association for approval at its Annual Meeting in Chicago this August.

The proposal was submitted without providing an opportunity for comment and review by interested parties and other ABA entities.

An annotated version of the Resolution can be found here, which discusses in detail the most objectionable aspects of the proposed regulation.

Under the guise of consumer protection, the proposed resolution creates major barriers to innovation and would be the death knell of the online legal document provider industry if passed by state entities responsible for enforcing these regulations.

One requirement alone—that online legal document software cannot be licensed or sold with an “as is” warranty—would kill off innovative efforts to create new legal software applications.

No software publisher licenses its software without an “as is” warranty as the liability insurance costs would be excessive.

First Amendment Protection for Software Publications

The proposed regulation is over-reaching and arguably unconstitutional.

Self-help legal software and on-line legal document software sold or licensed directly to consumers for their use is akin to a publication and arguably is protected speech under the First Amendment. The arguments for protecting self-help legal software from prior restraint are summarized in a pair of articles by Marc Lauritsen that appear here: Liberty, Justice, and Legal Automata, 88 Chi-Kent L. Rev. 917 (2013) and Are We Free to Code the Law? - August 2013 Communications of the Association for Computing Machinery.

Lauritsen argues that legal software applications, including online legal document software, dynamic legal information tools, and expert system web advisors, are computer code and therefore “text” and entitled to First Amendment free speech protections. The “speech" contained in online legal documents is not “commercial speech”, it is “speech”, like a song, a video game, a book, an interactive book, or a static legal form, and deserves First Amendment protection.

The Internet is changing how many goods and services are delivered, and consumers benefit from the increased choices, increased convenience, and decreased costs that the Internet can deliver. Yet overly-broad restrictions on developing self-help legal software impair the growth of e-commerce by (1) prohibiting or increasing the costs of electronic provision of forms or other legal self-help computer programs, (2) restricting the ability of providers to experiment and develop new forms of Internet services touching on legal matters that could benefit consumers directly, and (3) stopping or impeding the flow of investment capital into startups in this emerging industry.

Legal software applications, including online legal document applications, are alternatives to expensive legal services, and must have strong disclaimers that using these applications is not a substitute for consultation with an attorney, but reasonable disclosure requirements should not be expanded to create major obstacles to the ability of providers to operate without fear of lawsuits from the organized bar.

Online legal document applications provide a “good enough” solution for millions of consumers seeking a low-cost way to access the legal system and solve their problems. It would be a step backwards for the organized bar to prevent the development of software-based solutions to legal problems.

Federal Trade Commission and U.S. Department of Justice Position

In addressing similar regulations proposed by the North Carolina Bar, The U.S. Justice Department (DOJ) and the Federal Trade Commission (FTC) submitted a joint statement (.pdf) to the North Carolina urging lawmakers to consider the benefits of online legal documents. In its letter to the North Carolina legislature, the DOJ and the FTC stressed that:

“The Division and FTC staff believe that ‘the practice of law’ should mean activities for which specialized legal knowledge and training is demonstrably necessary to protect consumers and an attorney-client relationship is present. Over broad scope-of-practice and unauthorized-practice-of-law policies can restrict competition between licensed attorneys and non-attorney providers of legal services, increasing the prices consumers must pay for legal services, and reducing consumers’ choices.”

The Agencies also emphasized:

“Such interactive software products may raise legitimate consumer protection issues. The Agencies recommend that any consumer protections, such as requiring disclosures, be narrowly tailored to avoid unnecessarily inhibiting competition and new ways of delivering legal services that may benefit consumers.”

Over-regulation of online legal document providers by the organized bar will impose a chill on innovation and will harm the reputation of lawyers and the legal profession. Access to the legal system is too important a principle to let the legal profession regulate itself.

#accesstojustice #softwarepoweredlegalservice