Tennessee Plans to Regulate Online Legal Software Publishers
How is it that a publisher that sells or distributes online legal software for consumers is now considered the "practice of law" in the State of Tennessee? Under a new regulatory scheme to be adopted by the Tennessee legislature, the publisher of a website that offers interactive legal forms to consumers will be considered the practice of law, unless the publisher complies with the requirements of the proposed statute. Non-compliance means the publisher is "subject to penalties for the unauthorized practice of law." These penalties include a $10,000 civil fine and a violation could be a Class A misdemeanor.
This legislation will have a chilling effect on innovative efforts in Tennessee to use technology to help consumers solve their legal problems at low cost and further restrict access to the legal system. Regulation of online legal document software is just the first step in regulating online automated legal advice and other software applications that can provide limited legal assistance to citizens who cannot afford the high cost of legal fees. Download TN HR1411 Here or .Go Here.
There is a threshold question, which doesn't seem discussed or considered, as to whether the proposed regulation violates First Amendment speech rights under both Federal and Tennessee constitutions. An argument can be made that the sale and distribution of legal software is protected speech and immune from regulation.
That the sale/license of a software program could be considered the practice of law is absurd and unwise public policy. Moving down this path will only solidify public perception that the legal profession cares less about the public interest and more about protecting their incomes. It will lead to more pressure to deregulate the legal profession.
As my colleague Marc Lauritsen has argued:
"Alleged misinformation or harmfulness is not viewed as justifying suppression of books, except in extreme circumstances. Government is not appropriately in the business of judging the quality or content of speech. A landmark case held that distributing the 1965 book “How To Avoid Probate” did not constitute the unauthorized practice of law. It is arguable that automated systems are a form of “commercial speech” and deserve less protection. Commercial speech has generally been understood as the activity of beckoning business, not the substantive content of what is being offered."
"To the extent a software application is viewed as a work of authorship, it makes sense to apply the treatment one would apply to the comparable content delivered through a book. Legal software applications, like books, are essentially textual works of authorship, written before their use; the author is not present during use. If I may share the text of a program with others, and they would commit no offense by compiling and running it, why should I not may run the program and give them access to it? Whether First Amendment rights extend to computer code has arisen in cases involving publication of decryption algorithms; for example, “[C]computer source code, though unintelligible to many, is the preferred method of communication among computer programmers. Because computer source code is an expressive means for the exchange of information and ideas about computer programming, we hold that it is protected by the First Amendment.” See Lauritsen, Marc, 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.
Regulation of self-help legal software is suppressing freedom of expression of how the law works and restricts another way of enabling citizens who cannot afford the cost of legal fees to access the legal system. As long as there is no misrepresentation that using the software is not the substitute for the advice or a lawyer and there is no impersonation of the trusted relationship between a lawyer and a client, under what theory is regulation justified?
Besides the First Amendment issue, the proposed statutory scheme will have the unintended effect of deterring innovative legal software publishers from operating in the State of Tennessee resulting in reducing access to the legal system by low and moderate income individuals and families.Access to Justice efforts will suffer. [ Tennessee Access to Justice Commission members are you listening? Did your members sign off on this legislation?]
Ironically, there seems to be a disconnect between the excellent work that Vanderbilt Law School is undertaking with their Center for Innovation which seeks to use legal technology to provide new pathways for citizens to access the legal system and the proposed legislation.
Statutory Analysis
These are most problematic reguirements of the proposed regulation:
"(1) The consumer is provided a means to see the blank template or the final, completed document before finalizing a purchase of that document;" Comment:
The problem with this requirement is that an interactive document can generate hundreds of different versions of the document depending on the information provided by the user. There is no such thing as a "blank template" for many complex documents. Interactive document assembly applications can generate hundreds of different versions of the basic documents depending on the user's circumstances. This requirement demonstrates a lack of understanding of how document assembly technology works. Technically, it would be difficult to enable the user to view the assembled document before payment is made. A better solution would be to grant the user a right to refund for any reason if not satisfied with the assembled document.
" (2) An attorney licensed to practice law in this state has reviewed each blank template offered to consumers in this state, including each and every potential part that may appear in the completed document."
Comment: This would require the recruitment and selection of many lawyers with different expertise reviewing different documents, as you would not have a lawyer who specializes in divorce review estate planning documents. The impact of this requirement is too significantly increase the cost of publication to the point where it would be impractical for a publisher to serve a small state like Tennessee. Further, why should it be necessary to require a lawyer review of forms issued by the Tennessee court in MS Word or Adobe .PDF that are enhanced by a publisher through the addition of automation and help screens?
As we have stated elsewhere, a digital application is a publication, and not a service. It is arguable that this requirement is a prior restraint under the First Amendment.
"The provider must furnish professional liability insurance for each reviewing attorney to cover work performed by the reviewing attorney on behalf of the provider;"
Comment: This is another prior restraint as the cost of carrying professional liability insurance for many lawyers is likely to be excessive assuming such liability insurance can be secured.
"(5) The provider does not disclaim any warranties or liability and does not limit the recovery of damages or other remedies by the consumer;"
Comment: This requirement that legal document providers “not limit a warranty, or recovery under a warranty, in any way,” is unreasonable and will be the death knell of developing legal software applications for consumers in Tennessee.
The problem with this requirement is that it conflates the selling or distribution of a interactive legal form software product with the unlimited liability of a professional service offered by a licensed attorney. No software publisher of any kind sells or distribute their software without an “as is” warranty and a declaration that loss recovery is limited to the value of the license fee of the software. There are valid commercial good reasons for the sale or distribution of legal form software with an “as is” warranty. No legal document publisher or provider would expose themselves to the unlimited liability that results from deleting an “as is” warranty. No insurer would provide liability insurance to a legal form publisher or provider without an “ as is” warranty. Private and venture capital now flowing into legal technology start-ups would disappear if there were a requirement that legal software be distributed or sold without an “as is” warranty.
(6) The provider does not require the consumer to agree to jurisdiction or venue in any state other than this state for the resolution of disputes between the provider and the consumer;
Comment: This requirement makes it easier for a consumer in Tennessee to pursue a claim against the vendor, but the impact is to require a national publisher to defend itself, if widely applied, in every jurisdiction in the United States. If one extends the analogy that a software publisher has the same status as a book publisher then it seems this is another prior restraint on publication and unreasonable..
" (c) Each website provider subject to this section shall pay an initial registration fee in an amount not to exceed one hundred dollars ($100) and an annual renewal fee in an amount not to exceed fifty dollars ($50.00). Comment: Could there by a more blatant prior restraint on publication? Since when do software publishers must pay a registration fee to license their software to consumers within a particular state?
Conclusion
The adoption of the proposed regulation will risk unintended consequences that would deprive consumers in need of legal services. It would unnecessarily stifle innovation resulting in further loss of access to legal help for those who need it most and can afford it least.
The adoption of the proposed regulation will risk unintended consequences that would deprive consumers needing legal services. It would unnecessarily stifle innovation resulting in further loss of access to legal help for those who need it most and can afford it least. [See, for example, The First Legal Aid Voice Assistant America’s main legal aid body, the Legal Services Corporation, plus West Tennessee Legal Services and the Tennessee Alliance for Legal Services. Let's see how this vendor will comply with the proposed legislation? ].
Further, the legislation could be read to prohibit Intuit from providing its popular TurboTax tax preparation software to consumers because that provider could be viewed as providing legal forms to consumers for self-completion. TurboTax is an example of an expert system used by millions of Americans to help them file their state and federal taxes. A “legal document” could arguably also include documents such as purchase orders contractual in nature;
Finally, there is a lack of data or other evidence showing there exists the type and scope of harm that would require the breadth of this regulation. The online availability of interactive legal documents powered by software is not new, and we think it is important to first seek and evaluate data relating to the nature and scope of any harm before proposing a regulatory scheme likely to result in the elimination of software-powered legal applications for Tennessee’s citizens