Agreement reached in Missouri suit against LegalZoom

Monday, August 22, 2011 | 5:48 p.m. CDT

JEFFERSON CITY — A possible agreement has been reached to settle a $5 million lawsuit against a vendor for online legal documents before the start of a trial scheduled to begin Monday in federal court in Missouri.

The class-action lawsuit claims California-based Inc. is not licensed to provide legal services in Missouri and is seeking reimbursement of three times what its customers paid for the documents. It was filed by a Missouri resident who used LegalZoom to prepare a will, two others who used the service to organize a remodeling business and the business C&J Remodeling LLC.

LegalZoom was created about a decade ago and provides legal documents such as wills, trademarks and incorporation paperwork that are designed for the laws in each state. Customers answer questions online and the documents are created with computer software.

LegalZoom released a statement Monday saying a proposed settlement contains no admission of wrongdoing and would allow it to continue offering services in Missouri with certain changes to its business practices. The company said the terms were being negotiated and would be released after they've been approved by everyone involved in the case.

The company said the plaintiffs never asserted that the documents they purchased were defective. The firm said it continues to dispute the basis for the lawsuit, but the pending agreement would avoid a costly trial.

An attorney for the plaintiffs declined to discuss details of the proposed settlement with The Associated Press on Monday, but said the agreement involved compensation for Missouri consumers who have used LegalZoom and would include changes to the company's business practices.

Online federal court records show that the parties involved in the lawsuit indicated during a teleconference Aug. 12 that a possible agreement had been reached. The plaintiffs are to file a motion for preliminary approval of the settlement by Sept. 23, but those court records do not offer additional details about the terms of the possible agreement.

LegalZoom has said it offers people who want to represent themselves in legal issues an important tool by providing legal documents over the Internet. Attorneys for the plaintiffs have said those legal documents do not address every aspect of state law and customers do not have any recourse if the documents are faulty.

LegalZoom is among the best-known of an increasing number of companies that offer similar assistance. The business practices of LegalZoom have been challenged elsewhere, including Alabama and North Carolina.

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