LegalZoom, the online provider of legal forms and other services, has filed a federal antitrust lawsuit against the North Carolina State Bar for $10.5 million, contending that the bar is unlawfully prohibiting the company from providing prepaid legal services in the state.
(The state bar is the state agency responsible for regulating the practice of law in North Carolina — often confused with the NC Bar Association, which is the voluntary organization composed of lawyers, paralegals and law students.)
The precedent for the lawsuit?
The recent teeth-whitening case decided by the U.S. Supreme Court in February, NC Board of Dental Examiners v. FTC, in which the high court held that the dental board did not have antitrust immunity and could be sued for anticompetitive practices.
Writing for the court in that case, Justice Anthony Kennedy found that because the Board was comprised mostly of dentists practicing and competing in the teeth-whitening market with non-dentists, it could only invoke state-action antitrust immunity if the state actively supervised its actions concerning that service.
The ABA Journal summarizes the LegalZoom lawsuit here:
According to the suit, the state legislature in 1991 removed the bar from a role in approving legal services plans but gave it the “ministerial task” of keeping a registration list of plans sold in the state.
Yet the bar adopted a restrictive definition of what constitutes a prepaid legal services plan and refused to accept for registration plans that did not meet the definition, the suit alleges. The bar says such plans must be paid for in advance of any immediate need and any legal services provided must be provided by lawyers licensed in the state, the suit says.
LegalZoom and the state bar have been battling in court for years over the types of services it can offer to North Carolina residents, dating back to 2008, when the bar sent the company a cease-and-desist letter.
Read the complaint here.