Legalzoom Gets Sued

Legalzoom, the legal self-filing service is facing a hefty lawsuit from a Los Angeles attorney Kent Seton, whose speciality is in forming non-profit corporations. Seton sued Legalzoom on February 5, 2009 in Los Angeles Superior Court for breach of contract and misappropriation. The complaint alleges that Seton and Legalzoom entered into a joint venture in which customers of legalzoom would fill out forms on the Legalzoom website, and those forms would be sent to Seton to finalize the formation of a nonprofit entity.

The complaint further alleges that Legalzoom stopped sending Seton the forms and stopped sharing any profits earned, yet Legalzoom retained the proprietary system, that Seton claims he created, on the Legalzoom website.

Legalzoom was paying Seton a fixed fee of $350 per completed application. In total, Seton received $1.6 million from Legalzoom since the venture.

Legalzoom claims there was never a written agreement between them and Seton and that "there is no rational basis for the lawsuit" according to Legalzoom co-founder Brian Liu.