What's the difference between legal information and legal advice?  What is the unauthorized practice of law?  This article provides an overview of some of the legal issues to consider when building legal products and legal applications to improve work flow and create new sources of revenue.  In future articles, we’ll cover each of these topics in greater depth.  For now, we simply spot the issues and provide some basic considerations.  

Before we begin, we highlight the emerging trend:  States are increasingly exploring ways to integrate the new technologies and entrepreneurial nature of legal products and legal applications into the rules that govern traditional legal practice.

1.  Do legal products and software constitute the practice of law?

Legal products and legal software have developed so fast over the past few years, in so many permutations, that there is not a definitive answer.  That said, as noted above, the trend is to encourage legal products and software.  For example, the U.K. began loosening its rules regarding what constitutes the practice of law starting back in 2007, just to accommodate their emerging automated legal products market.

While in the U.S. it varies state by state, North Carolina is a good example of the trend towards facilitating the growth of the legal products and legal applications market.  It has passed legislation stating that software that generates legal documents based on a user’s responses to a legal questionnaire does not constitute the practice of law.  

2.  What’s the difference between providing legal information vs. legal advice?

Generally, “legal information” refers to items such as a court info sheet about how a legal process works, or generic forms from a court for use in legal proceedings.  This is because they are not intended to be specific to an individual’s particular case and they are not information that determines a final outcome. 

“Legal advice,” in contrast, is case specific.  It concerns providing advice to someone or preparing documents for someone in a way that affects legal rights.  As may be seen, an element of legal advice is the fact that it applies laws to a specific person’s or company’s specific needs.  Where does the building of legal products and legal applications fit in?  Given North Carolina’s view, discussed above, it is likely that most legal products and legal applications are more like legal information than legal advice.

3.  At What Point Is An Attorney-Client Relationship Formed, And Can You Avoid This?

Attorney-client relationships traditionally form at the point when the client believes they have retained an attorney and also believes that an attorney-client relationship exists.  Given the nature and process of legal products and legal applications, it is less likely that a client will form the above beliefs.  While there is no specific way to avoid an attorney-client relationship, any steps that reduce a person’s ability to form the above beliefs will tend to show that such a relationship has not been formed.

4.  Does Malpractice Insurance Cover Your Legal Software?

         This tends to depend on the insurance carrier.  For example, some malpractice insurance companies reportedly provide discounts to those who use automated legal products, because such use decreases the risk of errors or omissions.

5.  Conflicts of Interest

To avoid potential conflicts of interest in the legal products and legal applications context, a legal product application should likely be built to have procedures for identifying potential conflicts.

6.  Client Confidentiality

Practical considerations as to client confidentiality when building legal applications and legal products likely include having a process that deletes all of the personal information used in the application once the work flow is done or the document is created.

7.  Unbundling

The unbundling of legal services, which refers to offering legal services that are limited in scope, is permitted in most states, and it appears to be an increasingly common way for states to allow the delivery of work product through automated legal products and applications. Unbundling has been shown to save huge amounts of time and allows attorneys to practice at the top of their license.

8.  Are There Any Pending Regulations That Provide Guidance On These Topics?

Yes and no.  As we mentioned at the outset, the trend is to successfully integrate legal products and legal applications into the traditional rules that govern lawyers.  Given that trend, you can expect to see more and more regulatory changes like we’ve seen in the U.K. and in North Carolina, where changes have been made to facilitate entrepreneurs who use technology to make workflows more efficient.  That said, we’re not currently aware of any pending regulations right now that provide more guidance on these issues.  Stay tuned for updates in further articles.