George Leef shares with Forbes readers details of a dispute involving a Web-based provider of legal services and the N.C. State Bar.
In LegalZoom v. North Carolina State Bar Association, the innovative provider of affordable legal services has challenged the NC bar over its refusal to register its prepaid legal plans for individuals and small businesses. The case is based on the Sherman Antitrust Act, which forbids entities from attempting to monopolize any market.
This is the second time in a year that North Carolina has found itself accused of an antitrust violation.
In a case decided in February, the Court ruled in favor of the Federal Trade Commission’s antitrust suit against the North Carolina State Board of Dental Examiners. It held that the Dental Board’s activities in keeping any person not licensed to practice dentistry from offering teeth whitening services was not a state policy meant to protect consumers, but instead the work of dentists (the board consisting of dentists only) who were trying to stop competition in a field that dentists wanted all for themselves. (For more on that case, I wrote about it in this March piece.)
This case raises similar issues. The North Carolina State Bar is composed of licensed attorneys who have an interest in limiting competition in the market for legal services. Its efforts at preventing LegalZoom from offering its services to state residents is not sanctioned by any political action taken by the legislature. In fact, following the Dental Board case, the State Bar frantically tried to get the General Assembly to enact a bill under which the Attorney General would “actively supervise” the State Bar in its regulation of competition.
That bill has not been enacted, but even if it had been, it is doubtful that such legislation would satisfy the standard the Court set forth in the Dental Examiners case.
In fact, legislative history in North Carolina strongly favors LegalZoom.
