Ninth Circuit Tags Software Provider for Unauthorized Practice of Law

31 May Ninth Circuit Tags Software Provider for Unauthorized Practice of Law

The Ninth Circuit Court of Appeals has found that a web-based software provider was a bankruptcy petition preparer and was engaged in the unauthorized practice of law. The decision was based to a large extent on the relative sophistication of its operation:

The court found that several features of the software and how it was presented to users constituted the unauthorized practice of law. First, the vendor advertised itself as offering legal expertise. The software-provider’s web site offered advice on loopholes in the bankruptcy code, compared its services to those of a “top-notch bankruptcy lawyer,” and described the software as an “expert system.”

Second, the software provided much more than mere clerical services. The software chose where to place the user’s information, selected which exemptions to claim, and provided the legal citations to back everything up. The court concluded that this level of personal, although automated, guidance amounted to the unauthorized practice of law.

It’s worth noting, however, that despite the features of the software, the debtor’s use of it came to light because of the mistakes he made, which led to the trustee’s questions. My opinion–whatever the price, it’s no bargain.

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Däna (pronounced "Donna") Wilkinson, has been a bankruptcy lawyer in South Carolina for 20 years. She is certified as a bankruptcy specialist by the South Carolina Supreme Court.
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