US Court Holds that Providing Legal Software can Amount to Unauthorized Practice of Law

In the recent case of In re: Jason Reynoso (No 04-17190), the US Court of Appeals for the Ninth Circuit (Court) upheld a decision of the Ninth Circuit Bankruptcy Appellate Panel, and found that a legal software provider participated in the unauthorized practice of law. The software provider sold access to browser-based software for preparing bankruptcy petitions and schedules and offered informational guides promising advice on various aspects of relevant bankruptcy law. The Court first determined that the software provider was a "bankruptcy petition preparer" (BPP) within the meaning of 11 USC § 110(a)(1), that is, "a person, other than an attorney or an employee of an attorney, who prepares for compensation a document for filing." In making this finding, the Court noted that there was no statutory requirement for person-to-person interactions. Given that the software provider was a BPP, because BPPs are, by definition, not attorneys, they are prohibited from practicing law. Providing access to the software in this case was held to constitute an unauthorized practice of law. The nature of the software, above and beyond the provision of mere clerical services, was an important factor in determining that legal services were provided. The software organized user information, selected the exemptions a user should claim, and provided legal citations to support the output. Another significant factor was that the software provider held itself out as providing legal expertise. It offered advice on its web site on loopholes in the bankruptcy code, compared the provided services to those of a "top-notch bankruptcy lawyer," and described the software as "an expert system [which] knows the law". As a result, the Court concluded that the software offered personalized, albeit automated, counsel. The case raises fundamental questions about the nature of expert systems software in the eyes of professional services regulators and it is likely that In re: Jason Reynoso represents far from the last word on the subject. For the full reasons for judgment, see: http://servicios.vlex.com/archivos//1_3/im_1_3_26535410_in1.pdf For commentary on the decision, visit: http://technology.findlaw.com/articles/00006/010710.html Summary by: Michael Migus