Rocket Lawyer settles class action for $1.5 million

A class-action lawsuit claiming online legal document service Rocket Lawyer illegally practiced law settled for about $1.5 million in cash and credits.

St. Louis County Circuit Court Judge Thomas Prebil on Monday signed off on the settlement, which calls for cash payments totaling up to $175,000 for class members and $310,000 in plaintiffs’ attorneys’ fees. In addition to the cash, Rocket Lawyer Inc. will give out service credits valued at more than $1 million, said Alon Rotem, general counsel for the company.

The class consists of Missouri residents who paid fees to Rocket Lawyer between Nov. 26, 2007, and Jan. 29, 2014. About 9,000 people are members of the class, Rotem said in an email.

Those who paid fees in the first two years covered by the settlement can opt to claim a cash payment of 35 percent of all fees or credit for in-kind services of 100 percent, according to a March settlement notice.  Those who paid fees in the rest of the settlement period could receive a cash payment of 50 percent of the amount paid or a service credit of 115 percent. If the cash claims exceed $175,000, each claimant’s cash amount will be reduced on a pro rata basis and the remaining amounts paid in service credit.

The company denied wrongdoing and liability.

“Nothing in the settlement said anything about us not being in compliance with the laws,” Rotem said in a phone interview. “In fact, we believe we were at all times compliant with the law.”

Plaintiffs’ attorney David Butsch, of St. Louis firm Butsch Roberts & Associates, was in a mediation conference in another case and couldn’t be reached Tuesday.

San Francisco-based Rocket Lawyer, founded in 2008, prepares wills, real estate deeds, divorce agreements, copyright applications and other documents for a fee via its website. The company also provides advice through on-call attorneys.

Name plaintiff Barbara LeMay answered online questionnaires before obtaining a power of attorney, a will and a rental agreement through the site, according to the lawsuit. She paid about $100 for the documents.

The lawsuit, which was filed in 2011, alleged charging for the document preparation was the unauthorized practice of law and also violated the Missouri Merchandising Practices Act.

Prebil in May 2013 denied a Rocket Lawyer motion to compel arbitration, and the company appealed, according to the Jan. 22 settlement agreement. As part of the Missouri Court of Appeals’ settlement conference procedures, the two sides sat down Oct. 29 to a full day of settlement negotiations under the supervision of professional mediator Bradley Winters and ultimately reached an agreement.

$1.5 million settlement

Unauthorized practice of law class action

Venue: St. Louis County Circuit Court

Case number/date: 11SL-CC-04557/June 2, 2014

Judge: Thomas Prebil

Special damages: Up to $310,000 attorneys’ fees; up to $16,000 costs and expenses; up to $8,000 service award for name plaintiff Barbara LeMay

Caption: Barbara A. LeMay et al. v. Rocket Lawyer Inc.

Plaintiffs’ attorney: David Butsch and Chris Roberts, Butsch Roberts & Associates, St. Louis

Defendant’s attorneys: Forrest Hainline III, Susanne Geraghty and Hong-An Vu, Goodwin Procter, San Francisco; Robert F. Murray, Shands, Elbert, Gianoulakis & Giljum, St. Louis