LegalZoom.com Accused of Unauthorized Practice of Law and Privacy Violations

Legal Zoom (legalzoom.com) is accused of the unauthorized practice of law, as well as disclosing to third parties customers' private information:

LegalZoom and Washington State Reach Agreement Over Unauthorized Practice of Law, IP Watchdog

[T]he most egregious charge leveled against LegalZoom is that they sold, transfered or otherwise disclosed consumer information to third parties. So not only was LegalZoom offering to provide legal services to individuals without a legal license but they seem to have been collecting private information and giving away sensitive, personally identifying information such as financial information, information relating to real or personal property and information relating to family relationships. This screams for further investigation by other State Attorneys General and the United States Patent and Trademark Office. Not only does LegalZoom’s advertising lull unsuspecting consumers to believe they are being represented, but what LegalZoom learns during such representation is given away to third parties? If an attorney did that they would lose their license.

Proper (Business Attorney Assisted) Set Up and Maintenance Crucial to Limited Liability Protection of Corporations and LLCs

Couldn't agree more with this excerpt from today's article by fellow Southern California WealthCounsel attorney Alexis Martin Neely:

You'll recall from last week, that I said the purpose of your business entity is to limit your liability as a business owner. This is to encourage business owners to take risks that they would not take if they had unlimited personal liability.

Here's the thing though, the shield is only intact if certain formalities are maintained, such as proper filings with the State, annual meetings of the shareholders (for corporations), and separation of all financial activities between you and the entity.

Far too often, I've come across business owners who used an incorporation service, a shoddy lawyer, or a CPA to incorporate their business and when I asked these business owners where their operating agreements, bylaws, annual meeting minutes and state filings were kept, they couldn't tell me.

Why is that? Because they didn't realize that merely filing articles of incorporation with the State does not provide liability protection.
Your corporate entity must be established correctly from the beginning with governing documents and then maintained on a yearly basis.

If you don't do that, you may come to find out too late that your business entity doesn't provide the protection you thought it did.

So, make sure that once you decide what kind of an entity to use, you set it up right and then maintain that entity.

While I'm open to a pleasant surprise one day, thusfar I have yet to review one corporation or limited liability company that was properly set up and maintained by a do-it-yourselfer (including those who used online incorporation services, paralegals, CPAs, non-business attorneys).