Bankruptcy Software Maker Practicing Law Without License

 

A recent 9th Circuit decision has held that a
software manufacturer was practicing law without a license. The matter,
entitled Frankfort Digital Services v. Kistler (In re: Reynoso), involved a
manufacturer of software for bankruptcy that advertised the software as able to
determine the appropriate schedules and bankruptcy exemptions based on information
provided by the user.

 

The court found that the software and the corresponding
website promised that the software was an “expert system” and the results were
similar to services provided by “top notch bankruptcy attorneys.” Furthermore,
the software provided more than clerical service. The software chose the
appropriate exemptions, arranged the user’s information and even provided legal
citation as support for the various claims. Taken together, the court found
that the advertising and software qualified as unauthorized practice of law.

 

Bottom Line: While the court was careful to limit its
opinion to the facts of the case at bar, this opinion calls into question the
legality of many popular software packages. Similar programs such as TurboTax
and TaxCut are routinely used by taxpayers to determine which forms to file
with the IRS. Other programs allow a user to create simple wills and contracts.
While the Court was careful to avoid including other programs in its analysis,
manufacturers of legal software would be wise to take this case seriously.

 


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