smart bankruptcy software was practicing law: 9th Circ.


       Over the weekend, Law Librarian Blog reported that a sophisticated, web-based bankruptcy software program was determined by the Ninth Circuit appellate court to be practicing law without a license — because it made too many decisions to be considered a mere clerical tool.  Frankfort Digital Services, LTD v. Kistler (Ninth Circuit, No. 04-17190, Feb. 27, 2007; 15 pp. pdf)  Wired Magazine has a good description of the case in “AI Cited for Unlicensed Practice of Law” (March 5, 2007) “At issue were two websites maintained by entrepreneur Henry Ihejirika — and — which offered automated bankruptcy assistance.”

As Wired noted, the Ninth Circuit appeals court said:

The software did, indeed, go far beyond providing clerical services. It determined where (particularly, in which schedule) to place information provided by the debtor, selected exemptions for the debtor and supplied relevant legal citations. Providing such personalized guidance has been held to constitute the practice of law.

(The) system touted its offering of legal advice and projected an aura of expertise concerning bankruptcy petitions; and, in that context, it offered personalized — albeit automated — counsel. … We find that because this was the conduct of a non-attorney, it constituted the unauthorized practice of law.

As I have spent far too much of today worrying about far simpler document preparation services, I’m going to leave this case for your self-analysis.   I’ve got to tell ya, however, that I’m finding it difficult to distinguish fancy bankruptcy software from well-established income-tax-preparation software.

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