LegalZoom.com, Inc., an online legal services company, known to the common people as a do-it-yourself law firm, is gearing up for an initial public offering of 3.80 million shares of its common stock on the New York Stock Exchange under the symbol “LGZ.” On July 23, 2012, LegalZoom filed an amended prospectus.
According to RTT News, the company stated in a regulatory filing it expects the initial public offering to price between $10.00 and $12.00 per share. The selling stockholders are offering 4.20 million shares of common stock in the offering. The company and the selling stockholders grant underwriters a right to buy up to an additional 1.20 million shares of common stock to cover over-allotments. Morgan Stanley and Bank of America Merrill Lynch are the offering’s lead underwriters.
The online legal services company noted it will not receive any proceeds from the sale of shares by the selling stockholders. The company noted it plans to use net proceeds from the offering for general corporate purposes, including working capital and capital expenditures associated with scaling its operations, technology, and infrastructure growth. The company lists job openings in its website in California and Texas.
The company’s risks potential lawsuits relating to the unauthorized practice of law. The company settled three cases claiming unauthorized legal practices in 2011 for $5.4 million, though the final amount could reach $16 million, according to RTT News. LegalZoom denies supplying legal forms and other services can be deemed practicing law. About 2 million customers have used the company’s services to create wills, living trusts, powers of attorney, partnerships, limited liability companies, and educate on legal subjects such as intellectual property, real estate, and bankruptcy. The company also offers “Free Joe Friday,” a free legal Q&A session hosted on LegalZoom’s Facebook page.
LegalZoom has suffered at least two years of losses, and is struggling to grow revenue to become profitable. The company has been funded mostly by private investors, and was founded by Brian Liu, Brian Lee, Eddie Hartman, and Robert Shapiro. Shapiro was the former attorney to O.J. Simpson. Liu serves on the LegalZoom board of directors, and was previously the Chairman and LegalZoom’s Chief Executive Officer. Investors include Polaris Venture Partners. According to RTT News, LegalZoom is valued at 28 times 2012 earnings, in the top of its IPO range.
LegalZoom gives small businesses and individuals an efficient, inexpensive avenue to resolve simple legal issues. Forbes recently listed the company as one of the ten best tools for entrepreneurs. The National Law Journal gave mention to the company as one of the best legal forms providers. The company’s website features its ten in-house attorneys. Each attorney has a bio, and a video, displayed, detailing why each went to law school, and how LegalZoom empowers lay people to handle their own legal matters.
There is increasing competition in the business. For instance, BizFilings, RocketLawyer, and The Company Corporation are launching similar services. Attorneys are also getting into the act by offering not just legal forms, but also legal advice, and consultations.