who has standing to challenge robot lawyers?

MillerKing, LLC v. DoNotPay, Inc., --- F.Supp.3d ----, No. 3:23-CV-863-NJR, 2023 WL 8108547 (S.D. Ill. Nov. 17, 2023)

“This case pits real lawyers against a robot lawyer.” Spoiler: the robot wins for lack of Article III standing.

DoNotPay is an online subscription service that touts its ability to allow consumers to “[f]ight corporations, beat bureaucracy and sue anyone at the press of a button” and bills itself as “The World’s First Robot Lawyer,” offering legal services “related to marriage annulment, speeding ticket appeals, canceling timeshares, breaking leases, breach of contract disputes, defamation demand letters, copyright protection, child support payments, restraining orders, revocable living trusts, and standardized legal documents.”  But DNP isn’t actually licensed to practice law. MillerKing, a small Chicago law firm that claims to be a direct competitor of DNP, sued DNP for false association and false advertising under the Lanham Act and Illinois state law. Along with state consumer protection claims, MK alleged that DNP was engaged in the unlawful practice of law under Illinois law. (The false association claim was based on the theory that consumers are misled to believe that DNP is affiliated with licensed attorneys and that State bar authorities approve of or sponsor DNP’s services.)

MK “advertises its services online and provides legal services across various practice areas including personal injury, wrongful death, family law, divorce law, child custody, criminal law, traffic law, estate planning, probate, workers’ compensation, business law, municipal law, and mediation.” It sought to represent a class of similar law firms.

DNP advertises that it uses artificial intelligence” rather than “human knowledge.” Users can generate personalized contracts, independent contractor agreements, non-disclosure agreements, bills of sale, prenuptial agreements, LLC operating agreements, promissory notes, and parenting plans. It also touts its ability to give advice on property tax appeal procedures, create customized property tax guides, provide advice on how to appeal traffic tickets in any city, provide services to initiate litigation and obtain a judgment, and guide users through the process of filing a court case. For a lawsuit over $500, DNP states that it “can generate demand letters, court filings and give you a script to read in court.” It claims to have taken on hundreds of thousands of parking ticket cases and overturned $4 million in parking ticket fines; initiated more than 1,000 small claims lawsuits against a single company in 42 states; and “processed over 2 million cases.” However, it backed off a claim that the “robot lawyer” would soon represent someone in a courtroom by whispering in the person’s ear exactly what to say because of “threats from State Bar prosecutors.” Some online reviews are poor, stating that DNP has failed to dispute parking tickets as requested, has created inadequate legal documents, or has included inaccurate information in its forms. DNP removed some products from its website, but it continued to advertise and promote legal products and services including defamation demand letters, divorce certificates, divorce settlement agreements, and numerous other categories of legal services.

MK argued that it, and the class, have been or are likely to be injured by the direct diversion of clients from themselves to DNP or by a lessening of the goodwill associated with MK and the class’s goods and services. That wasn’t enough. MK didn’t allege any lost revenue or added expenditures as a result of DNP’s conduct. Nor did it allege that any MK client or prospective client withheld business, considered withholding business, or even heard of DNP. For the hundreds of thousands of parking ticket cases that DNP claims to have taken on, for example, there was no allegation that those customers originally were clients of MK, had considered hiring MK, or would have sought the advice of any law firm in the first place if not for the representations made by DNP.

As to goodwill, although the complaint alleged that DNP provided some poor customer service, it didn’t allege that DNP’s failures were imputed to MK specifically or lawyers generally. What about Lexmark?

Unlike MK, Static Control not only alleged injury due to diversion of sales and reputational harm, but it also provided the facts necessary to make those allegations plausible. Static Control alleged Lexmark directly targeted its customers and falsely stated that doing business with Static Control was illegal. These facts are sufficient to state a concrete, particularized, and actual injury. MK’s general allegations that DNP has caused a diversion of clients and loss of goodwill, on the other hand, are not.

Even if the Court were to find that MK (a law firm) was a “direct competitor” of DNP (an AI-based legal subscription service), the court would not presume Article III standing from direct competition. “MK has conflated the injury requirement for a statutory cause of action under the Lanham Act claim with Article III’s injury-in-fact requirement.” Maybe presuming injury  works in other cases, but the products here were different enough that the court declined to do so. “[T]he Court will not infer that MK has suffered harm through lost clients just because DNP has gained them.”