LegalZoom.com, Inc. (LZ) Investigation

LegalZoom finds itself under increased scrutiny regarding the progress of its strategic plan to shift its revenue more heavily towards subscriptions versus transactions, including the upside market and pricing power of its BOIR (Beneficial Ownership Information Report) offering.

LegalZoom’s BOIR offering is intended to address customers’ business reporting under the Financial Crimes Enforcement Network in the U.S. Department of Treasury regulations and company officials, including now-former CEO Dan Wernikoff, have touted BOIR as critical to successfully executing its strategic plan toward to shift to a heavier subscription revenue model.

However, questions arose on July 9, 2024, when LegalZoom announced, without explanation, that Wernikoff abruptly left the company. The company also slashed its 2024 revenue and free cash flow guidance, again without explanation.

Analysts reacted negatively, with JPMorgan reportedly stating “‘[i]nvestors are likely to take this as a signal of newfound, operational troubles at the company’” and “‘[o]ur thesis – which expected improved results would bear fruit in 2H24 and 2025 – appears compromised.’”

This news sent the price of LegalZoom shares 25% lower on July 10, 2024.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the LZ investigation about?

We’re investigating whether LegalZoom may have misrepresented the true progress it was making and its pricing power regarding certain of its product offerings.

WHAT SHOULD I DO?

I worked at LZ. What should I do?

If you were an employee of LZ, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in LZ, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any LZ investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.