Legal Aid Gone Wrong?

We The People might be the 7-Eleven of the legal world, a one-stop shop where you can get a low-cost divorce, file for bankruptcy or draft a living will.

"About 50 percent of a lawyer's practice could be done by a paralegal," says We The People CEO Ira Distenfield. "It's that 50 percent that we want to serve."

And its service at a fraction of a lawyer's cost. Customers fill out forms tailored to their legal need and We The People prepares the proper documents. The company's 150 franchises can give out basic information, but it's up to customers to make their own decisions.

Distenfield says his company does not give legal advice.

But, as CBS News Correspondent Kelly Cobiella reports, Larry and Kim Thompson claim We The People did advise them on the best way to file for bankruptcy.

"It seemed so simple and now it's gotten us into this mess," says Larry Thompson.

They filed while working in Alaska, even though they call a Minnesota property, home.

The Thompsons claim We The People told them they could use an Alaska state exemption to protect their Minnesota land. But that was not the case.

"The trustee's looking over the paperwork and he says, 'Well, I'm going to put your land up for sale.' And I had all I could do to keep from crying," says Kim Thompson.

While the company insists it never gave any advice, the Thompsons are now suing.

And We The People has faced legal action in a dozen other states. In Florida, they were ordered to stop practicing law without a license.

A U.S. bankruptcy trustee in New York charges the company's "unfair and deceptive tactics" had caused "debtors to place their assets at risk."

"I don't think anyone with a car or home should do bankruptcy on their own," says bankruptcy attorney Charles Juntikka.

Critics, like Juntikka, worry that We The People employees might cross the line between assisting and advising.

"People inevitably have questions and if those franchise people don't answer those questions, they will not survive as a business,'' said Juntikka.

The company is working with states to change regulations.

"I think our error rate is no more or no less than a traditional law office," says Distenfield. "We're the new guy on the block going against a traditional industry."

We The People calls itself the wave of the future in legal assistance. But critics say consumers need to be educated, or they might get in over their heads.
  • Jaime Holguin

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