Regulatory Scrutiny and UPL Risks: LegalZoom faces ongoing scrutiny regarding the Unauthorized Practice of Law (UPL) and compliance with various state bar association rules, which could lead to legal challenges, restrictions on their service offerings, or significant fines.

Intense Competition Landscape: The company operates in a highly competitive market, facing rivals from traditional law firms, other online legal service providers, DIY legal solution platforms, and large technology companies potentially entering the legal tech space, which could impact market share and pricing power.

Data Security and Privacy Breaches: Handling a vast amount of sensitive personal and business information subjects LegalZoom to significant risks of data breaches, cyberattacks, or system failures, which could lead to severe reputational damage, financial losses, and regulatory penalties under privacy laws like GDPR or CCPA.