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Commitments and Contingencies
 3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Operating Leases
We conduct operations from certain leased facilities in various locations. At March 31, 2022, we had various non-cancelable operating leases for office space and equipment, which expire between June 30, 2022 and September 30, 2029, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases.
Operating lease right-of-use assets and liabilities on our condensed consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable.
At March 31, 2022, the maturities of our remaining operating lease liabilities were as follows (in thousands, except years and percentages):
March 31, 2022
2022$1,485 
2023
1,099 
2024864 
2025548 
2026503 
Thereafter1,024 
Total minimum lease payments$5,523 
Less: Effects of discounting411 
Present value of lease liabilities under ASC 842$5,112 
Less: current portion$1,607 
Long-term lease liabilities$3,505 
Weighted-average remaining lease term4.9 years
Weighted-average incremental borrowing rate3.25 %
The component of our lease costs included in our unaudited condensed consolidated statements of income for the three month ended March 31, 2022, were as follows (in thousands):
Lease cost
  Operating lease cost
$415 
Other variable cost115 
Net lease cost
$530 
At March 31, 2022, we had lease agreements with commencement dates beginning on or after April 1, 2022. The total future aggregate minimum lease payments for such lease agreements calculated under ASC 842 were as follows (in thousands):
Operating Leases
2022$462 
2023
1,220 
20241,064 
2025857 
2026882 
Thereafter2,645 
Total minimum lease payments$7,130 
Less: Effects of discounting742 
Present value of lease liabilities under ASC 842$6,388 
Total future aggregate minimum lease payments calculated under ASC 840 as of December 31, 2021 were as follows (in thousands):
Operating
Leases
2022$2,372 
20231,101 
2024867 
2025550 
2026505 
Thereafter1,033 
Total minimum lease payments under ASC 840
$6,428 
Advertising, Media and Other Commitments
We use a variety of media to advertise our services, including search engine marketing, television and radio. At March 31, 2022, we had non-cancelable minimum advertising and media commitments for future advertising spots of $21.3 million, substantially all of which will be paid over a three year period. We also have non-cancelable agreements with various vendors, which require us to pay $52.5 million over a four year period, of which $41.8 million remains to be paid as of March 31, 2022.
Legal Proceedings
We received a demand letter dated April 20, 2020 from service partner Dun & Bradstreet alleging that Dun & Bradstreet had overpaid us for services. The letter alleges these overpayments occurred between 2015 and 2019, amounted to $5.6 million, and were caused by overreporting by us. The parties have continued to negotiate, and no claim has been filed. We deny and will continue to deny all of the allegations and claims asserted by Dun & Bradstreet, including, but not limited to, any allegation that Dun & Bradstreet has suffered any harm or damages. We believe we have meritorious defenses to the claims and will vigorously defend any action. While there is at least a reasonable possibility that a loss may be incurred, we have not recorded any loss or accrual in the accompanying unaudited condensed consolidated financial statements at March 31, 2022 for this matter as a loss is not probable.
In July 2021, Legalinc Corporate Services Inc., LegalZoom’s wholly owned subsidiary, or Legalinc, received a citation from the Wyoming Secretary of State of Wyoming regarding Legalinc’s registered agent services in Wyoming. The citation alleges that Legalinc failed to comply with Wyoming’s Registered Offices and Agents Act when carrying out its registered agent business in the state, and assessed an initial $4.1 million penalty and revoked Legalinc’s status as a commercial registered agent in Wyoming. Legalinc has requested a hearing to review the matter and is engaging in negotiations with the State. We are unable to predict the ultimate outcome of this matter. While there is at least a reasonable possibility that a loss may be incurred, we have not recorded any loss or accrual in the accompanying unaudited condensed consolidated financial statements at March 31, 2022 for this matter as a loss is not probable. If this matter is not resolved in our favor, the losses arising from the result of a final ruling, hearing or settlements may have a material adverse effect on our results of operations, cash flows and financial condition.
From time to time, we may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. Other than those described above and in our Annual Report on Form 10-K, we are not currently a party to any material legal proceedings, nor are we aware of any pending or threatened litigation that could have a material adverse effect on our results of operations, cash flows, and financial condition, should such litigation be resolved unfavorably.
Indemnifications
Indemnification provisions in our third-party service provider agreements provide that we will indemnify, hold harmless, and reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any claim by any third-party as a result of our website, advertising, marketing, payment processing, collection or customer service activities. The maximum potential amount of future payments we could be required to make under these indemnification provisions is undeterminable.
No amounts have been accrued or have been paid during any period presented as we believe the fair value of these indemnification obligations is immaterial.