Are Prepaid Legal Services a Scam?
Authored by H. Clare Callow in Legal
Published on 08-08-2009
Prepaid legal services are a hot topic at the moment, mainly due to the doubtful nature of some of the businesses supplying them. Some prepaid legal companies have added to the bad name of the industry by stinging employees as well as consumers, and some prepaid legal service businesses have been accused of questionable recruiting practices. This has led to accusations of pyramid scams, among other things.
Prepaid legal service businesses have been around on and off since the 1930s. The general idea is for the business to act as an intermediary between professionals and clients, and offer the same kind of service as medical insurance does. The difficulty is that some clients may never need to use the service, and others may need legal representation in a way that the service can’t provide.
Prepaid legal services resemble house or car insurance in many ways. You pay for a service you may never require. The contract you are signing may not cover you for the kind of help you need when you need it. There are also many disgruntled customers willing to complain about them, but a few happy customers too.
The difficulty when deciding whether you want to join a prepaid legal scheme is whether you would be better off paying for such services outright. Prepaid legal services may offer consultations and legal advice on tap, and be helpful when preparing your living will and settling your estate. The problems usually come in when more major legal services are required, such as representation in court. Quite a lot of prepaid legal schemes don’t cover this in their basic plan, but unless you’re running a criminal empire you’re not likely to think that you’ll ever need the extra cover for court services.
Another consideration is the importance of liking your representative when dealing with legal matters. It’s vital to trust, if not actually like, your attorney. Most prepaid legal plans don’t allow you to switch attorneys when you want to, which means that you are stuck with someone you don’t trust to perform an incredibly important task.
If you do decide to join in a prepaid legal service, it’s important to choose carefully. Some prepaid legal service companies are successful enough to sell shares of their stock. However, just as with any service, you shouldn’t be lured into the trap of trusting a company because they are listed on the stock market. The fall and rise of giant companies over the last couple of decades has demonstrated that stocks don’t represent solidity. When choosing a prepaid legal service, it is best to do your research and find out if they have any disgruntled customers. Look for both positive and negative reviews to get a balanced opinion.
Examine your contract carefully before you sign. If you’re unsure of exactly the sort of legal services you’re likely to need, do some more research before you sign.
The danger of using a prepaid legal service is that your needs might be beyond what the service covers. When it comes to legal matters, you can’t really afford to make mistakes. In the end, it might work out better for your budget to hire legal representation as and when you need it.
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Why is it that no one can come to a decision when blogging on the question is “Pre paid legal a scam”? I know there is a lack of published information on pre paid legal services., but I suggest you speak to one of the associates found nationwide and ask them questions in order to gain some real insight before posting a blog like this which, like a water bug always stay on the surface of the questions and never bothers to do dive in and do some serious research and reach any authentic conclusions on the matter.
I made up my mind and became a member of Pre Paid Legal Services Inc, after doing my “due diligence” for the reasons stated below. I say Pre Paid Legal Services Inc cause there is the only one legal insurance company that I know of that is PUBLICALY traded on the NYSE. Yes, I said publically traded, under the symbol, PPL which means that it is open to the scrutiny of the shareholders, the public, investors and the Securities Exchange Commission. In addition PPL has been, over the last 37 years endlessly examined under a microscope by Legal and Insurance boards across America and in Canada. Do you think if it was a scam it would still be around? How long can one company, individual or group stay around under the constant scrutiny of the law?
1. If pre paid legal services were such a bad idea, such a bad investment, why would 80% of Europeans already have legal insurance in place and utilize this service since 1907?
2. Insurance is always about risk. Collective risk. Maybe YOU will never have an everyday legal event occur where you need access to legal counsel. Maybe you will never sign a contract that you do not understand because you understand legalise like I understand Latin. NOT. It is the toss of the coin. However, if the coin lands unfavourable to you and you do need legal advice on any matter then you and others like you have been sharing the cost of top rated lawyers, creating a reserve and now you can pull from it to get an Expert answer to your question, a letter or a phone call from a lawyer. In 65% of the cases this will be enough to resolve the issue.
3. Where it is not enough to resolve the situation and becomes a big deal and is headed to court you can then, thru PPL services have access to a top rated lawyer at the standard provincial or state rate, minus a 25% discount. This is probably the same rate or even less than what you would pay if you “did it on your own”…anyhow…
4. With PPL you will not deal with a lawyer that you do not like! Why? The PPL model is build on the same model that Google is – the customer comes first! Lawyers who work for PPL excel in customer service. If they do not deliver on serving you as a customer then you can complain to PPL head office and they could, potentially be fired. PPL vets its law firms, holds each on a revolving 60 day contract and monitors each inquiry with a tracking number. If you are not happy with a particular lawyer then they will get you to another as the firm itself cannot afford to lose the collective PPL account, of which you are a significant part! The individual as part of the sum total has lots of collective leverage. Is this not what the internet has taught us?
There is nothing “doubtful” about Pre Paid Legal Inc. I suggest you give it a try. You can sign up about $35.00 a month, around the same as a cable bill which allows you to access the “LAW Channel” any time of day and in emergencies at night and on the weekend too! Further it is a month to month contract so you are free to cancel at anytime and you will pay no penalty. If you cancel then it is all in the hands of Lady Luck, god forbid that she decides that it is in your fate to be hit by a drunk driver as was mine!
[Reply]
Suzen,
The reason this article was not wholly endorsing pre-paid legal services was because research came up with quite a large number of people who were extremely dissatisfied with pre-paid legal services. Your experience may be a positive one, and thank you for posting such a thorough comment.
The research for this article took into account information provided by associates as well as customers. As I said, there was a lot of dissatisfaction out there.
As I have lived in Europe and have never known anyone to have legal insurance, I would be interested to know where you got your figures from?
Insurance is a very personal choice, and as I said in the article I strongly recommend anyone making a decision on this issue to research it thoroughly. There are a lot of blogs out there on the issue, yes, but there are also a lot of comments based on personal experience which may be of even better help.
[Reply]
You know, the biggest mistake I see that most PrePaid Legal Associates make is chasing after anyone who will listen and trying to recruit them. This wastes too much time and you never get anywhere, then drop out thinking it was a bad deal and say it’s a scam. To write your Pre-paid Legal success story, you must approach it with some sense. This is a business and the game is marketing, not a job of “tell me what to do and I’ll just go do it.” If that was all it took, they would simply hire employees.
Yes, everyone COULD benefit from PrePaid Legal Services, but wrap your mind around the fact that MOST people will not buy.
Your best bet is to narrow your focus as much as possible. Figure out the people who are most likely to buy, a smaller group who feel they’re at high risk, such as small business owners.
Consider: Does an Internet marketer selling information products feel they’re at high risk? Likely not. How about the owner of a small, family-owned auto repair shop or drycleaner? Definitely.
Unfortunately, you can’t just show up on their doorstep and expect them to listen to you. These people get hounded every day, mostly by amateurs looking to make a buck. They’re numb. Study some of the great copywriters and use their proven techniques to grab your prospect’s attention.
Times are always challenging for small businesses. I’ve helped many PrePaid Legal Associates get over this hump. Only look for the people who are actively looking for that safety net and forget about everyone else.
Mike Lewitz
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