Are Pre-paid services worth the money?

You may be covered when it comes to health, life, car or home insurance…
but what about legal coverage?

The question is not if you'll need a lawyer, but when: according to the
American Bar Association (ABA) “Americans have come to view legal
assistance as a necessity”. Yet, most Americans have not used a lawyer
more than once due to the sky high attorney fees – anywhere from $100 to
$1000 per hour – and the trepidation involved in the search for legal
services.

Prepaid legal insurance might just be the answer you have been looking
for. The concept is simple: for a fixed monthly subscription, you get
telephone access to advice from a lawyer. You pay a fixed amount in
advance each month to defray the cost of legal services furnished in the
future. These services span various areas of the law, anywhere from reviews
of simple legal documents and the writing of a simple will to more
comprehensive coverage of trials, divorce, bankruptcy and real estate
issues.

Pre-paid legal coverage is a very attractive proposition for people who
don’t have the resources to retain a lawyer on a regular basis whenever
they need assistance. You effectively have a network of attorneys you can
use as retainer to seek preliminary advice about what the issues are and
how the procedures work whenever legal matters arise. Services not covered
by the plan are available to members for a discount on regular hourly rates
or flat fees.

A hard fact, however, is that more than half of new subscribers drop out of
a prepaid
plan after their first year. One reason could be that many members do not
require any legal assistance during their first year, so opt out. Another
reason is the scope of services offered, which are very basic and limited
in nature. Most plans have certain caps or maximums as far as benefits
provided are concerned, and purport to offer discount on standard attorney
fees instead. However, by virtue of simply calling around by yourself you
could probably negotiate a lower rate.
Another problem with pre-paid legal plans is the likelihood of getting
assigned to a novice attorney. Because of cost considerations, many of the
companies behind per-paid services assign trainee or inexperienced
attorneys to handle phone consultation and drafting of simple legal
documents. You are also less likely to build rapport and understanding,
two of the most important attributes of choosing a good attorney, as over
90% of the work is done over the phone.

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Types of Legal Plans

A prepaid legal plan is a scheme based on the payment in advance of a set fee to defray the cost of providing future legal services to the members enrolled in the scheme. They vary in cost, scope of legal coverage provided and how the legal services are provided. We will look at the different types of pre-paid legal plans available in the United States and how to enrol into them

An individual pre-paid legal plan is readily accessible to the general public. There are two types of individual plans: access and comprehensive. An access pre-paid legal plan is the most basic plan. It is designed to give easy access to lawyer and a set of simple legal services for a low
cost. Basic services furnished include unlimited toll-free phone access to your attorney for consultation and advice, letters written by the lawyer on your behalf, brief office consultation and the drafting or review of simple legal documents.

Complex legal issues not covered will be subject to an hourly or flat rate negotiatable with your provider

The comprehensive plan goes beyond basic legal services, to offer more complex and comprehensive coverage for a premium in cost. Generally, all the benefits of an access plan are provided at no cost to you, plus a broader range of services like drafting complicated legal documents, negotiations with adverse parties, legal representation in court cases such as divorce and child custody. They also cover all the costs involved in a legal litigation. Comprehensive plans typically start at $300 per year and are most beneficial to middle-class families.

A group legal plan is typically sponsored by an organization as a fringe benefit to its members. The lawyer or law firm contracted provides free or low-cost legal coverage to all members of the sponsoring organization. Employers, labour unions and even universities are now increasingly
offering group legal plans to enhance the value of their benefits package and reduce the cost of administrative burden. Law firms are contracted to provide participating members telephone and office consultation for their most frequently needed legal matters. These typically include: Preparation of wills and trusts, document preparation and review, debt and real estate matters and family law.

Additional legal coverage can be contracted according to a fee schedule negotiable between the plan sponsor and provider, and publicised to participating members.