Surely you have heard the term “prepaid legal services”, but do you know what they are? To help, we’ve not only provided a definition, but also some pros and cons of using these types of services for your small business.
Prepaid legal services refer to individual or group legal employee benefit plans in which members pay a monthly fee in exchange for access to a variety of on-call legal services. The plans often offer services for a fixed monthly charge, such as legal advice and consultation, reviewing contracts, having a lawyer write a letter on behalf of a client, or drafting wills and other legal documents. Legal services plans may also cover legal representation in court and filing of motions, but most plans require the client to pay more for such services or cover a limited number of court hours.
Prepaid legal plans are a bit like HMOs for health care and are a way to keep legal costs down. A prepaid legal service typically contracts with a law firm in each state that handles calls from businesses within that state. With a prepaid legal plan, you pay a monthly fee, from $10 to $100 or more, for a package of basic services.
Where to start?
Do a simple Google search on “legal prepaid plans” and you’re sure to be inundated with all sorts of information. Here are some simple guidelines to help you decide what might be the best service for your needs.
1. Review the types of plans available. In a prepaid legal plan, you typically pay upfront to cover the cost of future legal services. For a monthly fee, a prepaid access plan will provide you with phone consultations and a set number of additional services. A group legal plan generally reduces legal costs by discounting the legal fees of a particular attorney or firm. A comprehensive prepaid legal plan costs more than an access plan, but covers an average of 80 percent of a person’s expected legal needs, far more than an access plan.
2. Do your research. Prepaid legal plans are available through LegalSurvival.com, Legal Club of America, Advance Pay Legal Services, Preferred Legal Plan, and Pre-paid Legal Services, Inc. Similarly, your regional Better Business Bureau can provide you with consumer information on private plans.
Additionally, you can supplement your own research by reviewing the different legal plan options on the American Prepaid Legal Service Institute (APLSI) website.
3. Know who will help you. Check the company you will be working with under a prepaid plan. Does anyone at the company have small business experience, especially within your industry? You may want to check the identities of the local attorneys who accept the plan before making a decision to purchase a particular plan.
