History

• Pre-Paid Legal was started in 1972 by Harland Stonecipher as The Sportsman’s Motor Club. The idea was, like other insurance products, to pay a monthly premium now to cover legal needs in the future. The company continued to grow, and is listed on the NASDAQ for trading in 1984. The company shrank it’s staff significantly in the later in the decade, but by 1999 it quadrupled its staff and was listed on the New York Stock Exchange. As of 2010, they report over 1.5 million members.
  
  

Benefits

• Pre-Paid Legal has different plans and riders (or extras) to choose from. They vary a bit from state to state. In Maryland, for example, the “Standard Family Plan” is quoted as being $16 per month. According to their website, this includes phone consultations, a phone call or letter on your behalf, contract and document review, wills, motor vehicle legal expense services, some trial defense services and IRS audit services. Other services not covered by the plan are discounted.
  
  

Limitations

• According to Business Week, there are several limitations to Pre-Paid Legal’s services. Pre-trial work, for example, is only covered for 2.5 hours. Generally the bulk of the work in going to trial is pre-trial, and is much more than 2.5 hours. There are also limitations for charges involving alcohol or drugs, wage garnishment, driving without a license, bankruptcy, child custody and divorce.
  
  

Purchasing a Plan

• Pre-Paid Legal is typically sold by an independent representative at a sales meeting. Be prepared to review all the plans available. Pre-paid Legal representatives also receive compensation based on the sales of people they recruit, so you may also be invited to join the company. As with any purchase, it’s important to review the information carefully and confirm the time frame you have to change your mind.
  
  

Lawsuits

• Pre-Paid Legal has itself been involved in a number of lawsuits. According to Business Week, Pre-Paid Legal paid out $1.5 million in 2001 to settle a number of suits. Suits have been brought against the company by both members and former independent associates. The main reason for the suits is that plan coverage was overstated when the plans were sold.