PrePaid Legal Services: a good deal for law firms?

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moneyCarolyn Elefant of Legal Blog Watch believes pre-paid legal services remain a good investment for consumers—and therefore a good deal for lawyers. For those not in the know, pre-paid legal services are kind of like insurance. Consumers pay a monthly fee in exchange for basic legal services. Major PPLS vendors include Hyatt Legal Plans, Inc., Pre-Paid Legal Services, Inc., and Arag Insurance Co., Inc.

PPLS lawyers do not have to do much. Most just send letters on the consumer’s behalf. If the consumer wants real representation, he or she must pay extra.

The consumer advocate in me thinks—based on what I have seen from PPLS in several cases—that PPLS is a rip-off. A few months of PPLS cost more than the hour or two it would take a lawyer to do what PPLS lawyers will do. And consumers who need real representation will not get it unless they pay more.

As a businessman, I do not know whether PPLS is a good deal. My hunch is that PPLS pays its lawyers peanuts, but it may be that the low demand on lawyers’ time balances that compensation. Based on an old article from the National Law Journal, lawyers also count on being able to convert PPLS clients to regular, higher-margin clients.

Pre-Paid Legal Remains a Good Investment | Legal Blog Watch

(photo: borman818)

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  • My only experience with PPLS was a client who called for a misdemeanor traffic ticket. He couldn’t get in touch the with PPLS lawyer in my area, so he called me. I don’t know if he was giving up a discount or not. Regardless, the PPLS plan seemed to fail him when he finally needed it.

  • On a different side, a former attorney talked to me about providing PPLS to those client who could not afford my legal services. He told me that he has other attorneys that do this, and some doing quite well selling PPLS on the side. One problem I saw with this was that I couldn’t control the quality of PPLS provided to the client, so if it was bad, the person who bought the PPLS would be coming and knocking at my door.

  • Prepaid legal services, in my experience, always seemed like a lawyer referral service, and was always told to “come down to the office to talk about it – for $150 an hour” I always wondered what I was pre-paying for.
    My advice? go to a Paralegal who is Certified Legal Document Preparer, represent yourself, and save thousands in attorneys fees.

  • I wanted to clarify that I didn’t express an opinion on PPLS one way or another. I was focusing more on investment trends. From what I’ve read about PPLS, the cases don’t pay much but do in some instances help lawyers establish a steady revenue stream. I certainly wouldn’t try to build my whole practice on PPLS but for some lawyers, it might provide a means to get a practice off the ground with smaller, less complicated matters.

  • Andy Mergendahl

    I can confirm Sam’s comment about PPLS attorneys not earning much. I recently turned down an interview for just such a position because the pay was too low. Way too low. On to solo practice!

  • Joey The Country Lawyer

    I think PPLS gets a bad rap. I have been a panel lawyer for pre paid legal and can testify that the discount of 25% has saved my clients hundreds of thousands of dollars over 10 years. I think it’s a great service for people who need attorneys occasionally and it’s a great source of referrals.