Legal Insurance .us
In a world of prepaid medical insurance, prepaid security, prepaid dental services,
prepaid phone service and even prepaid pet care, it’s not surprising that someone
would invent the idea of prepaid legal services. In fact, this idea is very old and its
latest approach, normally seen as an employee benefit, is simply a renaming of a
common practice. That said, employees and those taking on such plans should be
careful and research what it is they are exactly paying for. Many times prepaid legal
services end up just being an on paper entity that doesn’t provide much in the way of
value at all, but in some instances they can save you a substantial amount of money
on legal fees.
What It Is
Prepaid legal services, as the name implies is exactly what it sounds like. A group or
membership of people are offered the chance to pay a monthly fee in exchange for
access to specific legal services provided by attorneys. The services paid for with the
fee include initial consultation, initial opinions, and cursory activities performed to
comment on the potential of a case or the direction the member should go in per a
certified lawyer. Additional services receive some kind of a discount or percentage
reduction due to membership, but attorneys are free to work out direct details with
the member as the case grows in tasks and complexity.
Common services that are provided at no cost to members include such things as legal
assistance in large property transactions (i.e. a home or car), estate planning for a simple
will, insurance company communication, identity problems due to electronic theft,
introductory legal opinions, and referrals.
The system works via a toll-free phone number that members use to initiate services. The
member calls in and starts with a network coordinator. That person takes in some basic
information on the type of legal services needed. Similar to dental referral services, the
coordinator then sets up the claim for billing and refers the issue to a network attorney. The
attorney and member connect, discuss the needs, and arrange services to be provided.
The attorney and network separately arrange billing and additional costs are borne by the
member as necessary. The member can then decide whether to continue services or
cease them as desired.
The network referral based on monthly fees is a modern twist on the traditional hiring of an
attorney under retainer. A retainer is a set fee amount paid by a client to an attorney on a
monthly basis to cover and address costs associated with the client’s legal needs. Rather
than paying on a task basis, the client pays a monthly fee and demands services from the
attorney within an agreed upon group of covered tasks. Many times this includes advice,
legal communications and basic representation to other private parties, minor research,
legal document drafting or review, and similar basic attorney tasks. In higher fee amounts
and more complex matters the retainer can cover ongoing preliminary litigation exercises, extensive legal research, and complex legal advice.
The benefit of the traditional retainer model is that provides the client an attorney’s services without having to pay for the attorney as an employee.
The attorney also benefits because the retainer provides a steady stream of income without committing himself to just one client for a full work day.
Legal insurance services use this same model by having members pay a fee to be able to use legal services on call as needed. While the same
attorney won’t be used for every instance, the member does have the benefit of getting a legal advisor as needed for a low cost. And unlike
retainers, the monthly fee for the individual member is nominal since the cost of the network is spread out over hundreds of members. Most don’t
use legal services at all month to month, so the revenue ends up being mostly profit, offsetting any larger expenses for a few members.