Prepaid Legal Services 101

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Surely, you’ve 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 for using these types of services for your small business.

Pre-paid legal services refers to individual or group employee benefit legal plans in which members pay a monthly fee in exchange for access to a range of on-call legal services. Plans typically offer services for a fixed monthly charge such as legal advice and consultation, review of contracts, having a lawyer write a letter on a client’s behalf or the drafting of wills and other legal documents. Legal service plans may also cover legal representation in court and the filing of motions but most plans require a client to pay extra for such services or cover a limited number of hours in court time.

Prepaid legal plans are a little like HMOs for health care and are one way to keep legal costs down. A prepaid legal service typically contracts with one law firm in each state that handles calls from businesses within that state. Under a prepaid legal plan, you pay a monthly fee – from as low as $10 to $100 or more – for a package of basic services.

Where to Start?

Do a simple Google search on “prepaid legal plans” and you’re bound to be inundated with all types of information. Here are some simple guidelines to help you decide what might be the best service for your needs.

1. Review available plan types. In a prepaid legal plan, you typically pay in advance to cover the cost of future legal services. For a monthly fee, a prepaid access plan will get you phone consultations and a set number of additional services. A group legal plan generally lowers legal costs by discounting legal fees of a particular lawyer or firm. A comprehensive prepaid legal plan costs more than an access plan, but it 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 may be able to provide you with consumer information about particular plans.

Also, you can supplement your own research by checking out the different legal plan choices at the American Prepaid Legal Service Institute (APLSI) Web site.

3. Know who will be helping you. Check the firm you’ll be working with under a prepaid plan. Does anyone at the firm have small business experience, especially within your industry? You may wish to inquire as to the identities of local attorneys who accept the plan before making the decision to purchase any given plan.

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