Prepaid legal services -- All you need to know
Most prepaid plans charge $80 to $200 a year, but their benefits vary widely. Unless a plan offers a feature you find particularly attractive, you should settle for no less than the following:
- Unlimited consultations with a lawyer
- Letters and phone calls on your behalf
- Review of simple documents
- One will a year for you or your spouse
- A 25% discount on all additional services
You may want to consider signing up with one of the prepaid legal services that are proliferating across the country. Strongly endorsed by the American Bar Association, they cover 13 million people, up from 1.5 million a decade ago, and operate much like a health maintenance organization. You pay roughly $80 to $200 a year, depending on the company, and are generally assigned to a law firm in your city or state that has contracted to serve plan members in addition to its private clients. You are then eligible for such basic benefits as the opportunity to consult a lawyer as frequently as you wish. He or she will usually write letters or make phone calls to third parties on your behalf, review simple documents and write your will. Says Stuart Baron, one of the founders of Lawphone, which is open to individuals in 40 states: ''It's like having an ombudsman at your beck and call for the little thingsÂ - even when you're not sure it's a legal problem.''
Laborers' International, a construction trade union, established the first prepaid legal service in 1971 for its members. Since then the idea has spread to benefits packages at such corporations as General Motors and Prudential. But the fastest-growing legal services today are ones that sign up individual customers. In the past year, the number of people enrolled in such plans has tripled to 1.5 million. Says Harland Stonecipher, chairman of the biggest individual enrollment plan, Pre-Paid Legal Services Inc., with nearly 500,000 subscribers in 22 states: ''We are where medical insurance was 30 years ago.''
Plans are available to individuals in all but a handful of states, such as South Carolina, where regulatory problems are an obstacle. In some states, including California, Colorado, New York and Pennsylvania, you can choose from up to 10 services. Usually you have a choice of four to six.
For the programs in your state, send a self-addressed stamped envelope to National Resource Center for Consumers of Legal Services (NRCCLS):
Washington, DC Office, 1444 Eye St., NW Suite 1100, Washington, DC 20005, Tel (202) 289-6976, Fax (202) 289-7224 fax Send an e-mail to NSCLC
Los Angeles, CA Office, 3435 Wilshire Blvd., Suite 2860, Los Angeles, CA 90010-1938, Tel (213) 639-0930, Fax (213) 639-0934
Oakland, CA Office, 1330 Broadway, Suite 525, Oakland, CA 94612, Tel (510) 663-1055, Fax (510) 663-1051
Prepaid plans can be fine for simple legal matters. A landlord who refuses to return the security deposit on an apartment, for example, might change his . mind if he received a letter written by a lawyer on your behalf. Says William Bolger, executive director of the National Resource Center: ''It's a way to resolve budding problems rather than reacting to a problem that's gotten out of hand.'' Complex issues such as a liability suit, divorce, bankruptcy or sophisticated mortgage arrangement are beyond the scope of prepaid packages. Also, the plans rarely cover court appearances.
Because annual fees are low, proponents maintain that prepaid legal advice can save you money. Say your new car turns out to be a lemon. A prepaid service's lawyer can help you get the manufacturer to make good on the warranty, saving you the cost of expensive repairs. Says Alec Schwartz, executive director of the American Prepaid Legal Services Institute, a trade association: ''It's not so much the fees you're saving but what you can save yourself by knowing what to do.''
To make sure a plan suits you, however, you have to shop warily. Prepaid legal programs vary widely in their range of services. The biggest, Pre-Paid Legal Services, offers a large number of benefits but sets narrow limits on many of them. For example, the company lets you pick your own attorney, which is unusual, but covers only one half-hour visit every 90 days for each legal matter. You pay in full for any follow-up meeting within that period. Pre- Paid also promises to reimburse you for up to $40,000 in defense costs if you are sued because of a fatal auto accident. But such costs are usually already covered by your auto insurance. In any case, fear of a costly lawsuit is probably not a good reason to buy prepaid legal counsel. ''Seldom are defense costs in lawsuits not covered by automobile or homeowners insurance,'' says Bolger. ''You are usually duplicating coverage.''
Here are the key questions to ask before joining a plan:
What services do you get?
The best plans let you consult with an attorney as frequently as you wish, usually over the telephone. Hyatt Legal Services' LawPlan (about $120 a year; 800-468-5463) allows unlimited face-to-face consultations. Most plans restrict document reviews to ones of six pages or less. The plan's lawyer should be willing to draw up at least one will for you or your spouse annually, though some plans do wills for both of you and even include trusts for your kids.
Who will advise you?
Plans such as Lawphone (about $100 a year; 203-233-3626 in the East, 213-399-7756 in the West), Montgomery Ward's Legal Services Plan ($81 a year; 800-323-4620) and Amway's Ultimate Legal Network (about $160 a year; 800-233-6125) contract with law firms. Hyatt Legal Services, the nation's largest firm with 190 offices in 22 states and Washington, D.C., assigns most LawPlan members to one of its offices. When you join a legal program, you usually work with the same law firm for the length of your membership.
What if you you are unhappy with your attorney?
You should be able to switch to a new one by calling the plan administrator. For example, Montgomery Ward's plan, run by its Signature Group subsidiary, insists that a lawyer return your call within one business day. If he or she is slow, call Signature's 800 number and get the problem resolved. You especially want to beware of a lawyer who seems to be abusing a prepaid plan to generate new business. An attorney might encourage you to sue when you have little chance of winning, hoping you will pay him or her to represent youÂ - at additional cost.
What if you need more advice?
If the lawyer decides your problem is so complex that you need extra help or a lawyer to represent you in court, he or she should be willing to take on your case or refer you to another attorney approved by the service. The attorney should discount the fees 25% to 30% for the work, or charge no more than $50 to $60 an hour.