Pre-paid legal services
Encyclopedia
A pre-paid legal service (PPL or PPLS) is an individual or group low-cost insurance
provider for specific, limited legal services
(usually basic, but sometimes specialized) from participating law firms and attorneys at costs considerably less than independently hiring these providers. PPL services may be provided on an "open" basis, with a subscriber selecting specialists relatively freely from a pool of participating providers, or in a "closed" system, in which most or all services are provided to a subscriber by one central law firm. Pre-paid legal services have existed since the early 1900s, and have increased in popularity since the 1970s.
and law firm
s, certain affordable civil law
and criminal law
services to the general public for a fixed, recurring charge. A PPL does not replace the public defender
system, but rather provides access to private-sector legal services that subscribers otherwise might not easily be able to afford. This is possible because, as with auto, life
and medical insurance, the insurer makes a profit on the aggregated subscriber fees that is in excess of the costs of underwriting subscribers' actual usage of the available services. The participating legal service providers receive a reliable stream of clients and a streamlined billing process; the clients receive lower-cost legal services and consistent expectations with regard to billing and accountability; and the insurer receives continual collective income derived from many subscribers (also known as members, clients, the insured, etc.).
In many jurisdiction
s, PPLs are legally classified as insurance
and are regulated
as such (e.g. by a U.S. state's insurance commission). In these jurisdictions, a would-be provider of such services must usually obtain some kind of license before they are able to market subscriptions (memberships) in a pre-paid legal plan. In other areas, a pre-paid legal service is simply a business, requiring only a business license
.
and consultation, review of contracts, the writing of demand letter
s on a client's behalf]], the drafting of wills and other legal documents; legal representation in court and other hearings, for issues such as traffic violation defense
, defense against criminal charge
s, general civil trial defense, and property valuation protests
, as well as plaintiff
support, such as in employment compensation disputes and the filing of civil lawsuits against private
or public parties
. Legal plans can also be geared toward servicing specific target markets; there are family
plans, small business
plans, group employee benefit
plans, commercial driver plans, law enforcement officer plans, and others.
One difference between PPL services and many other types of insurance is that the legal services can be preventative and proactive, such that a subscriber may not have to wait for something negative to happen like an auto accident before using the service, e.g. for informational consultations on rights, legal questions and strategies to produce better outcomes than than might occur without legal advice.
An is one in which a subscriber has a list of participating law firms and independent attorneys to choose from for the different areas of law, and may choose different provider for different specialties and different jurisdictions. It does offer more choice for the subscriber but may be lacking in the dependability and quality control that the closed system can provide. Closed systems are similar to medical insurance preferred provider organization
s (PPOs).
. Legal plans have been sold in the United States
since at least the early 1970s. While some plans are marketed via pre-paid legal service companies, or even independent attorneys and law firms, directly (often specializing in specific legal fields), most plans are offered by companies whose services are sold through third-party insurance agents as part of a portfolio of insurance services, through employees of the pre-paid legal company, or through independent contractor
agents working on commission.
In June 2008, the U.S. National Association of Attorneys General
and the American Bar Association
adopted a resolution supporting the concept of prepaid legal plans.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
provider for specific, limited legal services
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
(usually basic, but sometimes specialized) from participating law firms and attorneys at costs considerably less than independently hiring these providers. PPL services may be provided on an "open" basis, with a subscriber selecting specialists relatively freely from a pool of participating providers, or in a "closed" system, in which most or all services are provided to a subscriber by one central law firm. Pre-paid legal services have existed since the early 1900s, and have increased in popularity since the 1970s.
Description
Pre-paid legal plans typically offer, through participating attorneysAttorney at law
An attorney at law in the United States is a practitioner in a court of law who is legally qualified to prosecute and defend actions in such court on the retainer of clients. Alternative terms include counselor and lawyer...
and law firm
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
s, certain affordable civil law
Civil law
Civil law may refer to:* Civil law , a branch of continental law which is the general part of private law* Civil law , a branch of common law dealing with relations between individuals or organizations...
and criminal law
Criminal law
Criminal law, is the body of law that relates to crime. It might be defined as the body of rules that defines conduct that is not allowed because it is held to threaten, harm or endanger the safety and welfare of people, and that sets out the punishment to be imposed on people who do not obey...
services to the general public for a fixed, recurring charge. A PPL does not replace the public defender
Public defender
The term public defender is primarily used to refer to a criminal defense lawyer appointed to represent people charged with a crime but who cannot afford to hire an attorney in the United States and Brazil. The term is also applied to some ombudsman offices, for example in Jamaica, and is one way...
system, but rather provides access to private-sector legal services that subscribers otherwise might not easily be able to afford. This is possible because, as with auto, life
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
and medical insurance, the insurer makes a profit on the aggregated subscriber fees that is in excess of the costs of underwriting subscribers' actual usage of the available services. The participating legal service providers receive a reliable stream of clients and a streamlined billing process; the clients receive lower-cost legal services and consistent expectations with regard to billing and accountability; and the insurer receives continual collective income derived from many subscribers (also known as members, clients, the insured, etc.).
In many jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
s, PPLs are legally classified as insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and are regulated
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
as such (e.g. by a U.S. state's insurance commission). In these jurisdictions, a would-be provider of such services must usually obtain some kind of license before they are able to market subscriptions (memberships) in a pre-paid legal plan. In other areas, a pre-paid legal service is simply a business, requiring only a business license
Business license
Business licenses are permits issued by government agencies that allow individuals or companies to conduct business within the government's geographical jurisdiction. It is the authorization to start a business issued by the local government....
.
Services
In most plans, subscribers are covered only for specific services, with additional retainer fees (sometimes at discounted rates) for other services, and subscribers may be required to pay additional charges for covered services when they require more expertise or longer periods of time to resolve than usual. Commonly covered services include general legal adviceLegal advice
In the common law, legal advice is the giving of a formal opinion regarding the substance or procedure of the law by an officer of the court , ordinarily in exchange for financial or other tangible compensation...
and consultation, review of contracts, the writing of demand letter
Demand letter
A demand letter, or LOD, ie. a Letter Of Demand , is letter stating a legal claim which makes a demand for restitution or performance of some obligation, owing to the recipients' alleged breach of contract, or for a legal wrong.In the United States, demand letters from a debt collector relating to...
s on a client's behalf]], the drafting of wills and other legal documents; legal representation in court and other hearings, for issues such as traffic violation defense
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
, defense against criminal charge
Criminal charge
A criminal charge is a formal accusation made by a governmental authority asserting that somebody has committed a crime. A charging document, which contains one or more criminal charges or counts, can take several forms, including:* complaint...
s, general civil trial defense, and property valuation protests
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
, as well as plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
support, such as in employment compensation disputes and the filing of civil lawsuits against private
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
or public parties
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
. Legal plans can also be geared toward servicing specific target markets; there are family
Family law
Family law is an area of the law that deals with family-related issues and domestic relations including:*the nature of marriage, civil unions, and domestic partnerships;...
plans, small business
Small business
A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships...
plans, group employee benefit
Employee benefit
Employee benefits and benefits in kind are various non-wage compensations provided to employees in addition to their normal wages or salaries...
plans, commercial driver plans, law enforcement officer plans, and others.
One difference between PPL services and many other types of insurance is that the legal services can be preventative and proactive, such that a subscriber may not have to wait for something negative to happen like an auto accident before using the service, e.g. for informational consultations on rights, legal questions and strategies to produce better outcomes than than might occur without legal advice.
Closed and open provider plans
Pre-paid legal services, like medical plans, can be delivered by a closed provider system or an open provider system. A is one in which a subscriber has one main or central law firm providing services in most or all areas of law. Such systems have their own quality control for themselves and for other referral attorneys that are part of the network, which may consist of a large or quite small number of participating firms. The concept is to limit expenses to the insurer, streamline accountability, and provide a uniform, dependable and simplified system for the subscriber to use. In this type of PPL system, the subscribers have little if any choice in the selection of the lawyers that service them. On the other hand, the subscribers may be more able to rely on the network as a whole and on the service-providing law firm to be dependable and accountable for the quality of service that they provide (depending upon how well established the network really is, and how well it tracks and enforces accountability). Closed systems are closely analogous to health maintenance organizations (HMOs) in the medical insurance field.An is one in which a subscriber has a list of participating law firms and independent attorneys to choose from for the different areas of law, and may choose different provider for different specialties and different jurisdictions. It does offer more choice for the subscriber but may be lacking in the dependability and quality control that the closed system can provide. Closed systems are similar to medical insurance preferred provider organization
Preferred provider organization
In health insurance in the United States, a preferred provider organization is a managed care organization of medical doctors, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced...
s (PPOs).
History
The pre-paid legal service industry has existed in Europe since 1907, but is a relatively recent phenomenon in North AmericaNorth America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
. Legal plans have been sold in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
since at least the early 1970s. While some plans are marketed via pre-paid legal service companies, or even independent attorneys and law firms, directly (often specializing in specific legal fields), most plans are offered by companies whose services are sold through third-party insurance agents as part of a portfolio of insurance services, through employees of the pre-paid legal company, or through independent contractor
Independent contractor
An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when...
agents working on commission.
In June 2008, the U.S. National Association of Attorneys General
National Association of Attorneys General
The National Association of Attorneys General is an organization of 56 state and territorial attorneys general in the United States...
and the American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
adopted a resolution supporting the concept of prepaid legal plans.