Prepaid legal service plans are subscription-based plans that make legal services available to their members whenever the need arises, serving as insurance against future legal needs. These plans are attractive to low- and middle-income individuals and families who are likely to have trouble paying standard legal fees– typically hundreds of dollars per hour– when they need a lawyer.
Prepaid legal membership can be beneficial for individuals who need simple document preparation or legal advice at a relatively low cost. They can also provide some peace of mind for those worried about potential legal troubles down the line. However, not all legal service plans are created equal, and in many instances paying for a plan does not make economic sense. If you are considering paying for prepaid legal services, consider the following pros and cons.
Save money by planning for future legal needs
The primary benefit of prepaid legal services is the potential to save significant money on legal fees by anticipating the need for an attorney. Depending on the plan, consumers may pay subscription fees as low as $30 per month. Compare this to standard attorney rates, which can run up to $500 or more for each billable hour, and it is easy to see why a prepaid plan is often the economical choice.
Legal advice when you need it
If you are fortunate enough to have a longstanding relationship with a lawyer you can trust, then you likely know who to call when you need advice or representation. However, for the majority of Americans who don’t have an attorney’s phone number at their fingertips, knowing who to turn to when legal trouble pops up can be difficult. Prepaid legal groups aid in this dilemma by connecting their members with attorneys in their area as soon as possible, sometimes within minutes.
Hiring a lawyer at the first sign of trouble
Prepaid legal plans for individuals also reduce the barriers that prevent average people from getting legal help for seemingly insignificant issues. Due to the high cost of legal fees, many individuals choose to go it alone when a minor dispute crops up, only to discover later that they are in over their heads. Having a prepaid plan makes seeking professional legal help at the first sign of controversy a much easier call.
Vetted and specialized legal professionals
Prepaid legal service plans also take some of the guesswork out of selecting an attorney, by connecting members with local attorneys with a specialization relevant to the member’s legal needs. The companies providing the prepaid legal plans also vet participating attorneys, ensuring that the client gets a lawyer who meets certain minimum requirements with regard to experience, competence, and ethics.
Less selection
If you retain a lawyer through a prepaid plan, you are limited to attorneys in their network. This is akin to having to find a doctor that is approved by your health insurance provider. Much like doctors, lawyers often help individuals with highly personal issues, and finding an attorney who is the right fit for you is a top priority. Although the lawyers available to prepaid plan members are vetted (see above), clients are still limited in their choice of counsel, unless they are willing to pay out-of-pocket.
Limited services
The main drawback of prepaid legal service plans is that most plans only cover certain legal services, often leaving members to fend for themselves when it comes to their most complicated legal problems. For example, the most basic plans may only provide their members with simple estate planning documents and brief phone consultations. For a slightly higher premium, expect a prepaid legal plan to also cover an uncontested, no-fault divorce or perhaps a personal bankruptcy petition. These basic plans typically offer discounted rates, but not full coverage, when more involved representation is necessary (such as a contentious divorce, criminal defense, or any other type of litigation). To be sure that every legal snafu is covered, a member is likely to pay a significantly higher subscription fee.
How to decide whether a prepaid legal plan is the best option for you
Given the above points, the choice of whether to move forward with a prepaid legal service plan (and if so, which one), is not always easy. The decision involves weighing the risk of potential legal trouble (and the high cost of representation) against the cost of plans available and how that cost fits into your budget. This determination is highly personal and specific to each individual, but a good start is to think about the likelihood of basic legal issues (divorce, landlord-tenant disputes, minor criminal issues) and then check out the average rates for attorneys in your area that cover those matters.
When looking into the cheaper, basic prepaid legal insurance, consider how much value you would get from simple legal services. For example, if you already have an estate plan, simple will-drafting services won’t provide much added value. If you are young and/or have few assets, estate planning may not be a big concern, and bankruptcy is probably not on your radar. Furthermore, if you are willing to do some research, you may find it more cost-effective to handle some basic legal projects yourself, such as drafting a simple will or writing a cease and desist letter.
It is essential when shopping for these plans to do your prepaid legal website research and read the fine print. Consider prepaid legal services reviews as part of your evaluation criteria. Every plan will cover a different range of services at different price points, so it is a must to pick one that not only fits your budget but also covers the most likely legal scenarios you anticipate.
