One of the reasons people may elect to represent themselves is the high cost of lawyers. Being advised in the middle of the “free initial consultation” that anything more will cost you $2500, $5000 or even $10,000 retainer against an hourly fee of two or three hundred dollars, can be sobering at best. Some of us can afford this kind of expense, others can’t. The prospect of finding yourself having to go to court with no way to afford an attorney is a fear that unfortunately has been played upon by a sometimes less than scrupulous industry – prepaid legal services.
In this post Be Your Own Lawyer will examine this industry so that you can make an informed decision about whether or not one of the many plans available is right for you.
First, what is a prepaid legal plan? In its simplest terms it is an arrangement where in exchange for a monthly fee, which you pay whether or need legal help or not, if and when you do need legal help, the plan provides it.
Understand that any prepaid legal plan is nothing more than an insurance policy. It is not different that health insurance, auto mobile insurance, or even an extended warranty on your car or appliance. The theory is simple. Most people will not need legal representation, therefore by collecting payments from a large number of people, those who require it are provided help. Most people never use the service, but have the security and peace of mind, knowing that if they need it, the help is there.
The theory is good. However, it must also be considered in the context of a second principle underlying any kind of insurance. Insurance companies are in the business of collecting premiums (in this case plan payments) and preferably not in the business of paying claims. Common sense confirms this. If an insurance company collects a certain amount of monthly payments, say $X, then every dollar they pay out in claims or benefits reduces their profits.
This is as much true of the prepaid legal services industry as it is with any other kind of insurance. The result is that many of these plans are effectively worthless due to limitations and exclusions. For example, one popular program charges $9.95 per month for individuals and $19.95 for families. That may sound like a good deal until you take a look at what it does not include. Divorces, separation, bankruptcy, criminal defense, any income producing property, or any business related matter. Limitations for services that are included, likewise make the plan virtually worthless. For example IRS audit benefits not in a trial environment are limited to three and a half hours of attorney time.
If you examine the list of exclusions and limitations it becomes quickly apparent that for most of the things that the average person is likely to need legal help with, the plan either provides no benefits, or benefits that are so limited that they are basically worthless.
Suddenly shelling out $9.95 or $19.95 per month is not such a great prospect!
This is not to say that all prepaid legal plans are bad, or of no value. It would be wise though to read the plans carefully and be sure they will be of value to you when you need them.