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January 11, 2004

NYT Takes a Look at Prepaid Legal Services Plans

Filed under: pre-06-2006 — David Giacalone @ 3:14 pm

New York Times article in today’s newspaper offers a good introduction to prepaid legal services plans.  (The H.M.O. Approach to Choosing a Lawyer, by Susan B. Garland, 01-11-04)  The article quotes an ABA official that half of all consumer who need a lawyer do not seek legal help and notes:

“This potential demand is fueling the growth of prepaid legal-services plans, also known as legal H.M.O.’s. The plans can be bought individually or obtained through some employee benefits packages.

“Like health maintenance organizations, legal plans typically charge a monthly fee, or premium, often $10 to $25. That buys access to a network of lawyers in private practice. The lawyers usually provide a set package of free services, like document review, will preparation and representation in real estate transactions. Depending on the plan, clients can receive more complex aid, like trial representation, at discounted rates.”

mouse lawyer . . .

Most of the plans are aimed at households with secure middleclass incomes, and they are not for everybody.  Like all major consumer purchases, getting a good fit with your own needs, comparing options and reading the fine print are very important.  I agree competely with the quote from Jeanne Charn, director of the Bellow-Sacks Access to Civil Legal Services Project at Harvard Law School:  “Consumers should be aggressive in asking what they will get for their fees, whether there are additional charges and how the plan ensures that the lawyers are competent.”

The article has a good checklist, with explanations, of issues that should be explored:

  • check first with your employer to see whether it offers one in its benefits package.

  • Compare the benefits of several plans.

  • Check what is included as covered, paid-in-full benefits. (“Many plans offer unlimited telephone advice, and some provide unlimited face-to-face consultation.”)

  • Understand how the plan imposes additional fees.

  • Look for exclusions. (e.g., “Many plans do not provide coverage for contingency-fee cases, lawsuits against your boss, tax audits or divorces. Many plans also limit coverage for “pre-existing conditions.”)

  • Ask for a list of participating lawyers.

  • Ask how the plans select lawyers for their networks.

A plan that includes discrete services and coaching (unbundling) for capable clients who can help significantly with important aspects of a matter or case, might indeed help improve access and reduce costs of legal services.

Some consumers, as noted in the article, have been stung by plans that offer very little.  But, increased competition and informed consumers could make prepaid legal services an important part of a system that offers fuller access to all Americans to the justice system and needed legal services. 

Don’t let the H.M.O. comparison keep you from exploring this concept — health maintenance organizations (especially before they were forced to take virtually all providers), often did a very good job putting together networks of professionals willing to cut their fees in exchange for a steady supply of consumers.

  • Editor’s Lawful but Non-Legal Vent:  I truly hope that prepaid legal services plans are not called “legal H.M.O.s” as mentioned in the article.  The lazy linguistic practice (often perpetrated and perpetuated by the popular media) of using familiar analogous situations not merely to explain a new concept, but also to name it, is making a mess of our language, with more and more phrases simply making no sense on their face.  Other annoying examples:

    • calling DNA identification information “DNA fingerprints.”  These are not fingerprints. 
    • borrowing the term “most favored nation” (and the acronym MFN) from treaties and diplomacy and using it whenever a group is assured treatment that is as good as any other entity receives.  At the FTC, I used to refuse to call insurance provisions guaranteeing such status to health care providers “most favored nations” clauses. They were most favored providers/physicians. 
    • Calling every device that records data on the operation and functioning of a vehicle (airplane, boat, train, automobile, etc.), a “black box” — especially now that they are usually bright orange.  [thanks for letting me vent; a perk for the editor — but not MFN status]

Update:  There’s a Commentary at Motley Fool (04-22-04) on the company Pre-Paid Legal Services..

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