Are Pre-paid services worth the money?

You may be covered when it comes to health, life, car or home insurance…
but what about legal coverage?

The question is not if you'll need a lawyer, but when: according to the
American Bar Association (ABA) “Americans have come to view legal
assistance as a necessity”. Yet, most Americans have not used a lawyer
more than once due to the sky high attorney fees – anywhere from $100
to $1000 per hour – and the trepidation involved in the search for
legal services.

Prepaid legal insurance might just be the answer you have been looking
for. The concept is simple: for a fixed monthly subscription, you get
telephone access to advice from a lawyer. You pay a fixed amount in
advance each month to defray the cost of legal services furnished in
the future. These services span various areas of the law, anywhere from
reviews of simple legal documents and the writing of a simple will to
more comprehensive coverage of trials, divorce, bankruptcy and real
estate issues.

Pre-paid legal coverage is a very attractive proposition for people
who don’t have the resources to retain a lawyer on a regular basis
whenever they need assistance. You effectively have a network of
attorneys you can use as retainer to seek preliminary advice about
what the issues are and how the procedures work whenever legal
matters arise. Services not covered by the plan are available to
members for a discount on regular hourly rates or flat fees.

A hard fact, however, is that more than half of new subscribers
drop out of a prepaid plan after their first year. One reason could
be that many members do not require any legal assistance during their
first year, so opt out.

Another reason is the scope of services offered, which are very basic
and limited in nature. Most plans have certain caps or maximums as
far as benefits provided are concerned, and purport to offer discount
on standard attorney fees instead. However, by virtue of simply calling
around by yourself you could probably negotiate a lower rate.

Another problem with pre-paid legal plans is the likelihood of getting
assigned to a novice attorney. Because of cost considerations, many of
the companies behind per-paid services assign trainee or inexperienced
attorneys to handle phone consultation and drafting of simple legal
documents. You are also less likely to build rapport and understanding,
two of the most important attributes of choosing a good attorney, as
over 90% of the work is done over the phone.