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How Two Legal-Service Pians compare
Business Dav Costi About $16 a month
Subscdbers: More than
Features of covemge:
Costi 56.75 8 month
Subscribws: Abou? 200 000
Feattures ot coverage:
l ~~E%IC?I new legat matter, a one-hour in-
W For eatzh new legal matter. a ha&hour
consuhatmn wtth lawyer of subScriber choti 10 person consuRaBon wrth a lawyer assigned by the
dmcuss a WIII or other legal matte?. (Clu9nt 1s PM.
re~mtiursed for 100 percent of th8 t8wyer.8 I Wtfimitec! t&phone or mail consuR8tlons with
customary f8e.j that l8wyer.
l For defendmg fawsut% CoWit of UP @ S5300 l Review of legal documen% up to SIX p8ges In
the ftrst year. &reaslq $5.000 8 mr to 8 , ’ length <
c maxtmum of SZ5#OII the iifth jre8r: m PrepaGihon of a 55rnpte witi
l For &fenUmg tax matters, up~%OCXl for l LetiefS or telephone calls by the lawyer on the Nancie E. Pouios, general man-
attorneyof accountant. e
client’s behalf. as may b necessary to resolve a
ager of Momgomeq Ward’s di-
l For 8u~omobiIe-reia Wd matters. *wMISOn8LJie’ matter.
rect-mail prepaid legal setice.
tees rangng tram $250 m con- with 108tng a l Reduced rates on uncontested divorces, real
drover s hcense, to .$2O.OOOOr more &I Connection estate clos~rtgs and other matters. with a $50-an- legal-servtces chents, s u c h chents
w!th a fatal automobile accKle& hour celting on t88s. can be a boon to small general prac-
tices. In Los Angeles, jor exahple,
the four lawvers at Fazio i? Fairchild
Group, Montgomery Ward’s fmanclal But skeptics point out that advIce is d o l i t t l e bit w o r k f o r theu MO0
m on how and when people should
servtces subsldjary, sends he four only as good as the lawyer glvlng it. Amway clients, 2,000 M o n t g o m e r y
use lawyers.”
millton pieces of mall every three “It’s not a good vatue, even at a rew W a r d c l i e n t s a n d o t h e r prepad
Prepaid Legal Services inc., a pub-
months to the store’s credtt-card dollars a month, If you’re aSSIgned to clients. Christopher Fairchild s a i d
hciy traded company based in Ada, the offIce handles about 100 telephone
Okla., is the oldest and biggest of the holders, and according to Nancie E. a lawyer who has no expertise m the
Poulos, the general manager of the area you’re concerned with and no m- calls a day, whtch m turn g e n e r a t e
compames selling to mdividuais -
plan. about 1 percent sign up. Mail- cenlive to spend the time lo research about 25 wills, 20 or 30 letters on legal
8nd one of the few that allowsmem- matters and 10 documents toreview.
be= to use any lawyer they want. mgs will be natIonwIde by September, 11,” said a partner at a large New
she said. York law firm, who asked not to be According to Warren Feldman, 8
“I think choosmg your own lawyer
is as important as choosing your own named. Long Island lawyer who dazs prepaid
Founder Predicts Rapid Growth work for NatIonwIde Legal Sewices,
doctor,” Hariand Stonecipher, the No Easy Measure-
founder and chairman of the compa- Hyatt Legal Servtces’ two-month- a pubhcly t r a d e d N e w Y o r k - b a s e d
ny, s8id. “If you’re being sued, an un- old Lawplan IS slgnmg up about lO,OOO While there IS no easy way to meas- company, and for several umon and
Citibank credit-card holders a week. ure the quality of iawyermg, most employer plans. the key to handlmg
Joel Hyatt, left, founder of Hyatt Legal Services, predicts Ihat Hyatt’s Lawpian will have 500,000individual sub- known voice on the other end of the
phone may not be very reassurtng.” according lo its founder, Joel Hyatt. plans do try to gauge clientsalisfac- prepaid chents IS a highly automated,
#crIbem by year end. Warren Feldman, a Long Island aUomey, does prepaid work for Nacfonwide Legal Services. and the ru-st malimgs have gone out lion. well-managed office.
Doubling of Sales AnUcipated to holders of FIrestone credit cards. “One of the thmgs we look at, on a “Clients are susptcious right from
Legal Advice: $6.75 a Month
Prepaid has about 150,000people in By the end of the year, he predicts, m o n t h l y basis, 1s t h e cancellation t h e begmmng with Ihis kmd of pm
22 states selling the plan door-to-door Lawplan will have 5OO.OOO mdlvldual rate of people using each iaw firm,” gram,” s a i d M r . F e l d m a n , w h o s e
and at gatherings of their friends and subscribers drawn from the mailmg Ms. Poulos said. “We can tell pretty firm, Feldman & Kramer, has eight
neighbors. Prepaid’s revenues were lists of banks, department stores and qutckiy where there’s a problem. The lawyers tn Hauppauge, L.I., and M8n-
nearly S2O milhon last year, and Mr. oil compames. No. I compiamt people have about hattan. “You have togive them better
paid for by unions or emplovers. But there IS no question that the StonecIpher expects more than dou- The A.F.L.-C.l.0.‘~ more than 13 lawyers, m our plan and elsewhere, 1s service than a traditional law firm
“Until about four years ago, all the plans are quuzkly gammg momen- ble that tfus year. mIllion m e m b e r s , m e a n w h i l e , a r e t h a t t h e y d o n ’ t r e t u r n phcme c8lls. would. And we can. If a client warns 8
By TAMAR LEWIN
actIon was m the unions, but now thp tum. “The market IS expanding rap- The Amway COrF@raliOn ais uses about to get another kmd of legal- Our subscribers get a toll-free num- WIII, our computers give him 8 range
financial services cornpanics. msur- Idly,” said William Bolger, executive person-to-person contacts by almost services package, known as a “free ber to call if there’s a problem, and of possible clauses that’s much wider
Montgomery Ward sells clothing, ancc rompanirs and all kinds of other director of the National Resource 8 milhon distributors to sellits plan. plan” - in effect a group-buymg ar- the lawyers know we take complamts than what a lawyer going through the
bicycles, televlstons and now, for businesses at-~ mtrrrsted.” said AIN Center ror Consumers 0r Legal Serv- L8st May, Amway distributors in rangement - under which certam v e r y serlousty, s o I thmk they’re form books would find. The down side
$6.75 a month, basic legal scwrccs: a Schwartz, cxccut~vc dlrpctor nf thr ices, a trade group m Washington. four states began offering packages lawyers will offer members a 30 per- especially careful IO be responsive to is that any mismanagement leads to
simple will, document review, unltm- A m e r i c a n Prcpatd Legal Servlccs ln- “But it’s going to be a few more years ranging from the $l6O-a-year faniily cent discount on fees. The plan will our subsc*rlbers.” a losmg situation.”
lted telephone consultations with a stilute, u nonprofit group conncctcd before everyone who wants a prepaid plan - covertng free wills, three cost neither the A.F.L.-Cl.0 nor INS Stall, when II comes to quality con- For the participaUng lawyers, who
lawyer and a dtscount on more com- to the Arncr~ca~~ Bar Association. legal-servtces plan will have been of- hours of in-person consultation,un- are paid a dollar or two 8 month for
members any money. Such free plans t ml, the prepaid plans of l&gal &imcs
phcatcd matters such as divorces. But several uncertamt ies surround fered even one package, much less a limiled telephone consultations, docu- pose a threat to the profit-makmg or- s u c h a s H y a t t Leeal S e r v i c e s o r each prepaid client assigned to them
Amway - which peddles soap,vita- the prepaid plans. mere is the matter chotce of plans.” ment review and reduced rates on Jacoby & Meyers may have an edge - even if the client never c&Is -
mins and other products - recently gamzatlons that selt p a y - m - a d v a n c e
of whether they are a form of insur- Until 1977, when the Supreme Court other services - 10 the S5OO-a-year plans. But those orgamzatlons say over plans that assign the work to there IS stiii some doubt about how
started offering a slmliar legal park- ance, subject to extensive state regu- opened the way for adverttsmg by executive plan, which covers many outsIde tawyers, a point they make on profItable prepatd plans will be. The
ap, calId the Ultimate Legal N~I- they are not worried.
lation In New York, New Jersey and lawyers, the very idea of a national business matters as well. “H~stortcaily, free plans start out their own behalf. answer will depend on how often cus-
work, for $160 a year And Hyatt Conneoticut such plans are generally prepaid legal-services plan was un- Amway, like Montgomery Ward “The best quahtv control is having tomers use the services and how
nicely and then, since they don’1 have
Legal Semites offers the SIO-a-month regulatd by the state insurance de- thinkable. fndti, the ftrst-genera- and others, pays local lawyers to pro- your own delivery- system, made ui often they bring m other work, such
money to spend on promotion and ad-
Lawplan, for holders of Citibank partments, but in all three slates (ion plans were local operations in vide the actual legal advice that its verttsmg, peopie forget about them of people you know and h8ve as divorces or real estate closmgs, for
c&it cards. some plans may be sold by non-msur- which unions or employers hired a 10,000 members ask for. “Al least and they fade away,” Ms. Poulos Of tramed,” M r . H y a t t said. which they typically pay an addi-
Prepaid legal-services plans, a ers. few lawyers to provtde workers with half of our members are our own dis- Montgomery Ward said. Gail Koff, a f o u n d i n g p a r t n e r o f tional $50 or $60 an hour.
product that barely exIsted IO years More fundamentally, some con- wills and advice on family or con- tributors,” s8id Henry Emrich, the People who pay ror mdlvidual plans Jacoby 8 Meyers, made a similar as- “I don’t know yet if prepaid legal
ago, suddenly are being seen as a sumer and legal experts wonder sumer problems. coordinator of the plan, who is plan- tend to use them a lot. Indeed, more sessment. But bnth she and Mr. HyaU services 1s gomg to be 8 real good
great marketing opportumty whether such plans, which must be A Fast-Growing Segment ning to expand iI natIonwIde. than 20 percent of Montgomery must be measured m their criticism business, a good business or even 8
About I7 milhon Americans are high-volume operatmns to be profit- Most of the Other new plans, tnclud- Ward’s subscrIbers use the plan each of networks of outsIde lawyers, for margmal busmess,” M s . Koff s8id.
covered hy some sort of legal-service able, ofrer good legal advice, espe- While many unions and employers ing those developed by Montgomery month, Ms. Poulos said: “We’ve had Hplt’s Lawplan uses such a network “We know from our offIces that are in
package, mosl of them by plans pro- cially when they move beyond routme stlfl offer those plans and group plans Ward and Hyatt Legal Services, are very good utllizatlon on ~111s and con- in areas where I( has no offIces and the Montgomery Ward plan that m
vtdcd by unions or organzalions to matters. In many of the plans, all but still cover the most people. the rast- selling their services by mail, sending sumer problems and family-related some of Jacohy 8 Meyers’s lawyers pie seem to use il ror a lot 0r con-
which they belong. But mostmiddle- the sjmplest legal questtons Incur est.growmg plans are the &es being solicit8tions to millions of credtt-card problems such as dtvorce, child sup- at-? part of the Montgomery Ward sumer questIons that are fmstr8tmg
mcomc Ameruznns still do not have extra costs. sold to individuals. h o l d e r s . MOntgOmery Ward is prob port or a kid in trouble. People use net work. from a legal pomt of vtew. If someone
lawyers. I.&ens of different con- “We’re over the first hurdle, the ably the large81 o f t h e d i r e c t - m a i l these attorneys not only for legal wants to collect $300 from the dry
Profitablll~y Is Unce#tain question of whether this idea is gomg Relying on Private Practices
ccrns, including retailers, banks and plans, although others in the industry questions, but as a resource for ad- cleaner who rumed their dress, and
legal clinics, are scrambimg to carve Finally, ror both the sponsormg or- to work, and we’re into the phase of dispute the retailer’s claim that it has vtce on things like what to do with a While large, prest!glous covrate meanwhile they’ve lost the receipt,
out a ptecc of that market - mostly ganiz8tions and the partictpatmg law- flgurmg out how to market it; said 200.000 subscribers. IXe Signature lump-sum retirement plan.” law hrms g e n e r a l l y s h u n p r e p a i d that’s a hard thmg to handle in a cost-
by selling their services directly to yers, there IS a lmgermg questton Mr. Schwartz of the legal services in- effectlvc way. I can tell you that iaw-
the mdtviduals who ~111 be covered. in about JUSI how prorltable legal-serv- stitute. “11% not like selling hamburg- yers will go out of bus ness if they’re
contrast to the old-style group plans Ices plans will be. ers. It’s more like consumer educa- getting lots of questi d!Is hke that.”
