Smart Business: Prepaid Legal Coverage
Hed: Legal Help at Hand
Deck: Employers are providing legal benefits for their employees to help stem
absenteeism and to recruit and retain workers.
Summary: Prepaid legal plans vary widely in services and cost, so it pays to shop
carefully for the right plan.
Pull quote: "The main advantage is employees have ready access to legal help and don't
have to lose work time." -- Bill Bolger, executive director, National Resource Center for
Consumers of Legal Services.
When employees suffer legal headaches, they can take their pain to the workplace, in the
form of increased absenteeism and lower productivity.
Some companies, as a result, are providing prepaid legal services through their employee
benefits. The option need not cost the employer a penny. And because few small
businesses offer the benefit, the ones that do can stand out in a crowd when recruiting.
"Employees just love it," says Sabra Moore, a benefits specialist for Aptis, a San
Antonio, Texas, software company with 170 employees. "Since it was at no cost to the
company we thought it'd be a great benefit to offer. We want to give employees as much
as we can."
Aptis offers prepaid legal services as a voluntary benefit administered by ARAG Group,
a national legal services plan administrator based in Des Moines, Iowa. About 25
employees signed up for the plan last year, and more are opting for it during this year's
open enrollment. Moore says the plan gives employees legal advice at an affordable
price, a godsend for those going through divorces or dealing with child-custody or other
issues. Moore, who herself is among the employees who signed up for the plan, calls
having it "a peace of mind kind of thing."
Insurance Against Legal Worries
"The main advantage is employees have ready access to legal help and don't have to lose
work time," says Bill Bolger, executive director of the National Resource Center for
Consumers of Legal Services in Gloucester, Va.
About half of moderate-income households face at least one legal need a year, but less
than half of those people seek professional help, according to an American Bar
Association study published in 1994.
Most people don't consult with an attorney because they don't know where to turn and
they fear what it might cost, so small issues may fester and grow into larger problems,
Bolger says. A 1985 study by LSK Associates in San Francisco found that employees
with legal problems were absent from work five times more than average employees and
used medical benefits and sick leave four times more than the average.
A prepaid legal services plan is insurance for legal issues. Each person enrolled gets
access to free or discounted legal advice for a flat monthly fee. According to the Legal
Plan Resource Group, an agency in Columbia, Md., that matches employers with legal
plan administrators, three types of plans are on the market – referral and discount, access,
and comprehensive plans.
Discount plans refer employees to attorneys for free initial telephone consultation and
discounted legal services. According to the Legal Plan Resource Group, the plans start at
75 cents a month per employee for employer-paid benefits and cost $4 to $6 a month for
Access plans provide free unlimited phone consultation, document review, and
preparation of simple legal documents, and discounted legal representation for more
complex matters. These plans, designed to cover 40 to 60 percent of the average person's
legal needs, cost $8 to $12 a month,.
Comprehensive plans are designed to cover 80 percent to 90 percent of an average
person's legal needs, and include all the services of an access plan plus additional office
and trial work. Those plans cost $13 to $25 a month.
Locating the Lawyers
Employers can find a list of national plan administrators on the National Resource Center
for Consumers of Legal Services' Web site. Caldwell Legal in Sacramento, Calif., for
instance, provides a plan for $14 a month that covers unlimited telephone advice on such
issues as landlord/tenant matters, consumer protection laws, premises liability, personal
injury and family law. The attorneys also write follow-up letters or make telephone calls
to third parties on members' behalf on simple legal matters. Free services also include
simple will preparation and updates, contract and document review, referrals to agencies,
and a hotline offering unlimited advice on federal tax matters. Under the plan, members
can get representation for $85 per hour for complex legal issues.
Prepaid Legal Services Inc. in Ada, Okla., another administrator that markets to small
businesses, offers a standard plan for $16 a month. It provides free telephone
consultation, document review, follow-up with third parties, simple will preparation,
defense for motor vehicle violations, up to 60 hours of defense in lawsuits, up to 50 hours
of legal help for IRS audits in the first year of coverage, and a 25 percent reduction on
legal services that aren't covered in the plan. An expanded plan for $25 a month covers
those services plus additional hours for defense in lawsuits – up to 75 hours in the first
year of coverage.
Bolger says about 7 percent of employers offer prepaid legal services plans. Outside of
negotiated union contracts, most companies offer them as a voluntary benefit that
employees pay for themselves, he says.
David Harris, marketing director for LawStar in Los Angeles, another prepaid legal plan
administrator, says employee participation in plans at small companies averages about 30
Brian Barger, owner of Laser Force, a family entertainment center with 20 employees in
Sacramento, Calif., says his company signed up with Caldwell Legal two years ago. "It's
tough to find employees," he says. "We were trying to find ways to keep our senior staff
who might be looking for other jobs." Barger says the legal services plan was an
inexpensive way to beef up the company's benefit package. So far two employees have
signed up for the plan, as well as Barger himself.
Companies that want to offer a prepaid legal services plan should shop carefully and
make sure they understand what the plans cover, says Alec Schwartz, executive director
of the American Prepaid Legal Services Institute in Chicago, Ill., a nonprofit trade group
affiliated with the American Bar Association. Employers should also carefully evaluate
the plan's ease of administration and customer service, and make sure the plan has
attorneys in all the states where employees reside, Schwartz says.
But prepaid legal services plans aren't the only way to give employees access to legal
advice. Bolger says a small business can set up its own legal services plan simply by
asking a local law firm to provide free initial consultations for employees in exchange for
the employee referrals.
Meanwhile, some companies offer access to legal services through their employee
assistance plans. Through the plan at Action Instruments, an industrial instrument
technology company in San Diego, Calif., for instance, employees get free psychological
counseling, as well as free initial consultations with attorneys and discounts on their
services. These employer-paid plans range in price from $1 to $3.50 per month per
employee, according to Integrated Insights, the plan provider for Action Instruments.
Says Azim Rizvi, HR administrator at Action Instruments: "Whether employees are
happy in their lives affects their work performance."
<a href=''http://www.araggroup.com">ARAG Group</a>
<a href=''http://www.actionio.com">Action Instruments</a>
<a href=''http://www.integratedinsights.com">Integrated Insights</a>
<a href=''http://www.nrccls.org">National Resource Center for Consumers of Legal
<a href=''http://www.caldwell-legal.com">Caldwell Legal</a>
<a href=''http://www.prepaidlegal.com">Pre-paid Legal Services Inc.</a>
<a href=''http:// www.abanet.org/api/home.html">American Prepaid Legal Services
<a href=''http://www.getlprg.com">Legal Plan Resource Group</a>
7411 John Smith Drive
San Antonio, Texas 78229
Human Resources Administrator
8601 Aero Drive
San Diego, CA 92123
858 277 6277 x2121
Lois Olson, program manager (not quoted)
9370 Sky Park Court Suite 140
San Diego, CA 92123
Phone: (800) 342-8111
David Harris, marketing director
6310 San Vicente Blvd., Suite 103
Los Angeles, CA 90048
Legal Plan Resource Group
10480 Little Patuxent Parkway, Suite 400
Columbia, MD 21044
Bill Bolger, executive director
The National Resource Center for Consumers of Legal Services
6596 Main Street
P.O. Box 340
Gloucester, VA 23061
phone: (804) 693-9330
Crystal Caldwell Virtue (not quoted)
PO Box 245778, Sacramento, CA 95824
Brian Barger, owner
6031 Fair Oaks Blvd.
Carmichael, CA 95608
(916) 972-7395 Ext. 110
American Prepaid Legal Services Institute
541 N. Fairbanks Court
Chicago, ILL 60611
VP, attorney resources
Pre-Paid Legal Services Inc.
PO Box 145
Ada, OK 74820
phone: 580/436-1234, 800/654-7757