Guide to Prepaid Legal Services for Small Business

Buy legal coverage and advice on the installment plan

By W. Eric Martin

Prepaid legal plans are a little like HMOs for health care. A prepaid legal service typically contracts with one law firm in each state that handles calls from businesses within that state. Under a prepaid legal plan, you pay a monthly fee – from as low as $10 to $100 or more – for a package of basic services such as:

1. Unlimited phone consultations with an attorney
2. A certain number of contract reviews and collection actions per month
3. Discounts on other legal services.

Action Steps
The best contacts and resources to help you get it done

Review available plan types

In a prepaid legal plan, you typically pay in advance to cover the cost of future legal services. For a monthly fee, a prepaid access plan will get you phone consultations and a set number of additional services. A group legal plan generally lowers legal costs by discounting legal fees of a particular lawyer or firm. A comprehensive prepaid legal plan costs more than an access plan, but it covers an average of 80 percent of a person's expected legal needs, far more than an access plan.

I recommend: See different legal plan choices at the American Prepaid Legal Service Institute (APLSI) Web site; you can also peruse its directory of prepaid plans.

Should you wait until you really need legal help?

One advantage of signing up for a prepaid legal plan is that you can tap legal help more quickly when you actually need it. Without such a plan, you might delay asking for advice because you don't want to pay a steep one-time fee – and holding off on advice might worsen your situation or at least delay resolution.

I recommend: Prepaid legal plans are available through LegalSurvival.com, Legal Club of America, Advance Pay Legal Services, Preferred Legal Plan, and Pre-paid Legal Services, Inc.. (Business plans aren't available in all states through every vendor).

Can your employees benefit?

Aside from using a prepaid legal service for your business, you can offer coverage to employees and their families as part of a benefit package.

I recommend: To set up prepaid legal services as an employee benefit, you can contact Pre-paid Legal Services, Inc., LegalSurvival.com, or Legal Club of America.

Who will be helping you?

Check the firm you'll be working with under a prepaid plan. Does anyone at the firm have small business experience, especially within your industry?

I recommend: Ask the plan for the legal background of the attorneys who will be on call or search for their backgrounds yourself on Martindale.com.

Helpful advice for making the most of this Guide

• •  Make sure you understand what's included in your plan and what you'll have to pay extra for.
• •  Remember that you'll likely talk to a different person each time you use the service. If you want to develop a relationship with one lawyer, you should skip legal plans.
• •  Ask how the legal plan handles conflicts of interest in case you have a dispute with someone who also uses the service.
• •  Before signing up with a plan, call local lawyers and see whether they'll offer an affordable payment plan should you ever need their services.