June 30, 2006 (Original publish date) • By Dennis Beaver
I work at a State Prison where many of the Correctional Officers here read your column. A couple of us have been offered a kind of legal insurance plan that we can buy for about $25.00 a month. Another Officer is selling it and, we are inclined to believe what he tells us. Do you have an opinion on these kinds of legal insurance plans?
Save your money
Do I have an opinion on legal referral, or paid legal “insurance” plans? I sure do, and it’s not a good one. Over many years of law practice, I’ve had contact with many of them, have had clients referred to me by plans that I’ve never heard of, and told several others to please stop calling me. In my opinion, most people would be better off taking that monthly membership fee and putting it towards a vacation – then, at least you would have nice photos to show what you got for your money.
How they work
There are numbers these referral plans on the market, from the nationally known Pre-Paid Legal, to the lesser known, Legal Access, Hyatt Legal, Legal Connect, and lots more. Some require a monthly fee and have a menu of services included with the membership — such as free telephone consultations, document review and a $25.00 simple will-while others merely promise to refer you to a lawyer in your area at a reduced rate, from their list of “pre-qualified, experienced lawyers for your legal problem.” In the space I have here, it is impossible to go into detail, but I will caution that the ads for these plans, in my opinion, often do not accurately reflect the quality and scope of legal services delivered.
“The Plan,” typically has a central referral office, a staff of at least one in-house attorney, and referral lawyers in various legal areas. Some are a benefit of union membership, while others are strictly a monthly subscription basis.
Out of curiosity to see how these plans function I have accepted “referrals” from several of them over the years. It has been a depressing experience, across the board, with all of them, but some much worse than others. It’s saddest with one very well known multi-level marketed plan where members pay a monthly membership fee, expecting an attorney for some of the most common legal problems, only to learn so often that their problem isn’t covered, or all they get is a reduced rate. Some examples: get arrested for DUI, and you’re on your own. Divorce? Child custody, support, other family law matters are covered on a “so many court hours” basis per year, which still can easily require thousands of dollars in attorney fees to be paid-by the client-for preparation time and the critically important pleading stages of the case.
In my opinion, if there is an area ripe for investigation by the California Attorney General, it is this industry. Here’s an example of a conversation that I had with a reader who was a “member” of one of the nation’s largest “legal plans” and their in house Los Angeles attorney, himself a retired judge. The member called me for help in getting his plan to provide an attorney to defend a traffic ticket but the plan refused, even though the member was told they cover traffic matters.
Plan Attorney: Well, tell me, were you speeding?
Member: Yes I was, but I have the right to a lawyer under the plan, and I know that there is a chance that if the police officer does not show up, the ticket will be dismissed. I drive for a living, and that’s why I bought the membership, and the salesman told me you would get me a lawyer to fight my ticket in this precise situation.
Plan Attorney: We determine if there is a valid defense and do not pay for a lawyer to go to court just to see if the officer fails to appear, even though that does happen fairly often. If you want that, then you pay for yourself.
Member: So I’ve been paying for nothing! This is not the way the salesperson told me the plan functions.
Plan Attorney I guess so. We do not waste our money!
That caller was one of many who honestly believed the legal plan would provide an attorney at plan expense for a variety of matters. More than the denial of his expected benefit, it was the attitude shown by the plan attorney – arrogant and uncaring, that led him to feel cheated.
“A good legal plan operates very much like an HMO does, but unfortunately in this industry, there are several legal plans who operate on the multi-level marketing system that encourages their paid representatives (sales people) to misrepresent the scope of their plan’s coverage and ability to serve members,” Bakersfield attorney William Go wrote, when I asked for his comments on these issues. He is recognized by the American Bar Association as one of the nation’s leading experts on Legal Insurance plans.
Mr. Go stresses that such plans should not be “painted with a broad sweep of the brush,” and urges anyone interested to carefully study the claims that are made before signing up. He maintains that many are of very high quality, but admits, “sometimes it is difficult to separate the legit ones from those that are little more than multi-level marketing schemes.”
Underpaid = danger
Another serious fault with so many of these plans is that they drastically underpay the lawyers to whom cases are referred. That is itself another real danger. If the plan pays a lawyer $200 for a day of trial, or peanuts to spend two to three hours in meetings with a client, preparation of a will, you have to wonder what kind of a lawyer would work for so little money when the going rate is several times that figure. Reality is that there are indeed lawyers who will work for virtually nothing, because that’s all they can command. I have often seen the results of plan lawyers who simply did not know what they were doing, or did not care.
Finally, much as with a family doctor-who knows you and your medical history-it is important to establish an ongoing relationship with a family or business lawyer. Having poor or marginal representation-because it’s cheap — costs you much more in the long run. And that’s what’s wrong with so many of these plans.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.