In 1997, more than 90% of individual prepaid legal clients opted for the family plan, which allowed them to take advantage of preventive legal services such as unlimited telephone consultations at no cost, correspondence, preparation of wills and review of all legal documents. The family plan also included litigation defense, audit support with the Internal Revenue Service, and motor vehicle legal services. Until 1997, the company offered its family plan in Spanish in states such as Florida, California and Texas. Like all businesses, Pre-Paid Legal was concerned about state laws and regulations. In 1997, according to a report by Salomon Brothers, only 14 states regulated prepaid legal firms as insurance companies, while the American Bar Association monitored interactions between prepaid and similar law firms with their provider attorneys. Not everyone thought multi-level marketing was a good way to sell legal protection insurance. In 1985, Christopher P. Nolan was working as a salesman for prepaid legal services, but he felt that MLM was better suited to selling tangible merchandise. He left Pre-Paid Legal and worked for a competitor, but frustration with the way his services were marketed led him to start his own business. Nolan founded Landmark Legal Plans Inc. in Denver and was profiled Inc.
in September 1988, but three months later his business had almost completely collapsed. Nolan`s new firm was backed by a Denver law firm that provided legal advice to Landmark`s clients. However, the same law firm has worked with several prominent competitors, including Pre-Paid Legal. The law firm decided to abandon Landmark. Meanwhile, Europeans began to offer the first versions of prepaid legal protection insurance. Germany already had such plans in the 1930s. However, it wasn`t until the 1960s that some U.S. Supreme Court cases paved the way for prepaid U.S. legal plans.
Supported by the American Bar Association, modern America`s first prepaid plan began in 1971 in Shreveport, Louisiana, where the General Contractors Association provided limited legal services to union members. Pre-paid Legal added two more plans for the public in the 1990s. In 1993, she developed the Legal Plan for School Teachers to assist teachers facing administrative hearings. Two years later, the company partnered with an accounting firm to launch its tax and financial services plan, designed to help prepaid legal representatives get the legal advice they need to prepare their state and federal income tax forms. This is the story of a visionary, Harland Stonecipher. who, through his own experience, has discovered a dramatic need in our society, affordable access to the legal system. This realization was the catalyst for the creation of Pre Paid Legal. Now called Legal Shield, a company over 45 years old operating in North America and soon in the UK.
This disruptive business model is rapidly changing the way legal services are delivered to individuals and families. “Equal justice for all” is now a reality! The American Bar Association conducted a 10-year study that concluded that in the late 1980s, about 70 percent of Americans, mostly middle-class, rarely, if ever, used legal services. Prepaid law firms and other prepaid law firms were encouraged by these statistics, which suggest that many more people were potential clients. In any event, the prospects for prepaid legal aid looked pretty good in 1997 for the immediate future. With no debt and $18 million in cash, the company was ready for a major expansion. Founder Harland Stonecipher in July/August 1997 Success predicted that all major insurance companies would soon offer legal expenses insurance and that his own company would have an annual turnover of $1 billion in just five years. This confidence was confirmed on the 4th. It was confirmed by Forbes in November 1996, including Pre-Paid Legal as one of the top 200 small businesses in the United States. And both Sovereign Equity and Salomon Brothers classified prepaid legal shares as a “hard buy” in 1997. Regardless of the specific legal plan, prepaid legal clients were entitled to limited benefits.
For the additional services of a supplier lawyer, they received a discount, usually 25% off the usual hourly rates. The average prices of the new legal regimes increased from $165 in 1993 to $215 in 1996. While prepaid legal services barely survived the late 1980s, several other firms had entered the growing field of legal insurance. The National Resource Center for Consumers of Legal Services estimated that about 30 million Americans were enrolled in a prepaid legal plan in 1987. From about 1985 to 1987, one of the newcomers to this industry was the Montgomery Ward Signature Group, which sold its plan by direct mail. In just two and a half years, 200,000 plans have been sold. Other companies that have used direct mail to promote legal expenses insurance include Hyatt Legal Services and Jacoby & Meyers. Amway used its distribution network to sell 14,000 packages in just eight states within a year of launching its ultimate legal network. Since 1986, the company has offered its legal plan for commercial drivers to truck drivers and other commercial vehicle drivers.
Benefits of the plan, signed by the Road America Motor Club, included legal assistance for movement and non-movement violations, arrest and bail guarantees, defense against a tragic accident, car rental discounts, and emergency services. In 1991, Pre-Paid Legal began offering its legal plan for lawyers, which offered many benefits in the family plan, as well as 24-hour emergency telephone access to lawyers, as well as legal assistance for administrative and post-trial hearings. The reality was that prepaid legal services were suffering from a severe lack of liquidity at the time. In an interview with Success in July/August, Stonecipher described the worst crisis in his company`s history. “[We] didn`t have the money to keep growing. So in 1986, we basically stopped our marketing, laid off half of our office staff, and focused solely on keeping the accounts we had. Our sales force has grown from 50,000 to 1,500 people. It was a terrible thing.
In 1972, Stonecipher, still a life insurance salesman, had a serious car accident that changed his life. He found that his insurance covered both his car and his medical expenses, but not his multi-thousand dollar legal fees. He thought, why not have legal assurance, so he first turned to the Oklahoma insurance commissioner for approval of his idea. He went on to found the predecessor company Pre-Paid Legal, a Motor Service Club in Oklahoma, which offered reimbursement of legal fees. The country`s various plans have been championed by a trade organization, the Chicago-based American Prepaid Legal Services Institute. In 1996, the Institute`s Executive Director reported that 90 per cent of all prepaid subscribers were satisfied with their packages, that most state-owned bars had approved prepaid packages and that they were increasing by 10 per cent per year. A 1997 report by Salomon Brothers confirmed the latter statistic. It was reported that the industry grew by 11%, from 29.5 million consumers in 1995 to 33 million in 1996. Many people think that you have to pay fees directly to a lawyer for their services. However, options for this direct payment method have been around since the turn of the century. For example, from 1899 to 1910, the Physicians` Defense Company provided physicians with prepaid legal protection against malpractice lawsuits. In the 1920s, some automobile clubs offered their members free legal advice in automotive-related matters, a type of service that the American Bar Association declared unethical.
Pre-Paid Legal made a significant change to its legal services in 1987. It no longer offered the kind of contract that was called an open regime where consumers could choose their own lawyers. The company began selling only closed plans, where clients had to choose from a network of lawyers created by Pre-Paid Legal. Typically, the company has one contract with one law firm per state. The supplier`s lawyers received fees for each client in their area. Of course, Pre-Paid Legal continued to adhere to open plans signed before 1987, but these have diminished over time. Until 1997, around 85% of Pre-Paid Legal`s activities concerned contracts. Meanwhile, Pre-Paid Legal moved from the NASDAQ to the US stock exchange in October 1986.
The AMEX symbol was PPD. Pre-Paid Legal and its predecessor used typical marketing strategies in the insurance industry to sell their legal expenses insurance for the first 10 years. In 1982, sales reached $4 million, then Harland Stonecipher decided to follow the advice of an old friend named John Hail that multi-level marketing (MLM), also known as network marketing, was a legitimate and effective way to sell goods and services. Hail founded the independent company TVC Marketing Associates to promote legal prepaid on an experimental basis in selected states. In 1997, Pre-Paid Legal had contracts with 35 law firms with between 10 and 60 lawyers.
