First off, what is a prepaid legal plan?
Some companies offer a legal insurance plan similar to medical insurance. The employee pays into the plan and if they ever need a lawyer for a prenup, real estate closing, wills and trust, bankruptcy, etc., they can call up their legal service provider and ask for a referral to an attorney that is in the network.
Some of the pros of being listed with one or more prepaid legal plan such as ARAG or Hyatt is that when you’re a new solo, you need every source of income you could get. Prepaid legal plans will provide you with much needed referrals similar to what you would get from a Lawyer Referral Service with the Massachusetts Bar Association or the Boston Bar Association. Along with getting more clients you will get the necessary experience to better help clients in the future. Lastly, these services will always pay so there’s no fear of non-payment by the client.
The con of being listed with one of these prepaid legal plans is that they generally pay very low rates. They have a set fee structure and it’s sometimes half or 1/10th of what you would normally charge for a similar matter. In the beginning of your practice, you might find that it’s better than no business at all and it’s a calculated move to get clients through the door.
Another thing to keep in mind is that these prepaid legal plan clients might refer you cases from a friend or relative that does not have legal insurance and therefore you can charge them your regular rates.
I think it’s great that Gabriel is educating solo practitioners on prepaid legal plans. Whether a prepaid legal plan is for you, is based on your firm goals, but there are many advantages for solo and small practice attorneys to join. Most notable would be the benefit of receiving client referrals via the provider’s marketing efforts to large employers. Once accepted to the panel, attorneys gain immediate exposure to thousands of eligible plan members in their area without lifting a finger or spending a dime.
Yes, the fees paid may be less than you may normally charge but the benefits of increased client volume and referral potential to non-clients from satisfied plan members generally outweighs the reduction in fees. You should also consider the advantages of immediate and direct payment (no credit collections or write offs) of working with a legal plan provider.
At ARAG we also offer easy online claims submission and immediate payment via electronic funds transfer, no fees (ever) for membership in the network, and ongoing educational programs and benefits to help attorneys just starting out or looking to grow their practice.
Nicolle Schippers
General Counsel, ARAG