There is a statistic floating around that claims you are three times more likely to be hauled into court than stay overnight at your local hospital.
Although it may be just another sign of our litigious times, it is also the statistic legal insurance providers quickly roll out when asked why their industry has experienced such a boom in the past several years.
For those unfamiliar with the concept, legal insurance is similar to an HMO in the health care industry. It first became available in the United States when Oklahoma-based Pre-Paid Legal Services Inc. set up shop in 1972. More recently, it is popping up as an employee benefit, alongside traditional health and dental insurance plans.
“I see it as a thing that’s going to become as common as health or disability,” says Benjamin Spofford, a Hudson-based Pre-Paid Legal Services affiliate. “There is a group benefit discount, plus an employer really wants it because the employee cannot use it against him.”
If there’s any doubt about the viability of the legal insurance industry, consider this: Pre-Paid Legal Services finished No. 13 on Money magazine’s list of top stocks of the 1990s, while Microsoft finished four spots behind at No. 17. Some quick research also reveals competitors are cropping up in the legal insurance market, with American Express’ basic $9 a month plan one of the most recent entrants.
Typically, legal insurance is purchased for individuals, businesses or as an employee benefit. The provider firm screens and contracts with attorneys, who provide their services when legal troubles arise, for a relatively inexpensive monthly premium.
Where shopping for legal insurance plans becomes complicated, however, is when it comes time to determine what services you get. Telephone consultation and the review of business documents are built into most, but many have limits on the amount of work conducted during each 30-day period. If you are named as a defendant in a civil or criminal matter, the plans usually covers your initial representation in court. But attorney fees could end up coming directly from your pockets as the case evolves.
Spofford readily admits the limits, but points out that legal insurance is most valuable when it is used to prevent a legal misstep. In essence, he argues more people doing better research could combat the glut of lawsuits heard in the courts each year.
“The real secret behind a good legal defense is to know the risks ahead of time, before you do that thing that could end you up in court,” he says. “Call the attorney to see if you’re right or wrong about an issue. That’s one of the greatest benefits of it, to just to protect yourself ahead of time.”
How to reach: Benjamin Spofford, Pre-Paid Legal Services Inc., (330) 656-3488
Jim Vickers (firstname.lastname@example.org) is an associate editor at SBN.