Posted about 3 years ago

An Introduction To Pre-Paid Legal Plans.

     This post ( a possible prelude to a series of posts) is intended as an introduction to what a pre-paid legal plan is, how it might be used and some of my experiences in using what I consider a valuable tool. There are several providers of this service available. I have experience with only one and can only relate my experience with that provider. This is not intended as a recruiting piece. I will not include any links to my web site nor mention the name of the provider I use. Bigger Pockets frowns on that and I agree with their stance on posts that are primarily spam with only a bit of content. If you are reading this it may mean that the BP moderators have not yet found this post or that they agree I have stayed on the right side of the line.

     What is a pre-paid legal plan? It is simply a group plan where members join and pay a modest monthly fee (~$25 monthly) to have access to a range of legal services at no additional charge. The available services will vary by provider and plan. These can include basic will preparation, document review, research, writing of letters, phone consultation and other services. If you are wholesaling, renting, or buying real estate you will have the need of legal advice from time to time. I do, indeed, speak from experience. The legal plan lawyer can provide a quick assessment of the situation you are facing. Most people wait too long to get legal opinions. (The best time to get a legal opinion is often well in advance of the need.) They either ignore situations hoping they will resolve on their own or take uniformed actions which put them in less favorable positions than they would have been in had they done nothing. Why is this? As you know, lawyers can be expensive and their meters often start running as soon as they pick up the phone. The pre-paid plans offer consultations at no additional cost. Will you be more likely to consult with a lawyer when your plan provides unlimited phone consultation at no additional charge? Of course you will.

     We are all faced with nuisance situations, an overcharge on a bill, a dispute over a poorly provided service, a traffic ticket—when you consult a lawyer you will know exactly where you stand, how to protect your rights and what might happen if you assert your rights. Real estate investors are often presented with contracts which are difficult to understand even if they were written well (they are often not). Would you be more comfortable if you had a lawyer explain exactly what that mystery clause means? Landlords incur threats of potential legal action from tenants. Most of those threats will never be acted on but would you be more comfortable if you knew exactly what your rights were and how to defend against the threatened action immediately? What if the consultation with the lawyer revealed a way for you to terminate a difficult tenancy?

     At least one pre-paid legal plan has contracted law firms in all 50 US States and some of the Canadian Provinces. Real estate, contract and finance law vary significantly from State to State. Even if you have an intricate understanding of the procedures in your State (or Province) if a situation arises with a property you own, manage or are considering purchasing in another State would you appreciate having access to a lawyer who knows the law in the remote location? Do you have access to a law firm in the locality of your investment? One that provides free phone consultation?

     I am going to wrap this up before it gets too long. This train of thought went in a different direction than I had intended and I didn’t get to my personal experiences with my pre-paid plan lawyers (they are mixed). If you are interested in this becoming a series of posts let me know in the comments. I will be happy to expand on this if the BP moderators allow.

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Comments (30)

  1. @Bryan Drury, @Matt Ashton, @Andy H., @Stanley Kong, and all others who may be interested, I posted the next installment here: Pre-Paid Legal Plans. My Experiences. Thank you for your encouragement.


  2. Thanks for sharing! My workplace actually offers LegalShield for $15/month. Seems like a great deal. Please share more of your stories with them.


    1. @Stanley Kong, that is considerably less than I pay for my membership. The group plans offer a lot of value. If you called a lawyer once a year it would probably pay for itself. I do plan on sharing more of my stories. Thanks for your interest and comment.


  3. Jeff: Thanks for writing about this. My wife and I have been considering using one of these services, but are still on the fence. We're definitely interested in hearing more personal experiences to see what the good, the bad, and the ugly are. 


    1. @Andy H., I appreciate your post. It seems there is enough interest for me to write up some more of my stories. I think the service is well worth it. I view it as first aid. It is great to get a first, fast opinion and can help one to quickly determine when more specialized help will be needed. It can most certainly stop you from doing something counter productive which would make the specialist's help more expensive when you bring them in. 


  4. Jeff:

    I LegalShield claims to operate in Canada as well - can't imagine it being a good market for them unless subscriptions also cover routine business such as property purchase and sale.


    1. @Roy N., they will consult on any legal issue and review any legal documents, warranties, real estate purchase, automobile purchase, etc. They will write letters on your behalf, including collection letters. It has been well worth it to me. I plan to share some more of my experiences. I don't have a lot of great stories but the plan has been well worth it to me.


      1. Jeff:

        I did a little more digging and discovered that LegalShield is not available in any Province where we operate {they only do business in AB, BC, MB, & ON}.


    2. @Roy N., thanks for keeping me honest. I called corporate today and you are correct. I was told that they are working on expanding to other Provinces but do not yet have a time table for when that might happen. I apologize for the misleading statement. I live just North of Ontario (Detroit suburbs) but have not yet done business on your side of the border.


  5. How are the attorneys able to make any money with only $25/month payment?


    1. @Dawn Anastasi, the law firm is paid for every member in the State whether they use the service or not. There is only one contracted law firm in each State. Most people only call in occasionally and there are thousands of members. This is similar to a capitated health care plan. 


    2. @Dawn Anastasi to answer your question...think of it like legal insurance. How often do you use any of your insurance vs. how often you pay into it? (rhetorical question). I've been a LegalShield member since 2007 and only needed to use them 3 times. Now multiply people like me by thousands...it adds up. Now to be fair, not everything is covered by the monthly fee. Depending on the complexity of your case and longevity of your membership will affect your costs to the lawyer. For example, in my case, if I needed legal representation, under my plan I would get unlimited consultations and 500 hours of legal research(for their research team) and case work(court room time) free. Above that threshold, the firm representing me would bill me at a reduced rate compared to non-members. (FYI - my plan no longer exists since I've had it for so long, I've been grandfathered in)


    3. It can also serve as a lead in to more work for the firm. For example, I needed assistance on a contract so the lawyer billed me at a reduced rate. You don't get everything under the sun for your monthly fee, but I find that what you do get is worth the cost.

    4. It can also serve as a lead in to more work for the firm. For example, I needed assistance on a contract so the lawyer billed me at a reduced rate. You don't get everything under the sun for your monthly fee, but I find that what you do get is worth the cost.

  6. Legalshield saved me over $750 on a closing on my PRIMARY residence in a state that required lawyers for closing. The cost was less than $20/month and I could have cancelled at any time. I have to say that the best lawyer I had dealt with wasn't in the plan and the lawyer in the plan was a real pain in the arse to deal with. I am sure there are better lawyer within the plan, but I just didn't find them. 

    @Dmitriy Fomichenko which plan do you use? I have found the two I typically used, Legalshield and Hyatt Legal didn't cover issues related to real estate investing or business.


    1. @Brian Maida, thanks for posting. Your statement seems contradictory. You say the plans you used didn't cover RE issues but saved you an a RE closing. I have consulted with my plan lawyers frequently regarding RE, landlord/tenant, business entities, operating agreements, taxes, quiet title, SD IRAs, etc. They weren't expert in all areas but always gave me useful information which informed my next move. 


    2. I use Legal Shield for my personal needs, real estate questions and issues as well as business. Very valuable service. 


      1. Thanks, @Dmitriy Fomichenko. I agree.


  7. I have been a member of Pre-Paid Legal plan for number of years and few times I used the service have saved me thousands of dollars in legal fees that I would paid to attorneys if I didn't have the plan.


    1. @Dmitriy Fomichenko, I have saved thousands in legal fees and have also saved thousands from contesting unreasonable bills and charges that I would, most likely, have paid had I not had easy access to lawyers who I could consult at no additional charge. I cannot see being without this service.


  8. Thanks BP. I have considered sharing my adventures with my pre-paid legal plan lawyers for a while but was reluctant to do so. Featuring this post is a nice way of expressing your approval. I plan to continue the series and appreciate your support.


  9. Thank you for the info. With just 2 properties I am not thinking I actually need to join a per-paid legal. However if I expand it would definitely be of great use. 

    Also I am wondering if/ when you need the service will there be lawyers who actually specialize in real estate? I have a dear friend who is a divorce lawyer but unless I am getting a divorce she is not much help regarding real estate :-)

    Ty!


    1. @Amy Bodakh, the plan I use contracts with multi-lawyer law firms in each State. They have scary looking letterhead. The calls are fielded by clerks who place it in the queue for the lawyers. The lawyer with the appropriate expertise to answer your question is the one you will speak with. If it is a real estate situation you will get a real estate lawyer. If it is a question regarding divorce you will get a divorce lawyer. If you do not feel the lawyer you spoke to had the appropriate experience or understood your situation you can ask to speak to another. If the appropriate experience is not available at the plan firm you will receive a referral to an outside lawyer who has the appropriate experience for a no cost consultation.


  10. Thanks Jeff.  I can definitely see the benefits of such a service as long as you feel confident in the advice being given.  I'd be interested to hear your personal experience and see if you felt the quality was high enough given the extremely low price you mentioned.  Thanks again for posting!


    1. @Matt Ashton, I was confident in the advice most of the time. The lawyers definitely knew landlord/tenant law and helped me fill out forms for evictions, garnishment, etc. They guided me through a small claims case with a great result--from a judgment against me to a judgement in my favor. That put more than $2,000 in my pocket. It paid for a lot of months of membership fees. They didn't know the rules regarding self-directed IRAs but gave me a referral to another lawyer who did and that consultation was also free. 

      Thank you for your comment and your interest.


  11. Jeff,I didn't realize this type of service existed,but I can see the benefit to myself easily.As our projects have expanded I see the need to have legal services localized to area we are operating in.I have learned a lot from your writings and appreciate you taking time out of your schedule to contribute.I would appreciate more writings on your experiences with pre-paidlegal services.Thanks


    1. @Bryan Drury, thank you for your comments. I have some interactions with the pre-paid legal plan that might make some good stories.


      1. Jeff - Thanks for bringing up this topic. I don't usually comment on posts but I want to express my experiences on this one. Over the past year I've used my LegalShield lawyers 3 times and saved close to $5000 as a result. Two of those times involved landlord/tenant situations. The third was for one of those nuisance situations that can come up for anybody. Just because we're all in real estate doesn't mean we should ignore everything else that can happen in life, where an attorney can make the outcome better. What if one of your teenage driver children gets a speeding ticket? Do you need an attorney? You bet! What if you’re contacted by the IRS for an audit? Need a tax attorney? You bet! And the cost of LegalShield protection is so low; if it were any lower it would be free. The decision to have it is not a money decision. I was so impressed with my LegalShield plan, as it is so worthwhile, I decided to enroll to be a representative and sell it. Since then, I have told friends, relatives and business associates all over the country about it. I live in Georgia, and have protected people with LegalShield as far away as Arizona and California. Being able to consult with an attorney and get advice without getting a bill is the best thing a person can do for themselves and their family.


      2. @Rich Sheff, your experience is similar to that which led me to become an associate. Thanks for sharing.


      3. I use Legalshield as well. Some months I do not contact them at all. However, it is well worth the small monthly fee I pay each month to have access to lawyers especially to quick legal questions I don't want to guess on.