What about less weighty matters?
Many small business owners, especially contractors and subcontractors, avoid seeking legal advice, even when it might be beneficial, because they either haven’t established a relationship with a lawyer or were reluctant to incur the costs. To address these needs, a number of providers are now offering legal insurance plans that cover routine legal assistance at a moderate and predictable cost. The plans cover attorney fees the way health insurance covers major medical bills. Customers pay a modest monthly fee, which entitles them to a certain number of attorney hours per month provided by law firms that have agreed to be part of the network. Like most health plans, the legal plans allow for referrals to attorneys with specific areas of expertise. And as in health plans, there’s an emphasis on preventive care — regular "legal checkups" -– to make sure legal affairs are in order and to head off potential problems.
Pre-Paid Legal Services, Inc. (PPLS), Ada, Okla. is one of the first companies to offer legal insurance. Harland Stonecipher founded the company in 1972. He recognized the need for such a service after nearly going broke paying attorney fees related to a 1969 auto accident. The concept has been well received in the consumer market and PPLS has grown accordingly. Recently, the company was ranked by Forbes magazine (October 30, 2000) as the 12th best small company in America. PPLS is especially useful for small businesses and is gaining popularity among contractors and subcontractors.
How does it work?
PPLS has arranged for a law firm in each state to provide service to its members. To gain access to an attorney, a member calls the provider law firm and gives his or her membership number. Attorneys who respond to customer requests are required to have at least three years experience in the legal area in which they are offering advice. PPLS provider law firms have compiled a database of most frequently asked questions that provider firms can access. The system helps reduce time and effort spent on researching similar problems. If the network law office has no one on staff with the expertise to handle the member’s problem, they’ll find you someone who does.
According to Nick Serba, PPLS’ National Director for Small Business Plans, premium payments vary by size of company. Those with 1-50 employees pay $75 and those with 51-99 employees pay $125 per month. PPLS is designed to serve only companies smaller than 100 employees, since that is where its service is most needed. A member company can also set up a plan that offers its employees the legal services to handle estate planning and other personal legal affairs.
Serba also serves as regional vice president for the state of Georgia and says that the type of services in each state vary based on what each state’s regulations will allow. Nationwide, however, all plans have unlimited consultation time and a maximum of 75 hours for lawsuit protection before any additional charges might apply.
PPLS also offers free legal web site
PPLS also maintains a free Web site with answers to frequently asked questions on both business and consumer law, which Serba says is the most comprehensive legal site on the Internet. The Legal Resources directory can be accessed on www.ppls.com under Membership Information. It also offers downloadable examples of common small-business legal documents and forms.
Is it right for you?
Whether you should buy a legal insurance plan depends on your particular circumstances. If you already have a good working relationship with an attorney who’s attentive to your needs and familiar with your business, you may not benefit much from the service. The same is true if your business regularly involves you in complex legal matters. According to Todd A. Jones, an attorney with Safran Law Offices in Raleigh, N.C., a pre-paid legal plan shouldn’t necessarily end a company’s relationship with its main legal counsel. A company can still seek out its established attorney in the event of some serious litigation or claim.
If, on the other hand, you’ve been skipping "legal checkups" for lack of time and fear of the cost, a pre-paid plan is probably worth investigating. Before signing up, ask for names of other members in your area. If you belong to a trade organization, find out whether it’s affiliated with a particular plan, since legal insurers often work through associations to help build membership. Talk to some companies like your own and see whether they’ve found membership to be worthwhile. If so, you might want to join the growing number of small businesses that use legal insurance as "an ounce of prevention," and consider it a convenient and inexpensive way to buy some peace of mind.
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