| Type | Private |
|---|---|
| Industry | legal service plans |
| Founded | 1972 |
| Headquarters | Ada, Oklahoma |
| Key people | Harland Stonecipher (founder, chairman), Rip Mason (CEO) |
| Products | Legal services, Identity theft restoration |
| Revenue | $461M |
| Employees | 813 Full Time |
| Website | www.mylegalshield.com |
LegalShield is a privately held corporation that offers specialized legal service products in the United States and Canada. The original company, Pre-Paid Legal Services, Inc., was founded on August 8, 1972, and made its initial public offering in 1984. Pre-Paid Legal Services, Inc. was a member of the S&P 600 SmallCap index and the S&P 1500 Super Comp index, prior to being acquired by Mid Ocean Partners. The company's name changed to LegalShield after the acquisition.
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LegalShield develops, and markets pre-paid legal service plans through a network of more than 50 independent provider law firms across the U.S. and Canada. The Company also markets an identity theft monitoring and restoration services through its partnership with Kroll Inc..[1] Currently most of the company's sales are described as multi-level marketing.[2] Products are also sold as an employee benefit through payroll deduction. The company has legal service plans for small businesses as well advertised with NFL Hall of Fame player Fran Tarkenton as spokesman.
Today, LegalShield has its headquarters in Ada, Oklahoma. The company owns several subsidiaries. Pre-Paid Legal Casualty, Inc. operates in Alabama, Arizona, Arkansas, Georgia, Illinois, Montana, Nebraska, Tennessee, & Wisconsin. There are three subsidiaries that serve individual states: Pre-Paid Legal Services, Inc. of Florida, National Pre-Paid Legal Services of Mississippi, Inc. and Legal Service Plans of Virginia, Inc. PPL Legal Care of Canada Corporation operates in the country of Canada.
On July 11, 1969, former CEO and founder Harland C. Stonecipher of Ada, Oklahoma was involved in a motor vehicle accident and was hospitalized. Although the other party was cited for fault, they had filed a suit against him for the accident.[3] He hired a lawyer to defend himself in court, but in doing so, depleted his life savings. After researching the industry of European legal expense plans, Stonecipher created Pre-Paid Legal's predecessor, The Sportsman’s Motor Club, on August 8, 1972. The club offered legal expense reimbursement to its members. Pre-Paid Legal began utilizing "network marketing" (multi-level marketing or MLM) in 1983. Pre-Paid Legal went public on the NASDAQ National Market System in 1984, and is currently listed on the New York Stock Exchange.[4]
In 2001, the Wyoming Attorney General issued a press release announcing "When we discovered that Pre-Paid was using prohibited income representations to promote their multilevel marketing program, we warned them that the representations were prohibited by Wyoming law". Pre-Paid paid $4,000 in lieu of civil penalties, reimbursed the state for $1,000 in costs, and refunded $2,000 to participants who claimed to have been misled.[5][6] In July the same year, the company was forced by the U.S. Securities and Exchange Commission (SEC) to stop counting the commissions they paid out to sales associates as assets, instead of expenses,[7] though they did not release their updated, halved, 2000 earnings figures until February 2002.[8]
Pre-Paid Legal has faced ongoing troubles in Missouri. After the company settled complaints in 2001, a number of similar suits arose. The company won in a jury trial against two plaintiffs,[9] but after losing others, including one in which a former customer was awarded $9.9 million[7][10] settled with more than 400 others. The company, and the U.S. Chamber of Commerce of which Pre-Paid Legal CEO Harland Stonecipher is a director,[11] have described the lawsuits against the company as "frivolous" and "abusive".[12]
Pre-Paid Legal reported to the SEC that less than 25% of its sales representatives sold more than one insurance plan in 2005, but avoids reporting such information to prospective sales representatives.[13]
In October 2009, Tulsa World reported[14] that Pre-Paid Legal had been subpoenaed by the SEC for various documents including those pertaining to a stock repurchase program that Pre-Paid started in April 1999. (And in 2006, the company said it would repurchase $27.4 million of shares owned by executives.)[13] The SEC reported that thus far that its demand for documents is a "fact finding" mission.
On November 19, 2009, Pre-Paid Legal announced[15] that it received a complaint from the Federal Trade Commission (FTC). The proposed draft complaint alleged that Pre-Paid's "ADRS program and related materials violate Section 5(a) of the FTC Act regarding asserted misleading representations, express or implied."[16] On July 27, 2010 the FTC ended its three year investigation of Pre-Paid Legal Services, Inc. without any action.[17]
Forbes magazine again in November 2010 ranked Pre-Paid Legal Services as number 78 out of the 100 best companies in America.
In January 2011, Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners, a premier private equity firm headquartered in New York which it says is "focused on the middle market." The transaction would result in the company becoming privately held. The deal closed on June 31, 2011.[18]
On September 10, 2011, the company announced [19] that it would change its name to LegalShield. The new corporate name for the 40 year old company was said by the company to be part of an overall re-branding initiative following the acquisition of Pre-Paid Legal Services, Inc. by MidOcean Partners.