A pre-paid legal service (PPL or PPLS) is an individual or group low-cost insurance provider for specific, limited legal services (usually basic, but sometimes specialized) from participating law firms and attorneys at costs considerably less than independently hiring these providers. PPL services may be provided on an "open" basis, with a subscriber selecting specialists relatively freely from a pool of participating providers, or in a "closed" system, in which most or all services are provided to a subscriber by one central law firm. Pre-paid legal services have existed since the early 1900s, and have increased in popularity since the 1970s.
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Pre-paid legal plans typically offer, through participating attorneys and law firms, certain affordable civil law and criminal law services to the general public for a fixed, recurring charge. A PPL does not replace the public defender system, but rather provides access to private-sector legal services that subscribers otherwise might not easily be able to afford. This is possible because, as with auto, life and medical insurance, the insurer makes a profit on the aggregated subscriber fees that is in excess of the costs of underwriting subscribers' actual usage of the available services. The participating legal service providers receive a reliable stream of clients and a streamlined billing process; the clients receive lower-cost legal services and consistent expectations with regard to billing and accountability; and the insurer receives continual collective income derived from many subscribers (also known as members, clients, the insured, etc.).
In many jurisdictions, PPLs are legally classified as insurance and are regulated as such (e.g. by a U.S. state's insurance commission). In these jurisdictions, a would-be provider of such services must usually obtain some kind of license before they are able to market subscriptions (memberships) in a pre-paid legal plan. In other areas, a pre-paid legal service is simply a business, requiring only a business license.
In most plans, subscribers are covered only for specific services, with additional retainer fees (sometimes at discounted rates) for other services, and subscribers may be required to pay additional charges for covered services when they require more expertise or longer periods of time to resolve than usual. Commonly covered services include general legal advice and consultation, review of contracts, the writing of demand letters on a client's behalf]], the drafting of wills and other legal documents; legal representation in court and other hearings, for issues such as traffic violation defense, defense against criminal charges, general civil trial defense, and property valuation protests, as well as plaintiff support, such as in employment compensation disputes and the filing of civil lawsuits against private or public parties. Legal plans can also be geared toward servicing specific target markets; there are family plans, small business plans, group employee benefit plans, commercial driver plans, law enforcement officer plans, and others.
One difference between PPL services and many other types of insurance is that the legal services can be preventative and proactive, such that a subscriber may not have to wait for something negative to happen like an auto accident before using the service, e.g. for informational consultations on rights, legal questions and strategies to produce better outcomes than than might occur without legal advice.
Pre-paid legal services, like medical plans, can be delivered by a closed provider system or an open provider system. A closed provider system is one in which a subscriber has one main or central law firm providing services in most or all areas of law. Such systems have their own quality control for themselves and for other referral attorneys that are part of the network, which may consist of a large or quite small number of participating firms. The concept is to limit expenses to the insurer, streamline accountability, and provide a uniform, dependable and simplified system for the subscriber to use. In this type of PPL system, the subscribers have little if any choice in the selection of the lawyers that service them. On the other hand, the subscribers may be more able to rely on the network as a whole and on the service-providing law firm to be dependable and accountable for the quality of service that they provide (depending upon how well established the network really is, and how well it tracks and enforces accountability). Closed systems are closely analogous to health maintenance organizations (HMOs) in the medical insurance field.
An open provider system is one in which a subscriber has a list of participating law firms and independent attorneys to choose from for the different areas of law, and may choose different provider for different specialties and different jurisdictions. It does offer more choice for the subscriber but may be lacking in the dependability and quality control that the closed system can provide. Closed systems are similar to medical insurance preferred provider organizations (PPOs).
The pre-paid legal service industry has existed in Europe since 1907, but is a relatively recent phenomenon in North America. Legal plans have been sold in the United States since at least the early 1970s. While some plans are marketed via pre-paid legal service companies, or even independent attorneys and law firms, directly (often specializing in specific legal fields), most plans are offered by companies whose services are sold through third-party insurance agents as part of a portfolio of insurance services, through employees of the pre-paid legal company, or through independent contractor agents working on commission.
In June 2008, the U.S. National Association of Attorneys General and the American Bar Association adopted a resolution supporting the concept of prepaid legal plans.[1]