LegalShield

LegalShield
Formerly called
  • Sportsman's Motor Club (1972–1976)
  • Pre-Paid Legal Services, Inc. (1976–2011)
Private
Industry Multi-level marketing, Legal services
Founded 1972 (1972)
Founder Harland Stonecipher
Headquarters Ada, Oklahoma, U.S.
Areas served
  • United States
  • Canada
Key people
Products
Services
  • Legal services
  • identity theft monitoring and restoration
Revenue est. $400 million[1] (2014)
Owner MidOcean Partners
Number of employees
 700[3] (2014)
Website legalshield.com

LegalShield (previously known as Pre-Paid Legal) is an American corporation that sells legal service products through direct sales and multi-level marketing in the United States and Canada.

The company was founded August 8, 1972 as the Sportsman's Motor Club. In 1976 it was incorporated as Pre-Paid Legal Services, Inc., and made its initial public offering in 1984.

Pre-Paid Legal Services, Inc. went from being traded on the New York Stock Exchange back to a private company in 2011 when it was acquired by MidOcean Partners for $650 million and subsequently changed its name to LegalShield.

Company description

LegalShield develops and markets pre-paid legal service plans through a network of more than 6,900 independent provider attorneys across the U.S. and Canada. The company also markets an identity theft monitoring and restoration services through its partnership with Kroll Inc..[4] The company's service plans are sold through its business-to-business channel (B-2-B), its employee benefits division, and also through its multi-level marketing division.[5]

History

Exterior of the company's headquarters in Ada, Oklahoma (2012)

LegalShield was established as Sportsman's Motor Club in 1972, then known as Pre-Paid Legal Services, Inc. from 1976 until its acquisition by MidOcean Partners in 2011.[3][6]

Harland Stonecipher (1938–2014) served as the company's founding president and chief executive officer (CEO).[7][8] The life insurance salesman from Ada, Oklahoma, created Pre-Paid's predecessor, a "motor service club", after being involved in a car accident in 1969. Although the other party was cited for fault, they filed a suit against him for the accident. Stonecipher had health, life, and vehicle insurance coverage, but was required to hire a lawyer to defend himself in court and struggled to pay associated legal expenses.[9] After researching the industry of European legal expense plans, he created the Sportsman's Motor Club to reimburse members for legal fees.[9][10]

Pre-Paid Legal began using "network marketing" (multi-level marketing or MLM) in 1983. The club changed its name and incorporated as Pre-Paid Legal Services, Inc. in 1976,[11] becoming the first company in the United States to provide pre-paid legal plans for individuals.[9] Initially, members could choose their own lawyer and seek reimbursement from Pre-Paid, but by the 1980s, the company established a way to direct members needing legal assistance to preselected firms.[9]

The company went public in 1984.[12] Pre-Paid was first listed on the NASDAQ, then moved to the American Stock Exchange in 1986,[13][14] followed by the New York Stock Exchange in 1999, being listed as "PPD".[8][15][16] In 1998, Pre-Paid acquired The People's Network, a marketing company based in Dallas.[17][18]

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.[19][20] 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,[21] the same way other types of insurance companies do, though they did not release their updated, halved, 2000 earnings figures until February 2002.[22]

Pre-Paid Legal has faced ongoing troubles in Mississippi. After the company settled complaints in 2001, a number of similar suits arose. The company won in a jury trial against two plaintiffs,[23] but after losing others, including one in which a former customer was awarded $9.9 million[21][24] 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,[25] have described the lawsuits against the company as "frivolous" and "abusive".[26]

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.[27]

In October 2009, Tulsa World reported[28] 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.)[27] The SEC reported that thus far that its demand for documents is a "fact finding" mission.

On November 19, 2009, Pre-Paid Legal announced[29] 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."[30] On July 27, 2010 the FTC ended its three-year investigation of Pre-Paid Legal Services, Inc. without any action.[31]

In January 2011, Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners, a 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.[32] Beginning in July 2011, Rip Mason served as Legal Shield’s Chief Executive Officer.

On September 10, 2011, the company announced [33] 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.

In July 2014, Jeff Bell was appointed Legal Shield's Chief Executive Officer replacing Rip Mason. Rip Mason assumed the position of Chairman of the Board.[34]

References

  1. 1 2 3 4 Silcox, Beth Douglass (March 2, 2015). "Company Spotlight Equal Access, Equal Adaptability: LegalShield’s Moral Imperative to Grow". Direct Selling News. Plano, Texas: VideoPlus. ISSN 1554-6470. Retrieved March 8, 2017.
  2. 1 2 3 4 5 "Company Information: Leadership". LegalShield. Retrieved March 8, 2017.
  3. 1 2 Burkes, Paula (September 7, 2014). "Executive Q&A: LegalShield chief comes home to Oklahoma roots". The Oklahoman. Oklahoma City: The Oklahoman Media Company. Retrieved February 24, 2017.
  4. ↑ "Pre-Paid Legal Services to Add Identity Theft Benefits Provided by Kroll Background America". kroll.com. Kroll Inc. Retrieved March 7, 2010.
  5. ↑ "Pre-paid legal services: Worth the money?". cbc.ca.
  6. ↑ "Pre-Paid Legal in $650 Million Buyout". The New York Times. The New York Times Company. January 31, 2011. ISSN 0362-4331. OCLC 1645522. Retrieved March 7, 2017.
  7. ↑ Davis, Melissa (February 22, 2005). "Pre-Paid Weathers Guilty Verdict". TheStreet.com. Retrieved March 6, 2017.
  8. 1 2 "U.S Chamber Reappoints Harland Stonecipher CEO of Pre-Paid Legal Services, to Board of Directors". United States Chamber of Commerce. June 27, 2005. Archived from the original on December 2, 2006. Retrieved March 7, 2017.
  9. 1 2 3 4 Martin, Douglas (November 20, 2014). "Harland Stonecipher, Insurance Pioneer, Dies at 76". The New York Times. Retrieved March 7, 2017.
  10. ↑ Swanson, Eric (November 11, 2014). "LegalShield founder and community booster Harland Stonecipher dies at 76". Ada Evening News. Retrieved March 9, 2017.
  11. ↑ "Form 10K Pre-Paid Legal Services, Inc". United States Securities Exchange Commission. December 31, 2010. Retrieved June 26, 2017.
  12. ↑ Gene Lehmann (August 23, 2011). "New firm to rebrand Pre-Paid Legal in Ada". The Ada News. Retrieved 26 June 2017.
  13. ↑ The Big Book of Home Business Company Directory. Ouvrage Collectif. June 21, 2016. p. 48. Retrieved March 9, 2017.
  14. ↑ Adelson, Andrea (May 26, 1996). "Earning It; Getting Legal Advice, Without Billable Hours". The New York Times. Retrieved March 9, 2017.
  15. ↑ Duhigg, Charles (November 13, 2006). "Why Short Sellers Want to Crash the Tupperware Party". The New York Times. Retrieved March 7, 2017.
  16. ↑ "Hardland Stonecipher". The Oklahoman. November 12, 2014. Retrieved March 9, 2017.
  17. ↑ "Pre-Paid Legal acquires satellite TV channel". The Journal Record. Oklahoma City, Oklahoma. September 25, 1998. Retrieved May 9, 2017.
  18. ↑ Hogan, Gypsy (September 25, 1998). "Pre-Paid Legal Plans Satellite Channel Buy". The Oklahoman. Retrieved May 9, 2017.
  19. ↑ Bernick, Bob, Jr. (October 30, 2008). "Shurtleff's Fundraising Trounces Hill's | Deseret News (Salt Lake City) Newspaper | Find Articles at BNET". FindArticles.com. Archived from the original on October 31, 2009. Retrieved October 23, 2009.
  20. ↑ "Newell letter" (PDF). Retrieved October 23, 2009.
  21. 1 2 "Pre-Paid Weathers Guilty Verdict", TheStreet.com
  22. ↑ Morgenson, Gretchen (April 18, 2003). "Exchange to Warn Investors on Companies". New York Times.
  23. ↑ Davis, Melissa (October 20, 2004). "Pre-Paid Prevails in Mississippi Case; Financial Articles & Investing News". TheStreet.com. Retrieved October 23, 2009.
  24. ↑ "Verdict Hammers Pre-Paid, TheStreet.com
  25. ↑ "U.S. Chamber of Commerce - June 27 - U.S Chamber Reappoints Harland Stonecipher, CEO of Pre-Paid Legal Services, to Board of Directors". USChamber.com. U.S. Chamber of Commerce. June 27, 2005. Archived from the original on April 14, 2009. Retrieved October 23, 2009.
  26. ↑ "U.S. Chamber of Commerce - Nov 24 - Chamber Joins Miss. Case against Frivolous Lawsuits - Pre-Paid Legal Services Targeted Improperly". USChamber.com. November 24, 2004. Archived from the original on April 13, 2009. Retrieved October 23, 2009.
  27. 1 2 Duhigg, Charles (November 13, 2006). "Why Short Sellers Want to Crash the Tupperware Party". New York Times. Retrieved October 14, 2009.
  28. ↑ "SEC asks Pre-Paid Legal for documents". Tulsa World. Retrieved October 23, 2009.
  29. ↑ "Pre-Paid Legal Services Announces FTC Developments". Pre-Paid Legal Services. Retrieved November 19, 2009.
  30. ↑ "Pre-Paid Legal (PPD) Received Draft Complaint from FTC Relating to ITSADRS Program". StreetInsider.com. November 11, 2009. Retrieved September 26, 2010.
  31. ↑ "FTC ends investigation of Pre-Paid Legal". July 27, 2010. Retrieved July 28, 2011.
  32. ↑ Winslow, Laurie (February 1, 2011). "Pre-Paid to Merge with MidOcean". Tulsa World..
  33. ↑ "Pre-Paid Legal Services Becomes LegalShield". Pre-Paid Legal Services. Retrieved September 22, 2011.
  34. ↑ PR Newswire. "LegalShield Names Jeff Bell as Chief Executive Officer". www.reuters.com. Reuters. Retrieved 7 September 2014.
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