Access to the law: prepaid legal services can offer significant assistance to employees with few HR headaches - Focus on Benefits

HR Magazine, Sept, 2002 by Charlotte Garvey

As an experienced legal secretary in a Washington, D.C., law firm, Leona Benn knows lawyers' services don't come cheap. So, when she anticipated the need for legal help, Benn subscribed to the prepaid legal service her firm offered, which came in handy when she filed for an uncontested divorce.

Her legal expenses through the employer-sponsored plan have been low, and the process was simple. "I don't know why anybody would not want to go this way," Benn says.

Benn's employer, Crowell and Moring, which has more than 500 lawyers, provides employee-paid optional coverage through LawPhone, a legal consultation service owned by Advisory Communications Systems Inc., of Lanham, Md. Benn pays her monthly premium-$16-through after-tax payroll deduction. The plan gives her access to telephone consultations within a specified network of lawyers, along with help filing legal documents and other services.

Benn is part of a growing trend. A 2002 survey by the National Resource Center for Consumers of Legal Services (NRCCLS) found that the number of Americans covered by some type of legal services plan increased by nearly 20 percent since 2000. An estimated 3 million people are enrolled in plans sponsored by employers and funded through employee payroll deductions, according to the survey. The group, a Gloucester, Va.-based non-profit, is primarily funded by lawyers and plan sponsors.

Growth Industry

HR and legal industry experts attribute the recent growth to prepaid legal services being a low-cost benefit with little administration that can help recruiting and retention efforts. "It sort of builds on itself. One company gets it and they have a good response, and that puts some pressure on the HR people in [competing companies] to have a [similar] package," says William Bolger, NRCCLS executive director. "And it doesn't cost employers very much."

The optional legal benefit plan lets employers offer employees an additional benefit with limited administrative burden, according to Bolger. This can be an attractive option in an economic environment in which many employers are cutting back on benefits.

Carol Guinan, benefits director at AmeriGas Propane in Valley Forge, Pa., says her company began offering a legal plan about seven years ago. "We were making a lot of major benefit cutbacks, so we thought we'd throw in another option for employees," she says. Guinan estimates that 8 percent of AmeriGas's workforce, many of whom are truck drivers who transport propane, participate in the plan.

Sandra DeMent, CEO of the parent company that manages Law-Phone, says worries prompted by the events of Sept. 11 have spurred many more young workers to draw up wills, which is the No. 1 reason people use legal plans, according to company research. That's followed by consumer/financial concerns, such as pursuing a consumer complaint. Family law issues, such as divorces, and real estate issues, such as closing on a new home or refinancing a mortgage, are also highly used legal plan benefits.

"Whatever it may be, most people don't know how to find an attorney outside of going through the Yellow Pages," says Greg Miller, business development director with Signature LegalCare, a plan administrator in Louisville, Ky., that is a subsidiary of GE Financial Assurance in Richmond, Va. Prepaid legal plans can give employees a greater ease of access to legal advice and services.

Employee Use and Cost

Basic or access plans give enrolled employees access to legal services through unlimited phone consultations with pre-selected lawyers within a network, along with discounted legal fees for more complex services. Some access plans also include follow-up services, such as an office visit, phone call or letter, along with basic document preparation or review.

More comprehensive, and expensive, plans offer additional services, such as representation in a divorce, in real estate transactions or in civil or administrative trials, but the benefits--and prices--vary. There is no one-size-fits-all plan.

TDK RF Solutions, a radio-frequency engineering and software company in Cedar Park, Texas, and a subsidiary of electronics conglomerate TDK Corp., offers a plan that is fairly comprehensive in its coverage. The plan is provided by Hyatt Legal Plans, a MetLife subsidiary headquartered in Cleveland.

Laura Burk Riojas, a product designer, first used the plan for help on will preparation. "I was very apprehensive at first, but I figured for a will it would be worth it" for peace of mind, says Burk Riojas, a single parent who decided to enroll after pricing will preparation outside of the benefit plan.

Since then, Burk Riojas has been "pleasantly surprised" to find other legal matters have been covered under the plan. She used a network lawyer to help her file a quit-claim deed, surrendering claim to property she had owned jointly with her ex-husband. The matter had been pending since her 1998 divorce, but Burk Riojas did not deal with it until she realized the matter could be addressed under the legal plan. She was required only to pay the filing fees.