Are prepaid legal service plans worth it?

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Question:

What's your opinion of prepaid legal services? Considering today's lawyers' fees, prepaid services seem like an idea whose time has come.

Answer:

Sorry to be the sandstorm on your beach vacation, but prepaid legal services may not save you a cent in legal fees. Prepaid plans are a type of legal insurance plan offered by a number of different companies and marketed through employers, labor unions, credit unions, department stores, credit card companies, and even door to door. The theory is that legal services, much the same as nuts and berries, are cheaper when bought in bulk. A relatively low yearly fee, sometimes under $100, purports to cover a number of lawyerly tasks.

In fact, most low-cost plans cover only a couple of phone consultations -- and a few basic services such as a simple will. Beyond that, you receive a discount for other types of legal services. But unfortunately, the resulting fee is often not much lower than you could negotiate if you called around on your own. The better and more expensive plans completely cover certain legal services, such as divorce, bankruptcy, and drunk driving defense. Also, to avoid obvious conflicts of interest, the best plans do not allow the lawyers who provide telephone consultations to refer cases to themselves.

Think about how likely it is that you'll need one of the covered services -- and think about how many of these tasks, such as writing a will or filing for divorce, you can do on your own with a little help from Nolo. Because most people use a lawyer only a few times in their lives, this may be insurance you can do without. Even if you decide to sign up, don't write that check until you know exactly what the plan covers and what you'll have to pay on your own. Also ask whether the plan's phone-consultation lawyers are allowed to recommend their own services. If so, you are at risk of buying into a bait-and-switch scheme.

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