Is Pre-Paid Legal a scam?
December 15, 2004 1:31 PM Subscribe
Is Pre-Paid Legal a scam? A friend of mine just became a Sales Associate, and I'm wondering what sort of risks are involved.
An ex-coworker used them and said it worked out great for him.
Keep in mind this is also the guy who kept going on and on about how awesome personal bakruptcy was. Sooooo...
posted by xmutex at 1:55 PM on December 15, 2004
Keep in mind this is also the guy who kept going on and on about how awesome personal bakruptcy was. Sooooo...
posted by xmutex at 1:55 PM on December 15, 2004
Not a scam; sort of like an HMO (LMO)? But doesn't deal with the fact that most attorneys have terrible personalities; and that you won't be able to completely chose your attorney.
posted by ParisParamus at 2:03 PM on December 15, 2004
posted by ParisParamus at 2:03 PM on December 15, 2004
Well, there are two sides to this. The first is from the customer's perspective. As Paris mentions here and I mentioned in the previous thread, Pre-Paid Legal is a little like an HMO, with both benefits and sacrifices. While the cost is relatively low, you will likely not be able to choose your own lawyer. Additionally, this kind of service is useful for many common kinds of legal problems, like basic family or property law, but if the case gets complicated, you may quickly exhaust your coverage or the service's available expertise.
The other side is from the employee's perspective, which is what I gather you're asking about here. I can't say much about the company other than that they appear to be a fairly standard MLM, i.e., you only get paid on sales, you are pressured to sign up new "associates," etc. I wouldn't want to work for them, but some people eat that shit up.
When I was in college, I worked for that cutlery company that uses an MLM to do all its sales. I was involved for almost two years, and made decent money for the time I put in. Some people showed up for training, dropped the cash for the sales kit, and then never sold a thing. Those people obviously thought it was a scam. On the other hand, I knew a few people--very few--that made a substantial income from it. Some people are cut out for this kind of thing, and some aren't.
Personally, I think MLM operations suck and I wouldn't go back to that job for any amount of money. The economics are totally skewed against the employees, because the higher-ups in the organization make more money with higher turnover. Speaking generally, because an MLM employee is generally considered an "independent contractor," the organization provides no benefits and no regular paycheck. I think it's a awful idea, and the opinion I had of the people who were successful in the organization I was involved in was uniformly bad.
posted by monju_bosatsu at 2:17 PM on December 15, 2004
The other side is from the employee's perspective, which is what I gather you're asking about here. I can't say much about the company other than that they appear to be a fairly standard MLM, i.e., you only get paid on sales, you are pressured to sign up new "associates," etc. I wouldn't want to work for them, but some people eat that shit up.
When I was in college, I worked for that cutlery company that uses an MLM to do all its sales. I was involved for almost two years, and made decent money for the time I put in. Some people showed up for training, dropped the cash for the sales kit, and then never sold a thing. Those people obviously thought it was a scam. On the other hand, I knew a few people--very few--that made a substantial income from it. Some people are cut out for this kind of thing, and some aren't.
Personally, I think MLM operations suck and I wouldn't go back to that job for any amount of money. The economics are totally skewed against the employees, because the higher-ups in the organization make more money with higher turnover. Speaking generally, because an MLM employee is generally considered an "independent contractor," the organization provides no benefits and no regular paycheck. I think it's a awful idea, and the opinion I had of the people who were successful in the organization I was involved in was uniformly bad.
posted by monju_bosatsu at 2:17 PM on December 15, 2004
I should not that I have no direct experience with Pre-Paid; my comments are about MLMs in general. On the other hand, I haven't seen any features of Pre-Paid that distinguish it from other MLMs in terms of the employee experience.
posted by monju_bosatsu at 2:18 PM on December 15, 2004
posted by monju_bosatsu at 2:18 PM on December 15, 2004
I wouldn't use one. What's the point? Why not hire one if and when the time ever comes when you need one? Why put money into something that doesn't even return interest and very well could loose all of it's value (the lawyer dies...)?
posted by pwb503 at 2:19 PM on December 15, 2004
posted by pwb503 at 2:19 PM on December 15, 2004
As a consumer, there are definite pros and cons.
Pro: You will always have access to an attorney for civil and criminal matters, no matter where you are in the contiguous 48 states. (Coverage in Hawaii and Alaska was spotty, at best, last I checked.)
Pro: You will likely be able to access said attorney for minor matters without paying any additional hourly fees.
Pro: So long as the company doesn't go out of business you won't lose your coverage, but like any other insurance, what you put into it is only going to truly come back to you dollar for dollar if you end up involved in a situation that you'd probably rather not be involved in. (Even though you can use PPL attorneys for things like setting up a new business, I couldn't recommend it in good conscience because there's no guarantee, even though you pick someone who "specializes" in your area of need, that you'd get someone who really knows what they're doing, and that's something that you really need a top-level expert for, especially if you're getting into a partnership situation or incorporating.)
Con: You will not have a lot of say in the attorney who is assigned to your case, unless you are very dissatisfied with their service.
Con: In addition to your monthly fee, you will pay hourly fees (albeit at a considerably reduced rate) should you get involved in a protracted situation. You will also pay, regardless of the complexity of your matter, the typical fees for paralegal, courier and secretarial services.
Con: As a consumer of the product, the person who sold it to you will inevitably attempt to convince you that you should become involved in sales as well. It is built on MLM sales, as m_b noted, so every recruit a sales associate nets increases their income, so it isn't enough (from a career perspective) to simply sell, even if you sell like crazy. It is this aspect which makes involvement iffy. But if you're buying from your sister, you will probably not end up having to resist a hard sell, which can make it, if you can afford the monthly fee, a good idea, especially if you already own a small business of some kind and may have need to talk to a lawyer quickly in the case of a dissatisfied customer or a slip-and-fall accident or one of those other business nuisance matters.
posted by Dreama at 2:29 PM on December 15, 2004
Pro: You will always have access to an attorney for civil and criminal matters, no matter where you are in the contiguous 48 states. (Coverage in Hawaii and Alaska was spotty, at best, last I checked.)
Pro: You will likely be able to access said attorney for minor matters without paying any additional hourly fees.
Pro: So long as the company doesn't go out of business you won't lose your coverage, but like any other insurance, what you put into it is only going to truly come back to you dollar for dollar if you end up involved in a situation that you'd probably rather not be involved in. (Even though you can use PPL attorneys for things like setting up a new business, I couldn't recommend it in good conscience because there's no guarantee, even though you pick someone who "specializes" in your area of need, that you'd get someone who really knows what they're doing, and that's something that you really need a top-level expert for, especially if you're getting into a partnership situation or incorporating.)
Con: You will not have a lot of say in the attorney who is assigned to your case, unless you are very dissatisfied with their service.
Con: In addition to your monthly fee, you will pay hourly fees (albeit at a considerably reduced rate) should you get involved in a protracted situation. You will also pay, regardless of the complexity of your matter, the typical fees for paralegal, courier and secretarial services.
Con: As a consumer of the product, the person who sold it to you will inevitably attempt to convince you that you should become involved in sales as well. It is built on MLM sales, as m_b noted, so every recruit a sales associate nets increases their income, so it isn't enough (from a career perspective) to simply sell, even if you sell like crazy. It is this aspect which makes involvement iffy. But if you're buying from your sister, you will probably not end up having to resist a hard sell, which can make it, if you can afford the monthly fee, a good idea, especially if you already own a small business of some kind and may have need to talk to a lawyer quickly in the case of a dissatisfied customer or a slip-and-fall accident or one of those other business nuisance matters.
posted by Dreama at 2:29 PM on December 15, 2004
ParisParamus and monju_bosatsu, you have it pegged pretty well. I have known associates for Pre-Paid Legal, looked over their offerings and known some of their clients.
Basically, Pre-Paid is perfect for the most common types of legal needs. However, most people don't need these services on a yearly basis.
Also if you are thinking of becoming a customer, read their contract very carefully. What, if any, are the waiting periods for the services you will most likely need a lawyer for? What are the monetary limits on the benefits, both yearly and over your lifetime?
posted by sequential at 2:30 PM on December 15, 2004
Basically, Pre-Paid is perfect for the most common types of legal needs. However, most people don't need these services on a yearly basis.
Also if you are thinking of becoming a customer, read their contract very carefully. What, if any, are the waiting periods for the services you will most likely need a lawyer for? What are the monetary limits on the benefits, both yearly and over your lifetime?
posted by sequential at 2:30 PM on December 15, 2004
Response by poster: As Monju guessed, I'm only interested in the employee's perspective here. Is it at all risky, beyond the $250 sales kit? Can you potentially lose more money, a la Herbalife?
posted by waxpancake at 2:38 PM on December 15, 2004
posted by waxpancake at 2:38 PM on December 15, 2004
Can't really use the word "employee." Let's say "associate." One pitfall I'm aware of is that an associate is bonused a considerable amount of money for each customer that signs up under them. This is based on the assumption that the customer will continue to subscribe month after month for a year. If they fail to renew, as many do, then the recruiting associate has to cough up part of the original bonus. If the associate has already spent that bonus, as many do... well, you see where I'm going...
posted by Tubes at 3:22 PM on December 15, 2004
posted by Tubes at 3:22 PM on December 15, 2004
Hi waxpancake. My wife has been a PPL Associate for about five years--we were customers for a couple years previously.
I'll say at the outset that I was *completely* uncomfortable with MLM for about the first 3 years she was doing this (I was not the supportive spouse I like to think I usually am), but as I have come to know the company and do my research and see my fireball spouse in action I've become a big supporter of the company and the product.
A very big distinction between PPL and other MLM companies is that they are providing a service, which is centrally managed (though decentrally provided by law firms in each region--a PPO anaology is apt) and so associates don't have to buy inventory and assume that fiancial risk. Some MLM companies really do look like pyramid schemes because the company gets its income from selling goods to their distributors as opposed to selling them to end customers. That's not the case with PPL.
The primary fees involved are an initial startup fee that covers basic training and then any sales materials, which are provided by a variety of third parties. Given the comp structure, the first three memberships sold typically cover the startup cost.
Like any endeavor, you get out this gig what you put into it. And while there's nothing sady about the company (30years old, NYSE, etc), you'll run into all types. If you're getting a squicky feeling from anyone you're dealing with, don't deal with them. I've known people personally who have made zero dollars with PPL (they didn't do any work) and I know people who have been at it for five years who are bringing in >$20K/month.
Having watched my spouse succeed (and go through rough patches too) despite my initial skepticism, I'd be more than happy to answer any questions offline.
posted by donovan at 3:26 PM on December 15, 2004
I'll say at the outset that I was *completely* uncomfortable with MLM for about the first 3 years she was doing this (I was not the supportive spouse I like to think I usually am), but as I have come to know the company and do my research and see my fireball spouse in action I've become a big supporter of the company and the product.
A very big distinction between PPL and other MLM companies is that they are providing a service, which is centrally managed (though decentrally provided by law firms in each region--a PPO anaology is apt) and so associates don't have to buy inventory and assume that fiancial risk. Some MLM companies really do look like pyramid schemes because the company gets its income from selling goods to their distributors as opposed to selling them to end customers. That's not the case with PPL.
The primary fees involved are an initial startup fee that covers basic training and then any sales materials, which are provided by a variety of third parties. Given the comp structure, the first three memberships sold typically cover the startup cost.
Like any endeavor, you get out this gig what you put into it. And while there's nothing sady about the company (30years old, NYSE, etc), you'll run into all types. If you're getting a squicky feeling from anyone you're dealing with, don't deal with them. I've known people personally who have made zero dollars with PPL (they didn't do any work) and I know people who have been at it for five years who are bringing in >$20K/month.
Having watched my spouse succeed (and go through rough patches too) despite my initial skepticism, I'd be more than happy to answer any questions offline.
posted by donovan at 3:26 PM on December 15, 2004
Melissa Davis at TheStreet.com has done a number of articles on PPL and their business practices. And here's a page that does a pretty good job of summarizing my feelings about this type of Multi-Level Marketing organization in general. Inc.com has a short MLM anecdote. Meanwhile, MediaMoogle offers a "a look at the Pre-Paid Legal opportunity. A must read for anyone looking to gain balanced information and who isn't sure about MLM."
posted by Tubes at 3:35 PM on December 15, 2004
posted by Tubes at 3:35 PM on December 15, 2004
One pitfall I'm aware of is that an associate is bonused a considerable amount of money . . . If they fail to renew, as many do . ... well, you see where I'm going...
I don't know how other companies do this, but with PPL you can take your commission "as earned" which creates no risk of a chargeback. Furthermore the company places a lot of emphasis on customer retention and this is a metric that is carefully tracked as part of a near realtiem IT system that associates get tapped into. I've observed that this "chargeback" problem is only big issue with people who do group sales (like having a company sign up employees as a benefit) since big swaths of people can unenroll at once (like when the company goes bankrupt!).
Tubes, your general advice--that you need to carefully understand the ins and outs of how you get paid and any risk--is of course true and good advice before starting any job.
On preview: As I wrote previously, if you get a slimy vibe from someone, stay away. The experience Davis writes about is completely at odds with my personal experience over the past 5 years.
posted by donovan at 3:44 PM on December 15, 2004
I don't know how other companies do this, but with PPL you can take your commission "as earned" which creates no risk of a chargeback. Furthermore the company places a lot of emphasis on customer retention and this is a metric that is carefully tracked as part of a near realtiem IT system that associates get tapped into. I've observed that this "chargeback" problem is only big issue with people who do group sales (like having a company sign up employees as a benefit) since big swaths of people can unenroll at once (like when the company goes bankrupt!).
Tubes, your general advice--that you need to carefully understand the ins and outs of how you get paid and any risk--is of course true and good advice before starting any job.
On preview: As I wrote previously, if you get a slimy vibe from someone, stay away. The experience Davis writes about is completely at odds with my personal experience over the past 5 years.
posted by donovan at 3:44 PM on December 15, 2004
At my old job, we had Pre-paid legal as a benefit. I didn't opt for it, as I didn't have any use for it. But a colleague at the time, whose opinion I hold in high regard did happen to purchase it. Apparently, when he was buying a new house, he saved quite a bit of money by using it. What, I'm not sure, but he insists that it came in quite handy.
If you anticipate you may have a use for it, go ahead and try it out.
posted by punkrockrat at 5:41 PM on December 15, 2004
If you anticipate you may have a use for it, go ahead and try it out.
posted by punkrockrat at 5:41 PM on December 15, 2004
when he was buying a new house, he saved quite a bit of money by using it. What, I'm not sure, but he insists that it came in quite handy.
He probably bought a true FSBO house, and had the attorney do all the paperwork, thus bypassing realtors altogether.
posted by Kwantsar at 6:49 PM on December 15, 2004
He probably bought a true FSBO house, and had the attorney do all the paperwork, thus bypassing realtors altogether.
posted by Kwantsar at 6:49 PM on December 15, 2004
This thread is closed to new comments.
posted by vacapinta at 1:34 PM on December 15, 2004