PREPAID PLANSAuthor(s): Nancy BlodgettSource: ABA Journal, Vol. 73, No. 10 (AUGUST 1, 1987), p. 40Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/20759436 .

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News

PREPAID PLANS

Looking for new clients? Why not service a prepaid legal plan?

"We didn't want to advertise on TV or in the newspaper to get more clients and we didn't want to merge with a bigger firm," said Lawrence Stahl, a Baltimore lawyer. "Instead, we signed up to represent people through the Montgomery Ward pre paid plan. Now we have a ready-made group of clients."

Stahl, who has a general law

practice with another lawyer, esti mates that this "ready-made" group now numbers between 200 and 400.

"We don't have to hustle clients," adds David Dessen, a Philadelphia lawyer whose firm works for 15 dif ferent legal service plans.

Although a relatively new con

cept, these plans are growing by leaps and bounds, with 30 million Ameri cans now covered by some kind of plan. Ten years ago, less than 2 mil lion people had joined any type of plan.

The ABA House of Delegates in 1983 passed a resolution encouraging the development of prepaid legal service plans designed to make legal services available at a reasonable cost.

According to Alec Schwartz, ex ecutive director of the ABA-spon sored American Prepaid Legal Services Institute in Chicago, prepaid plans are not only good for the per son who doesn't have a lawyer, but for the person who wants a second legal opinion on a matter.

Lawyers also can encourage groups to set up their own plans. "There is a real opportunity for law yers to approach churches or syn agogues, country clubs or civic associations and get them to create a

prepaid plan that they could serv

ice," notes William Bolger, executive director of the National Resource Center for Consumers of Legal Serv ices in Washington, D.C

"It doesn't take money to start a

plan," says Bolger, whose center helps set up and run legal plans. "All a law yer needs is a group of at least 200 people so there is sufficient volume to offer cut rates and still make

money."

THE BOTTOM LINE He warns lawyers, however, not

to be overly optimistic about the rev enue generated by such plans.

The No. 1 drawback for lawyers is the limitation on what they can charge. For example, the Signature Legal Services Plan?offered by Montgomery Ward & Co.?requires lawyers to give members unlimited consultation by phone or mail, and a simple will for the prepaid fee. For a house closing, lawyers can only charge clients $175 and for an uncon tested divorce, $210. Other services cost $50.

A VOLUME BUSINESS As Dessen admits, "It's more dif

ficult to make money than in a tra ditional practice." But, he added, "we make money through volume."

Stahl, who contracted with the Signature plan last October, said he doesn't expect to make much money for a while. "But the more people we

help, the more referrals we'll get. Once we build a relationship with these people, we'll start generating fees."

Prepaid plans do provide a smooth introduction for the majority of Americans who have never dealt with lawyers.

"For some people, it's scary to talk to a lawyer," said Steve Blutza of Chicago, who markets the Consumer Services Organization's prepaid legal plan. "But plans give people a buffer between themselves and what they think are arrogant, money-grubbing attorneys."

Working for a plan also spurs lawyers to seek speedy resolutions to problems. "We're more attuned to quick ways to resolve matters," said Dessen. "There is no advantage to al lowing a case to drag on while charg ing the client for it.

"In divorce cases, for example, we try hard to negotiate a settlement instead of going to court. Some other lawyers are just as happy to litigate for three years and then negotiate."

On the other hand, clients who have already paid a lawyer may drag their feet in reaching a settlement. "Some members take unreasonable positions in their disputes because they know it's not costing them any thing," said Dessen.

?Nancy Blodgett

Chart shows the growth of prepaid plans

t?i?i?i?i?i?i?i?i?i?i?i?i?i?r 1971 1976 1979 1981 1983 1985 1987

40 ABA JOURNAL / AUGUST 1, 1987 ABAJ/Juvenol Mortinez

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