We recently reported that insurance for legal expenses was a developed offering in Europe and was gaining traction in Canada, Japan and South Africa.
On his visit to Australia last month to promote the concept, Simon Warr, President of the International Association of Legal Protection Insurance, pointed out a close alternative to legal expense insurance. It is the system that operates in the United States.
Simon Warr said that setting up an insurance company that services the entire United States had its regulatory challenges, as an insurance company has to be licensed in each state. A solution adopted in the US is the legal plan.
A major player in legal plans in the US is LegalShield. Legal Practice Intelligence views this service as a hybrid of pre-paid expenses, insurance and group-buying. It does not fit neatly into any one of these individual categories.
Before it changed its name to LegalShield, the company was known as Pre-Paid Legal. LegalShield has found a winning formula. The company has been in existence for 45 years and has announced that it has grown its membership base to exceed 1,651,000 members.
As well as its LegalShield service, it also offers IDShield – an identity theft solution for individuals, families and small businesses.
The company states that it protects more than 1,651,000 individual, families and businesses through its legal plans, while IDShield provides identity protection to one million individuals. In addition, LegalShield and IDShield serve more than 141,000 businesses. Both legal and identity theft plans start as low as US$20 per month.
“Our increasing membership and low churn rate are the result of our dedication to constantly improving our products and customers’ experience. We are a ‘45-year-old start-up’ that keeps pushing the boundaries of the innovative legal services industry,” said CEO Jeff Bell.
“On top of that, the LegalShield family is expanding with more independent associates joining our ranks and making legal protection accessible to more Americans every day. We take great pride in our mission, and we’re just getting started.”
LegalShield and IDShield plans are sold across the United States by non-lawyer, independent sales associates.
Members of LegalShield are referred to a law firm in their own state. It is therefore a source of leads and ongoing work for firms.
Participating firms have to meet certain criteria to be accepted as a referral partner and as well they are required to offer a discount on their standard hourly rates.
Like all insurance, it provides a degree of comfort to its subscribers. Members know that if they have a legal issue, they will be able to call an established law firm who will have an obligation to listen to them, and at the minimum, give them some initial direction.
Could this be a model for Australia, alleviating our access to justice problem and at the same time providing work for small law firms?