A look at the PrePaid Legal (now LegalShield) opportunity. A must read for anyone looking to gain balanced information and who isn't sure about PRE-PAID LEGAL OR MLM IN GENERAL.

MediaMoogle: PrePaid Legal (now LegalShield) Info

Updates: So what has changed with Legal Shield?

With the switching to the LegalShield brand and its transition from a publicly traded company (PPD) to one owned by a private equity firm, how has Pre-Paid Legal/Legal Shield changed? In terms of its membership retention rates, this is difficult to gauge since, as stated below, being privately held means they are no longer required to disclose this information to the public. The plan more or less has remained the same: for a monthly fee its subscribers have access to certain legal coverage (family/divorce law, foreclosure, moving violations, nursing home agreements, power of attorney, etc).

Like any plan, you will have your unhappy customers. It is of course, difficult to know if this is the exception or the rule (the “pro” Legalshield videos are often uploaded by people trying to sell the plan or selling a service (or ‘secret formula to success’) they market to people selling the plan).


Google Trends indicates a several-year long drop of interest in Pre-Paid Legal. The switch to Legal Shield is quite obvious from the GT graph below (you can see where searches for “PPL” drop off and searches for “LS” pick up).

Google Trends: "PrePaid Legal" and "Legal Shield"

PrePaid Legal and Legal Shield

Certainly less people are searching to see if it’s a “scam” which could indicate that the new branding has a more positive reputation than its predecessor.

Google Trends: "PrePaid Legal Scam" and "Legal Shield Scam"

PrePaid Legal Scam and Legal Shield Scam

Because Pre-Paid Legal (LegalShield) is now a privately-owned company, SEC filings (where I get the membership retention numbers below) will no longer be available. This means 2010 is likely the last year for which such information will be provided here.

PrePaid Legal's
2010 numbers are in (read more here). According to this report: For the year 2010, new sales associates enrolled decreased 25.6% to 138,442 compared to 186,064 enrolled during 2009 while new memberships produced were 502,982, a decrease of 11.5% from 568,095. Our active memberships decreased 4.8% during 2010 from 1,547,585 to 1,473,237. From the 3rd quarter of 2010 to the 4th quarter of 2010, our active memberships decreased by 19,896 memberships.

This trend (of cancellations keeping close pace with new memberships sold) is important to note for associates being recruited under the idea that Pre-Paid Legal memberships are taking market by storm (as suggested in recruiting tools such as this video). It's also important they understand how canceled memberships impose chargebacks for Prepaid Legal associates using advanced commissions. Below is a list of active memberships by end of year, starting in 2002 (when I was recruited).

Year - Active Pre-Paid Legal (now LegalShield) Memberships
2010 - 1,473,237
2009 - 1,547,585
2008 - 1,559,154
2007 - 1,575,802
2006 - 1,542,789
2005 - 1,451,700
2004 - 1,418,997
2003 - 1,382,306
2002 - 1,242,908

legal shield member

Pre-Paid Legal Recent Updates

Pre-Paid Legal changes name to LegalShield
The videotaped program will offer Fox Business News viewers an informative, fast-paced perspective on the business opportunity available to motivated individuals who want to work for themselves in a position with strong self-determined earning potential.
Read More

Pre-Paid Legal Services Launches Recruitment Program on Fox News
The videotaped program will offer Fox Business News viewers an informative, fast-paced perspective on the business opportunity available to motivated individuals who want to work for themselves in a position with strong self-determined earning potential.
Read More

PrePaid Legal Memberships Fall
Pre-Paid Legal Services Inc., which provides underwritten legal assistance for a monthly fee, on Monday said new memberships produced fell 2.2 percent in the first quarter. Read More

PrePaid Weathers Guilty Verdict
PrePaid has been found guilty of fraud in one of the many legal battles that has been dogging it for years. Read More

PrePaid Legal Lawsuit victory
Mississipi lawsuit claiming that PrePaid Legal's service is an outright fraud has been dismissed.

Yahoo PrePaid Legal Message Board (stock info).

Identity Theft appears to be a real Threat. Credit Card and Check fraud, social security number theft and even spyware and hack attempts (from typical adware to computer virus' with heavy payloads) have become real threats.

Other Pre-Paid Legal Service Providers

ARAG | United Legal APLSI

My PrePaid Legal experience

In May 2002, I became a PrePaid Legal associate at the recommendation of a good friend of mine. During this time, Buck Reed and Shari Sharman, both of whom have a history with Equinox (which was shut down after being declared an illegal pyramid scheme), were involved with PrePaid Legal Services, Inc. After attending a couple of meetings I decided it wasn't for me and decided to put my efforts elsewhere. I have never considered myself to be much of a salesman and figured my time would be better spent focused on my career as a web designer/developer. This web page serves as my case study on PrePaid Legal's opportunity from a researchers point of view.

PrePaid Legal Lawsuits

Membership lawsuits
-Pre-Paid Legal Services faced lawsuits in Alabama where former customers claimed that the service didn't do what it was supposed to do. These have been more or less dismissed. Read More

-PrePaid Legal Faces two separate class action lawsuits in Oklahoma, where the company is based. One accuses PrePaid Legal of being a pyramid scheme Read More
The other Oklahoma lawsuit accuses PrePaid Legal of breach of contract Read More

Earning Claims
-In 2001, PPL settled with the state of Wyoming regarding exaggerating income claims. Read More

Securities Lawsuit
Pre-Paid Legal also faced litigation from their own shareholders who accused them of accounting fraud. Though the case was dismissed with prejudice, the SEC forced PrePaid Legal to change them to change their accounting methods. You can read more about PrePaid Legal's lawsuits in their own Annual Report, starting on page 13.

Short Sellers

For those unfamiliar with the concept of short selling, it is the practice of investing in a company in a manner in which the investor actually gains by seeing the stock fall instead of rise. PPL's advocates have a tendency of blaming PPL's barrage of negative press coverage on short-sellers of its stock (as opposed to the actual content of the negative press). On the other hand, one can argue that this shorting is the effect, not the cause of controversy surrounding Pre-Paid Legal. In PPL's defense, short selling is considered to be a questionable practice by many and there are plenty of abusive short sellers in the market. Read more about short selling here.

Recruiting: Why I think some call Pre-Paid Legal a Scam

Most "Pre-Paid Legal scam" accusations likely result from disillusioned PrePaid Legal (former) associates. MLM in itself is indeed a legitimate business model and there are those who have certainly made a comfortable living from it. The problem appears to result with pie-in-the sky expectations that are unrealistically conveyed during recruitment. The standard response from Pre-Paid Legal (and other MLM) advocates is to place the blame on the recruited associates; that they didn't take the opportunity seriously enough, and that PrePaid Legal (and/or MLM in general) is hard work and needs to be taken seriously. Most PrePaid Legal associates simply didn't try hard enough.

I believe the problem results from a disparity that exists between the pie-in-the sky expectations created during recruitment and the realities of selling MLM. Many PrePaid Legal hopefuls are sold on the product and the numerous success stories (as I recall, whether these success stories are legitimately people who built their Pre-Paid Legal business from the ground up as many potential recruits would have to or if these success stories had a pre-existing network already built up didn't seem to be disclosed) regarding financial independence via the Pre-Paid Legal business plan.

Whether one decides to blame Pre-Paid Legal inc, specific Pre-Paid Legal recruiters, or naïve associates fault for "misunderstanding" the disparity between what they were presented and what the actual PrePaid Legal business plan would entail, this appears to be the main reason some call Pre-Paid Legal a scam. The service itself appears to be legitimate and surely would have been shut down if it were in fact a scam.

My 2 Cents on PrePaid Legal

While I would never go so far as to call PrePaid Legal a scam, I do not see it ever reaching 'critical mass' (the point at which a new product catches and suddenly the market becomes a gold mine, as is often suggested in Pre-Paid Legal recruiting tools such as this video). Having worked in marketing for some time, I can understand how the young hopefuls buy into this notion that the service will reach this point of critical mass.

However PrePaid Legal has been around for well over 30 years and has only fairly recently broken the 1.5 million barrier. The reason is that cancellations happen almost as quickly as memberships are sold, which is why 700,000-800,000 memberships will sell in a year's time, yet memberships will slighlty rise or fall. Hence, PrePaid Legal services aren't an 'exciting new technology', barely about to make their mark. They have been around for some time, and for every membership that is sold, it appears that one is canceled.

Having said this, there are countless (though often seemingly unverifiable) anecdotes of PrePaid Legal getting a person out of a ticket, clearing someone of a controversial bill, and of course there's always the 'free will.' On the other hand, I think back to the last speeding ticket I actually fought, where I was cleared because the officer failed to appear in court, or the countless times I've called a company over a controversial bill or fee I received and walked away without having to pay it. I think about all of the free 'Legal Documents' software programs that allow the buyer (and whomever he/she shares this program with) to make any number of wills, and changes to thereof. Without the ability to study these situations empirically (the same holds true with the wide number of complaints), it is difficult to paint a black or white picture.

So while I would not all the service or even the opportunity itself a scam, I would certainly not recommend the PrePaid Legal 'opportunity' and would be hesitant to recommend the service. There are indeed people making money in PrePaid Legal but again, there were people making money in Equinox. Always research and never base decisions on unsupported claims.