PrePaid Legal's 2009 numbers are in (read more here). According to this report; Net income for the full year of 2009 decreased 8% to $55.1 million from $60.2 million for 2008. Diluted earnings per share for 2009 remained constant at $5.04 per share for both years due to decreased net income of 8% and an 8% decrease in the weighted average number of outstanding shares. Membership revenues for 2009 were down 2% to $426.4 million from $436.8 million for the prior year.

During the same time period, the number of new sales associates enrolled decreased 17.8% (from 122,255 to 148,802, about 1/3 the number of memberships sold during these time periods). While this may seem like nit-picking (after all, the end of 2007 did mark the beginning of a recession), 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). Below is a list of active memberships by end of year, starting in 2002 (when I was recruited).

Year - Active Pre-Paid Legal Memberships
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

Pre-Paid Legal Recent Updates

Pre-Paid Legal Services Announces 2007 1st Quarter Membership and Recruiting Results
During the 1st quarter of 2007, new sales associates enrolled decreased 37.6% compared to the first quarter of 2006. Memberships produced decreased 2.2% and new membership fees written decreased 7.5% and our active membership base increased slightly by 8,368 memberships compared to the comparable period of the previous year. 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).

Rip Off Report on PrePaid Legal
Great source of differing viewpoints

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

Other Pre-Paid Legal Service Providers

Hyatt Legal Plans | Legal Help Now
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 webpage serves as my case study on PrePaid Legal's opportunity from a researchers point of view.

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
-PPL 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 tock 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.

My 2 Cents...

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 how the young hopefuls buy it up.

Howeverm PrePaid Legal has been around for well over 30 years and has only now recently broken the 1.5 million barrier. Cancellations are an happen almost as quickly as memberships are sold, which is why 700,000-800.00 memberships will sell in a year's time, yet memberships will sighlty rise or fall. The sad truth is that PrePaid Legal services aren't an 'exciting new technology', barely about to make its mark.

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 hardly call it 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.