- A pre paid legal compensation plan, also known as a pre paid legal plan, is an employee benefit wherein employees receive the ability to access attorney services. Usually, employees elect to be included as a member in the pre paid legal plan and pay a certain amount pre tax compensation, in order to have access to these services. Once an employee is a member of the plan, the employee has the ability to contact an attorney at any time to discuss his or her legal matter, and the call is free of charge. Furthermore, the pre paid legal plan offers certain legal services which are included as membership in the plan.
- Every pre paid legal services compensation plan varies with respect to what is included in the plan. Generally, a pre paid legal services plan will include unlimited telephone consultations, a certain number of attorney-drafted letters (such as a collections letter), review of certain types of legal documents (such as a will or power of attorney document), preparation of wills, some criminal legal work and other types of legal services.
- There may be legal services which are outside the scope of the pre paid legal plan. Usually, the pre paid legal service provider will offer reduced fees for these additional services. For instance, attorney appearances in court, court filings, trials and/or Internal Revenue Services auditing assistance may be arranged for an additional legal fee.
- The cost of membership in a pre paid legal plan depends upon the employer providing the benefit. While some companies offer a free membership to its employees, most employers require some level of contribution by the employee in order for the employee to become a member. The cost of the plan will depend upon the contract with the provider and the employer, and the cost is frequently reduced based upon a high number of enrollees into the pre paid legal plan.
- Recently, pre paid legal plans have been the target of investigation and discussion. Specifically, pre paid legal service providers have been subject to scrutiny based upon improper and possibly illegal conduct. According to Fly on the Wall, the Fraud Discovery Institute has indicated that pre paid legal plans may be "the next Madoff like fraud." Furthermore, the Institute has alleged that "months of investigation show "critical points of similarity" between Bernie Madoff's ponzi scheme and the recruitment based multi-level marketing compensation plan of Pre-Paid Legal." Thus, employers are reviewing their providers carefully in order to provide the most efficient plans for their employees.
