Legal Services Plans: What Are They?
In Wisconsin, a "group legal services plan" or a "prepaid legal services plan" is one where a consumer who participates in the plan is afforded some legal services by an attorney recommended or selected under the terms of the plan.
How Do They Work?
Legal services plans work by making prior arrangements with lawyers to provide specified services to plan members at reduced fees. These plans may involve a prepaid charge or premium, but some plans have no prepayment features.
Some legal services plans are negotiated employee benefits, where the cost of the plan is partially or fully paid by the employer. Other plans are offered to groups of affiliated persons (e.g., credit union members) who "enroll" in the plan by agreeing to pay the plan's enrollment charge for covered services. This charge is similar to an insurance premium. Still other plans enroll individuals (e.g., credit card holders) who charge the plan fee to their credit cards. Finally, there are plans for groups where there is no prepayment but the participating lawyers agree to provide listed services at reduced fees to plan members.
In a prepaid plan: Where legal services are "covered" in the plan documents, the fee for those services is paid by the plan. Where the legal services are "partly covered", there is partial payment by the plan. Where the legal services are "not covered" by the plan, the member pays the lawyer directly, but typically at a reduced fee for that service.
In a no prepayment plan: Where legal services are "covered" in the plan documents, those services are provided to the plan member at a reduced fee. Where the legal services are "not covered" by the plan, there is no prearranged fee for those services.
Finally, whether in a prepaid or no prepayment type plan, where the services are "excluded" the plan does not apply at all to the legal fees.
Legal services plans are the product of a free market and thus vary greatly in extent of coverage, extent of choice of legal service providers, and, of course, the prices consumers pay. Therefore, as in all else, it pays to shop carefully.
What Do Legal Services Plans Typically Cover?
There is no set model for the services covered under a legal services plan. Each plan's coverage must be examined before you sign up.
However, we can identify the two basic plan types that mark the ends of the coverage/cost spectrum. At one end of the coverage and cost spectrum are Access plans that provide quick access to an attorney for advice and uncomplicated legal services. At the other end of the spectrum are Comprehensive plans providing extensive services such as complex legal advice, legal document drafting (e.g., wills, trusts, contracts and deeds), representation in real estate transactions and in negotiations, as well as before courts and administrative agencies. A few comprehensive plans even cover some or all of the costs involved in litigation.
Who Provides The Services?
Legal services plans provide service through arrangements with lawyers. Exactly how the lawyers are engaged depends upon the particular plan. For example, the plan may use a panel of private lawyers in the community; or, may allow the members to go to any lawyer in the area; or, may furnish a lawyer from a staff of full time lawyers who work only for plan members.
In a prepaid plan, when the plan uses staff or panel lawyers, the plan pays the lawyers directly and the lawyers do not bill the members for covered services. When the plan allows any lawyer to be used, the plan only pays a set amount to the lawyer for covered services; thus the member might have to pay the lawyer additional fees.
In a plan with no prepayment, the plan's panel attorneys are the only ones to provide the services.
Shopping For Legal Services Plans: What To Look For
If you do decide to enroll in a plan, you must be given a copy of the description of the terms of the plan.Under Wisconsin law, any legal services plan must be written and provide the following information:
- The covered legal services provided,
- The legal services excluded,
- Any geographical limitations on services,
- The amount of any prepayment or costs you will incur,
- The relationship among the attorney, the client, and the plan,
- How to file complaints if a dispute arises and the procedures for reviewing and resolving any dispute arising under the plan,
- That the consumer may obtain legal services independently of the plan,
- That the attorney furnishing legal services under the plan is free to exercise independent legal, professional judgment,
- That the sponsoring organization or persons connected with the sponsor will not derive any profit from the plan, except to improve the benefits of the plan and for reasonable administrative expenses.
- That any surpluses will be refunded to the users of the legal services and enrollees of the plan only.
Keep in mind that certain legal expenses may already be covered under insurance policies such as homeowners or automobile policies. Remember such existing coverage when evaluating whether a particular legal services plan meets your needs.
Being in a legal services plan does not lock you into particular lawyers. Plan members are always able to take legal matters to lawyers of their choice. However, the plan may not apply. The plan may not pay for those lawyers' services and you may have to pay the regular fees.
Who Regulates Legal Services Plans?
Legal services plans, their sponsors, and the lawyers who provide services are regulated under federal or state law or both.
Legal services plans that are part of an employee welfare benefit plan are regulated by the U.S. Department of Labor under the Employee Retirement Security Act of 1974.
Many legal services plans in Wisconsin are regulated by the Wisconsin Office of the Commissioner of Insurance.
The Wisconsin Supreme Court, under Supreme Court Rule 11.06, also regulates Wisconsin attorneys providing services through group or prepaid legal services plans.
Legal Services Plans: The Bottom Line
Aside from potentially lowering the costs of legal services through the benefit of group membership, or the prepayment of fees, legal services plans may offer other advantages. They may provide easy access to a lawyer, especially for preventative services, and may enhance service and quality for the member by bringing the economic power of the plan to bear on the lawyer when a dispute arises. |
