LegalShield / Pre-Paid Legal Scam Video

The Pre-Paid Legal company has been around for years.  There have been lawsuits against them and lots of negative reports on this business opportunity.  Recently they have changed their name to LegalShield and have become a private company.  Let’s take a look at this business opportunity.

LegalShield / Pre-Paid Legal Scam Claims

Imagine a world where anyone can access an attorney about any legal issue. Now imagine a world where everyone can afford it. Thanks to LegalShield that is the world we live in. For as little as $20 per month.

LegalShield Pre-Paid Legal Scam Introduction Video

LegalShield Can Provide A New Lifestyle! – Diamond Executive Director Brain Carruthers
LegalShield Prepaid Legal Scam Lifestyle Video

Worry less and live more.

LegalShield / Pre-Paid Legal Scam Reality

In 1976 this company was incorporated as Pre-Paid Legal Services, Inc.. Pre-Paid Legal Services, Inc. was acquired by MidOcean Partners in 2011 and changed its name to LegalShield.

Incredible claims of income are a sure sign of a work at home business opportunity scam! If the ad you’re looking at features palm trees, a mansion, and a Ferrari, it’s probably a scam. Researchers screen about 5,000 home jobs leads every week, and there is a “54-to-1 scam ratio”. – Durst, the CEO of Staffcentrix

Cost To Sell LegalShield

Price: $99

  • 30 Days LS Evo (Televox) $9.95 per month after 30 days (details)
  • Your Choice of eService (With FREE 2 Month Business Builder Subscription) (details)
  • Standard New Associate Kit
  • Flipbook (details)
  • DVD, “Worry Less, Live More” (details)
  • CD, The Next Step (details)
  • LegalShield Brochures (details)
  • Universal Member Application (details)
  • Associate Application (details)
  • Offer for Starter Pack of Business Cards (details)
  • START Booklet (details)
  • LegalShield Lapel Pin (details)
  • Licensing Information (if applicable in your state/province) (details)

Refund Policy

An Associate may request a refund within 30 days of his or her production date. The Introductory Kit must be received to terminate and refund all Associate Agreements. Refunds are only considered if there is no downline activity on the account (placed or personal) no corporate sponsored training has been attended, and all introductory materials for a refund are received.

Income Disclosure

They do not provide one.

Problems With The Pre-Paid Legal Business Opportunity

Pre-Paid Legal reported to the SEC that more than 75% of its sales representatives did not sell more than one plan in 2005, but avoids reporting such information to prospective sales representatives. – Source New York Times

Pre-Paid Legal 2010 Information

502,982 Memberships Sold
438,007 Vested Associates
$114,224,000 Commissions paid
Commissions on average go to 8 other people on a sale.
The available commission for each Vested Associate is $261 per year. – Source Form 10-K SEC

There is a 50.4% retention rate for the first year of service. In other words, only 50.4% of members were still paying 1-year after those members purchased a membership.  – Source Form 10-K SEC

Problems With The Product

Legal Shield Product Plans

There are many limitations to the legal services you receive for your monthly fee.

You have to pay extra for contracts greater than 15 pages in length.

Services/Phone Consultation: Unlimited phone consultation is available to the extent the Provider Law Firm deems it necessary to adequately advise the member on his/her personal legal matter.

Letters and Phone Calls: One letter or phone call per personal legal matter is available if advisable in the Provider Law Firm’s sole discretion.

Will Preparation: Trust preparation is available at the preferred member rate.

Motor Vehicle Legal Services: Representation under this benefit is provided when the member has a valid driver’s license and is driving a properly licensed motor vehicle. Pre-existing conditions, charges of DUI/DWI related matters, drug-related matters, hit-and-run related charges, leaving the scene of an accident. Criminal moving violations and unmeritorious cases are excluded. Commercial vehicles with more than two axles are not covered.

Trial Defense Services: Matters not covered under Plan benefits and which the member may use his/her preferred member rate for
services are:

  • Dependents (covers member and spouse only).
  • Bankruptcy, divorce, separation, annulment, child custody or other divorce or domestic-related matters.
  • Charges of DUI/DWI, drug-related matters (whether prescribed or not), hit-and-run, leaving the scene of an accident, and civil or criminal charges occurring as a result of operating a commercial vehicle with more than two axles.
  • Lawsuits filed because of something that occurred prior to the membership or because of conditions that were reasonably anticipated or foreseeable prior to enrollment (even if the lawsuit is filed after enrollment).
  • Class actions, interventions or amicus curiae filings in which the covered member is a party (or potential party).
  • Garnishment, attachment or any other appeal.
  • Claims, defenses, or legal positions which the Provider Law Firm determines will not prevail in court or are frivolous or without merit.

IRS Audit Legal Services: Coverage includes the return due on April 15th of the first membership year. Does not cover garnishment, attachment or any other appeal, class actions, interventions or amicus curiae filings, charges of tax fraud or income tax evasions, Trust returns, business and/or corporate tax returns, payroll and information returns, partnerships, corporation returns or portions thereof that are included in the member’s tax returns, pre-existing conditions—where member has been notified by the IRS prior to enrollment, and services rendered by an enrolled agent.

Preferred Member Rate: If the member needs representation in court, he/she must notify the Provider Law Firm at least five business days in advance so they may prepare for the case. Hourly rates for referral lawyers and court appearances may vary.

General Provisions: Members may use their preferred member rate and phone consultation benefit for Plan exclusions. Fines, court costs, penalties, expert witness fees, bonds, bail bonds, and any out-of-pocket expenses are the member’s responsibility
and are not part of the membership fees and/or benefits. A retainer fee may be required prior to services being rendered for services not otherwise covered by membership benefits. – Source LegalShield Success Guide

If you need legal help, they will make one phone call or write one letter. Then they refer you to an outside lawyer who you will need to pay additional money to. LegalShield’s real business is recruiting people to sell many monthly plans for commission. They’ve also been accused of being a billing scam. They continue to charge your credit card monthly without permission and they make it difficult to contact them. – Mary Cummins Real Estate Appraiser

These many limitations in my opinion do not create a world where anyone can access an attorney about any legal issue and they can afford it. It creates a world were you can access an attorney and then pay a lot of money to do something about your legal issue.

Their are many complaints about the LegalShield service.

Here is an example of one complaint from ConsumerAffairs.com.

“The LegalShield people are very polite and nice…because they want your monthly money. The lawyers they deal with in my case Glantz law in Florida seem to be incompetent and extremely rude lawyers that no one would hire for a regular fee. Their handling of the case is null and will make you waste precious time. Stay away from LegalShield and find a decent lawyer (there must be some..) that will really represent you and not botch up your job.” – Lily of Davenport, FL on July 19, 2014

I have no idea how LegalShield has a high rating with the BBB.  They have many complaints over the last 12 months.

Here is an example of one of the BBB complaints from 02/14/2014.

“They provide a service that gives wrong information and jeopardized me.

1. provided incorrect evaluation of a contract
2. jeopardized a medicaids recipient by putting incorrect information on a will.
3. spelled names incorrectly 3 times.
4. took over 3 months to get a will completed.
5. were argumentative
6. Did not make corrections as requested 3 times
7. told me that they called repeatedly and did not”

Compensation Plan 

To make significant income you need to be a recruiting machine! -Eddie Sturgis
Legalshield Pre-Paid Legal Scam Compensation Video

LegalShield Compensation Plan

When a customer signs a new membership, an associate is paid an advanced commission for the full first year of service. Unfortunately, almost half of all consumers cancel their service before the year ends. When this happens, the company takes back part of the commission the associate was paid leaving an associate earning considerably less than they had expected.

Vesting: In order to be eligible to receive commissions, Associates must have an active Associate Agreement. In order to
keep an active Agreement Associates must do one of the following:

  • Maintain an active personal LegalShield membership

OR

  • Make three personal membership sales per calendar quarter

If an Associate fails to do either, his or her Associate Agreement will be placed in a precancel status for one quarter. During the precancel quarter, the Associate must either:

  • Reinstate their personal LegalShield membership

OR

  • Make six personal membership sales

If these requirements are not met, the Associate will go into a dropped status at the end of the precancel quarter. Upon the date the Associate Agreement is dropped, the Associate loses all downline, level, counters and qualifications and forfeits any pending advanced commission, earnings and bonuses. – Source LegalShield Success Guide

On average commissions paid are divided between 8 people. This structure rewards those with a large team but often leaves those just getting started struggling to earn enough to support their business.

Many levels of compensation only further enriches those at or near the top of the pyramid of distributors. Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public. This makes it an exploitive money transfer scheme, or product-based pyramid scheme. –  Source Mlm-thetruth.com

What is a product-based pyramid scheme?

LegalShield / Pre-Paid Legal Scam Conclusion

In my opinion the LegalShield business opportunity is a bad business opportunity and should be avoided.  It is a product-based pyramid scheme that is focused on recruiting an endless amount of people to become associates which purchase the plan to remain vested, and the focus is not on retail sales to customers.  The product has some very serious quality issues with the amount of complaints that are found about the service. The cancellation rate for plans is close to 50% for the first year. More than 75% of sales representatives do not sell more than one plan. The available commission for each Vested Associate in 2010 was only $261 per year. On average commissions paid are divided between 8 people. This structure rewards those with a large team but often leaves those just getting started struggling to earn enough to support their business.