However, there is no single fit-for-all group legal plan for all
organizations. For a start, each organization has a distinct list
of requirements when contracting for legal insurance. A requirement
built on the premise of reduced administrative costs will require a
different set of legal services than requirements built on
enhancing a benefits package or protect against liability.

Legal plans also vary in what they offer: the quality of their
customer service, flexibility of plan design and finally the
experience and professional track record of their panel of
attorneys.

In order to minimize the risk of poor service and plummeting
employer satisfaction, an employer should conduct both requirements
analysis amongst its employee base to cover for their difference
needs, and a due research to select the most appropriate legal plan
to fit those requirements based on experience, integrity and track
record.

The number one criterion has to do with a lawyer’s legal
ability: someone who lays the law down for you, present you with
options, explain the ramifications of each decision you make and
give you recommendations on the best course of action. In this day
and age of complicated legal matters, many lawyers are increasingly
specialized and you stand to get better information from someone
with a practice focus in a particular area of the law than a
generalist who deals with a broad spectrum of legal issues.
Building rapport is also very important: your relationship with
your lawyer can make or break your case. You need a lawyer who
gives you candid advice and council you can trust, someone with
enough perspective to step back from an issue and look at it from
all perspectives.

Client-lawyer relationships are very limited within a prepaid
legal plan. Because of “preventive” nature of most plans, your
contact with your lawyer will be limited on many occasions. You
seldom get to talk to your lawyer face-to-face – as most of the
consultation is done over the phone – and even when you get to talk
to them, it’s difficult to build rapport when your office
consultations are limited to a dozen hours a year.

The good news, however, is you still have some options left.
When you sign up for a legal plan, you get to choose your lawyer
and there is a number of steps you can take to increase the
likelihood of getting a good lawyer. First, you need to ask for
referrals from previous clients. Ask around about good attorneys in
the network. Once you get a few names, check their educational
background, their qualifications and their professional track
record with your state’s bar association.

After you receive your referrals, don’t shy away from setting up
interviews with attorneys in the network. Most don’t mind receiving
inquiries about what they do and how able there are. |Ask tough
questions: How long have they been in practice? How satisfied are
their previous clients? How many legal problems of interest to you
have they taken recently?

What is covered? Legal plans are offered in
different models and differ in the specifics of what they cover.
While phone consultation and simple drafting and reviewing of
simple contracts are included across the board, more elaborate and
complicated legal matters are not covered. It’s best to review your
own legal needs before you choose a legal plan. Ask which legal
services will you need most and then choose a plan that provides
the best coverage given those needs. For instance, if you are a
business owner, lawsuits, lease and contract negotiations could be
high on your list and you would be looking for a legal plan that
provides coverage accordingly.

What legal coverage do I already have? Don’t
pay for coverage twice! If you have car insurance, then you are
covered for liability and medical protection, home insurance covers
you for injuries sustained on your property… Your existing
insurance policies already cover some of your legal costs and there
is no need to pay for that coverage when you select with a legal
plan.

Does the company have an in-house procedure to handle
complaints? One of the stumbling blocks of pre-paid legal
services is quality of service. Newly-licensed attorneys, phone
calls not getting answered and that ointment on any client –lawyer
relationship: fee disputes, typically involving bills made to your
credit car to cover for services not included in your contract…
This is just a specimen of the many problems people face with their
plan providers.

Make sure you select a plan that has clear guidelines as
to how to settle dispute when they arise. A company that
has a good in-house mechanism to handle complaints will generally
assign a senior attorney with the authority to handle customer
complaints of and disputes with any attorneys in the network.
Secondary sources of resolution may include your state insurance
department or bar association. Check their outlet for complaints
against pre-paid services.

What is the quality of the work they provide?
You’ll need to do some homework before you select your legal
provider. Ask these questions: What’s the firm’s reputation in my
area? How many years have they been in business? Have they been
operating in my local area for at least a year without complaints?
How skilled are they attorneys? Do they cover the locale where my
business operates? Some good places to start your background
research are your state bar association, the Better Business Bureau
and the Consumer Affairs Office.

When you sign up for a pre-paid legal plan, you have the right
to unlimited toll-free telephone access to your attorney. The sound
advice and consultation given to you by your lawyer will help you
take the necessary steps to detect and resolve any potential legal
problems before they take more dangerous proportions.

This is called in legal jargon “therapeutic jurisprudence” or “
preventive law”. Just as preventive medicine helps prevent disease
by detecting their symptoms, preventive law helps prevent serious
legal consequences by detecting early problems. In an increasingly
litigious society, there is real concern that assets you have
worked long and hard to accumulate may be attacked by creditors and
litigants, through no fault of your own. By the time a potential
claim or liability is identified, it is too late to act.

A competent attorney’s advice is your best option to minimize
your exposure to potential risks and protect yourself from legal
problems getting out of hand.

If you are going to start a business, it’s crucial that you take
the necessary steps to protect yourself right up front or as soon
as possible. If you haven’t done it yet, don’t delay or
procrastinate . . . form an LLC now. Wise business planning
includes the formation of the proper business entity and the
purchase of liability or business risk insurance when available.
You cannot eliminate every possible risk when starting a business
but you can substantially reduce the likelihood of a devastating
lawsuit through proper planning.

From a liability stand point, you are always in a much stronger
position to protect your personal assets when you operate as an LLC
or corporation. If you operate your business as a sole proprietor
or general partnership, there is no protection.

Although coverage differs across the board, most pre-paid plans
offer unlimited telephone consultation with a lawyer, a valuable
service that is enough to solve many small-business matters. This
encourages “preventive law”: the process whereby you identify legal
problems that affect your business, contact your lawyer and get
advice on taking steps to minimize them.

Basic plans provide coverage for simple contracts and the
drafting of simple legal documents, like a power of attorney or a
bill of sale. More comprehensive plans will deal with more
elaborate matters like equipment lease and accounts-receivable
collection work.

If you are a member of a local chamber of commerce, trade or
professional group than you can get a plan at a reduced group rate.
Otherwise, buy directly from a commercial vendor.

On the other, they desired the personal liability protection offered by incorporation. Traditionally, it was possible to achieve these dual goals only by forming a corporation and then applying for S corporation status from the IRS. Then a few years ago a new legal entity, the limited liability company (LLC) was introduced. LLC’s, which are recognized by all states can have many of the most popular attributes of partnerships (pass through tax status) and corporations (limited personal liability for the owners). Most states allow a one person LLC but some states require an LLC to have at least two owners, meaning they are not suitable for sole proprietors except where a spouse is included as a co-owner.

LLC’s, like corporations, are formed by filing Articles of Organization with your state’s corporate filing office, usually the Secretary. Then the parties prepare and adopt an Operating Agreement which is similar to a Partnership Agreement which sets forth the rights and responsibilities of the parties involved.

Here are the main features of the LLC, which make it attractive to many small business owners :

Limited liability. Until the LLC came along, business owners were personally on the hook for all the business debts, including liability from most lawsuits, unless they incorporated. But LLC owners are not personally liable for business debts, such as court judgments or legal settlements obtained against the business. They risk losing only the amount they paid into the business to get it started. (If however, you personally co-sign a loan, you are personally liable, no matter how the business is set up.)

Flexible management. The owners of an LLC are called members. Small LLCs are normally member-managed, since most small business owners want and need to have an active hand in running the business. Members can, however, elect a management group, which may include nonmembers.

One-level of taxation. The LLC, like a partnership, is normally recognized by the IRS as a “pass-through” tax entity (you can also elect to have it taxed like a corporation which for some business owners can result in lower overall taxation); LLC’s can even elect S corporation tax status, but this is a complicated tax strategy that puts LLC’s in a quasi-partnership type of tax treatment). Unless you choose corporate tax treatment, the profits or losses of the LLC are not reported and taxed at a separate business level, as are corporate profits. Instead, they pass through the business and are reflected and taxed on the individual tax returns of the owners. (Sole proprietorships and corporations that have elected S corporation status with the IRS are also pass-through entities with similar tax status.)

Flexible distribution of profits and losses. When a business is co-owned, the owners may or may not wish to split profits and losses of the business proportionately to capital contributions. Different business forms have different rules about how business profits, losses and assets can or cannot be split up. The corporate form is generally the most rigid, and partnerships the most flexible; S corporation tax status falls somewhere in between. The LLC is treated like a partnership for tax purposes, and this applies to the division of profits and losses of the LLC.

However, LLC’s may not be for everyone. Although LLC’s may be the best choice for some business owners who wish to limit their personal liability for business debts and claims, some would be better off forming a corporation. For example, a business that would benefit from a formal separation of management from financial interests–as is found in the separation of the corporate board of directors from its shareholders, with each group subject to separate legal rules, responsibilities and decision making power–or a business that looks forward to issuing stock incentives to employees or selling its shares to the public should consider incorporating instead of forming an LLC.

Practical Suggestions

Many accountants I work with are still recommending the S corporation for operating a small business which offers a service or sells a product. For people who need an entity for buying, selling or holding real estate or for holding other assets, the LLC may be the best choice. Both entities provide similar limited liability protection. The only difference is that S corporations have been around for so many years that there are a lot of legal decisions determining various issues of liability which make them more predictable. LLC’s are relatively new and their treatment by the courts is less predictable. With respect to taxes, many accountants suggest you can save some money in the area of FICA taxes (the 15.3% Social Security and Medicare Taxes) in an S corporation where the same treatment is generally not available in an LLC.

Some accountants suggest using an LLC that elects S corporation tax status. This is certainly a possible way to get the best of both worlds but is a fairly new strategy and not familiar to some accountants or tax practitioners

I don’t need to tell you that a growing lawsuit epidemic is going on in the United States and it only appears to be getting worse. Statistics reveal that 1000′s of lawsuits are being filed each month and small business owners are prime targets. It may be a disgruntled former employee… a customer… a business competitor… a total stranger… some government agency… the list goes on.

Operating a business as a sole proprietor or general partnership provides absolutely no protection against lawsuits. You leave your personal assets wide open to risk.

Don’t get me wrong. I’m an absolute believer in small businesses. They’re great . . . they help make dreams come true for many people and they can be your path to financial freedom, independence and success. They are the back bone of our society and one of the main supports of our national economy. My father was a small business owner all of my growing up years. I’m strongly in favor of small businesses.

But, small business owners need to protect themselves. The most important step you can take to protect yourself is to operate your business through a properly formed and maintained entity like an LLC.

The LLC entity was specifically created by law to provide a layer of protection between the business and its individual owners. With our lawsuit crazed society, the number of LLC’s being formed has grown by over 90% in the past few years. The main reason is protection.

The most basic pre-paid plan is designed to make the simple legal services readily available to the general public at low cost. These plans typically cost between $10 and $30 per month, billed in advance.

You get unrestricted toll-free number telephone access to a lawyer for legal advice and consultation. You can also make brief office consultations to talk to your lawyer about any legal problems you may be encountering. Your lawyer can also write to letters or make phone calls on your behalf. This can help resolve many problems before they escalate further.

Other services provided are not overly time-consuming: the drafting of your will to distribute your property after your death, review of your trust and any other simple legal document.

If you require any other service beyond the scope of a basic plan, then you can either pay discounts on regular lawyer fees or pay a premium to upgrade to a more comprehensive plan.

Request a free consultation on the process of setting up a company in the USA.

So, who is involved in your prepaid legal arrangement?

Your Lawyer

You get to choose your attorney from a pool of attorneys in the
network. Your lawyer is your point of contact for any phone advice
or office consultation. He is the one who furnishes other legal
services specified in your written agreement with your provider: he
drafts your will, reviews simple contracts for you, writes letters
on your behalf and makes phone calls to adverse third parties.

If you are unsatisfied with the quality of work you are getting
from your current attorney in the network then you have the choice
of choosing alternate attorneys. You can also make a complaint to
your provider’s in-house charge of complaints.

If you benefit from legal services under a group plan scheme
then there are a number of parties who are involved in this
scheme.

First the contracted firm, just as is the case with an
individual plan, is the one which provides all the legal help
through its network of attorneys. There are also two parties
involved in the deal: a plan administrator and a plan sponsor.

A plan sponsor is the organization you are member of, which
sponsors your legal plan. Your sponsor can either choose to provide
the legal services as a fringe-benefit, as is the case with most
employers, pre-charge for the service – universities usually charge
for any legal service as part of tuition fees ñ or charge
low-costs, as do trade unions under a group-bargaining scheme.

Your plan administrator is the person appointed by your sponsor
to arrange for the panel of lawyers from the contracted firm to
provide services, collects all the fees paid into a prepaid plan,
publicizes the plan and handles enrollment and marketing. The
administrator may be a an employee of the sponsor, an insurance
company or an outside firm.

Regulating Authority

Authorities that regulate prepaid plans provide you with an
outline of how prepaid legal services are managed and also an
outlet in case there are any complaints.

Individual prepaid legal plans are generally regulated by your
state department of consumer affairs.

If you are an employee participating in a group plan funded by
your employer, then the legal services are covered and regulated
under the deferral Employee Retirement Income Security Act
(ERISA).