LegalShield: Anatomy of the Top Legal Insurance MLM Company


LegalShield is a legal services company (one of the top legal insurance MLM companies) offering legal plans to families, individuals, and small businesses.

Founded by Harland Stonecipher, the company has achieved impressive market performance, boasting over 1.7 million members in the United States and Canada.

It has a network of thousands of lawyers providing access to legal services with the help of innovation and technology.

This in-depth analysis explores the company’s growth and success in its mission to remove barriers to legal access for everyone.


Insights

  • LegalShield is a top legal insurance MLM company that offers affordable legal plans to individuals, families, and small businesses, with a mission to remove barriers to legal access for everyone.
  • Founded by Harland Stonecipher, the company has achieved impressive market performance, having over 1.7 million members, 39 provider law firms, and a network of 4,600 lawyers in the United States and Canada.
  • LegalShield’s business model allows sales associates to earn income through personal sales, commissions from downline associates, renewals, and bonuses, with the average annual earnings for new associates being $798 in 2019.

Section 1 – The Company

In this initial section, we analyze the critical factors that indicate how well the company is performing and also how it has grown over the years.


The official company name is Pre-Paid Legal Services, Inc. d/b/a LegalShield (doing business as LegalShield or using the trade name LegalShield).

PPLSI or LegalShield is simply a legal services company offering affordable legal plans for individuals, families, or small businesses. Instead of paying hourly fees when in need of legal services, members pay small monthly fees to access experienced attorneys that help with various legal issues. LegalShield sells its legal service products directly to consumers through employer groups and multi-level marketing.

It has various subsidiaries including Pre-Paid Legal Casualty, Inc.; PPL Legal Care of Canada Corporation; Legal Service Plans of Virginia, Inc.; Pre-Paid Legal Access, Inc.; Pre-Paid Legal Services, Inc. of Florida; and Ada Travel Service, Inc.

The company’s legal services are offered by a network of provider law firms, and it was the first company in the US to provide pre-paid legal plans for individuals.

Market Performance

LegalShield has achieved impressive market performance, with revenues of $542 million in 2022, up from $523 million in 2021. This placed it in the 23rd position in the DSN Global 100 List of the top direct-selling companies.

Founded in 1972, the company has continued to grow, passing the 1 million membership milestone in 2000, and currently boasting over 1.7 million members (with 47,000 small business accounts) and 39 provider law firms within the United States and Canada. LegalShield impacts over 4.5 million individuals, as well as 140,000 businesses in North America through their tools, services, and partnerships.

As the #1 provider of subscription-based legal plans for households, LegalShield serves 6,900 broker and agency clients, with a referral network of 4,600 lawyers, with an average of 22 years of experience.

History

LegalShield was founded in the year 1972 as the Sportsman’s Motor Club in Ada, Oklahoma, by Harland Stonecipher.

After being involved in a car accident in 1969 and experiencing financial difficulties paying legal fees despite not being at fault, Stonecipher created the company to help others avoid the same situation. He pioneered the idea of a network of law firms that made legal representation accessible and affordable.

The company was incorporated in 1976 as Pre-Paid Legal Services, Inc. And in 1984, it went public and was listed on NASDAQ before moving to the American Stock Exchange in 1986. Thereafter, it was listed on the NYSE (New York Stock Exchange) in 1999.

The company was eventually acquired by MidOcean Partners, a New York private equity firm, in 2011 for $650 million and renamed LegalShield.

LegalShield was briefly available in the UK from 2019 to 2021 under the trade names LegalDefence and PrivacyDefence.

Harland Stonecipher founded the company in 1972. Despite his passing in 2014, LegalShield continues to provide affordable legal services to over a million members.

Warren Schlichting is the Chief Executive Officer.

Other key executives include:

  • Steve Williamson, EVP, Chief Financial Officer
  • Kathy Pinson, EVP, Chief Operating Officer

MidOcean Partners, a New York private equity firm, acquired LegalShield in 2011 for $650 million. This acquisition was through a merger agreement with MidOcean PPL Holdings Corp. and PPL Acquisition Corp., newly created entities by MidOcean Partners.

LegalShield is headquartered in Ada, Oklahoma, at 1 Prepaid Way Ada, OK, 74820-5813 United States.

Company Values and Mission

LegalShield states that they are dedicated to providing affordable legal services to everyone. Their mission is to remove barriers to legal access for everyone.

The company has been championing equal access to legal, identity, and reputation management services for 50 years, with the help of innovation and technology.


Section 2 – Business Model

This section provides a detailed evaluation of LegalShields’ marketing strategies with a deep analysis of the business opportunity for sales associates.


LegalShield markets its legal service products mainly through its associates and brokers/insurance agents.

The company has been using multilevel marketing (MLM) since 1982 to sell its legal insurance plans. To achieve this, Harland, the founder, bought TVC Marketing Associates (an independent MLM firm promoting LegalShield and created by his friend John Hail) in 1985.

In the past, LegalShield has also attempted to partner with insurance companies and other service providers to offer its legal service plans alongside their regular policies. Although there have been mixed results with this cooperative marketing strategy, LegalShield remains focused on MLM.

While there is no current data on the number of LegalShield’s sales associates, historical information sheds light on the company’s growth.

By the end of 1996, Pre-Paid Legal, which later became LegalShield, had over 110,000 active sales associates. These were defined as those who sold 3+ new contracts per quarter or retained their personal contract. Many associates worked part-time.

Fast forward to 2005, the company had nearly 500,000 sales representatives who generated more than $423 million in revenue, according to The New York Times.

There are two main ways to make money on LegalShield: as a LegalShield Associate or Broker & Insurance Agent.

For Brokers & Insurance Agents, these are the options available to earn an income:

  1. Incentive Programs:

LegalShield offers various programs that provide bonuses apart from commissions earned through sales. They include cash prizes and trips.

  1. Level Compensation:

Commissions are based on the number of memberships sold, and bonuses are available for reaching certain thresholds. Commissions are a percentage of membership fees, ranging from 12% to 16%. Bonuses apply for 1,000+ memberships. Renewals are at the same rate as the first year.

  1. Advanced Compensation:

This provides high first-year commissions, and renewal commissions ranging from 2.30% to 21.26%.

For LegalShield Associates, these are the options available to earn an income:

  1. Personal Sales:

A percentage on each membership sold. The commission rate starts at 10% and can increase as you sell more and advance in the marketing plan.

  1. Sales by Downline Associates:

You can also sponsor other Associates and earn money when they make a sale.

  1. Renewals:

Associates earn each month when a membership they sold is renewed past the original advance period.

  1. Bonuses:

Associates get special bonuses after selling a number of memberships.

LegalShield indicates that existing LegalShield Members can sign up to become LegalShield Associates. Associates can sell LegalShield plans and earn commissions or bonuses, unlike members who don’t earn.

According to the company’s 2020 Income Disclosure Statement, building a successful business with LegalShield takes hard work and time, and most associates sell plans to make part-time income.

The average annual earnings for associates with 0-2 years experience and at least one sale were $798 in 2019. About 73% of all associates made less than $1,000 in that year.

Legalshield-Income DisclosurePin

LegalShield paid out 1+ billion dollars to its associates in the last decade.

In LegalShield’s marketing plan, Independent Associates can grow and develop their business through the following 11 ranks:

  1. Associate:

The starting level when you join.

  1. Senior Associate:

You achieve $180 in personal membership premiums written.

  1. Manager:

You achieve $500 in personal membership premiums written.

  1. Senior Manager:

You achieve $2,000 in personal membership premiums written.

  1. Director:

You achieve $4,000 in personal membership premiums written.

  1. Senior Director:

You generate $800 in personal membership premiums written within one month.

  1. Executive Director:

You generate $1,600 in membership premiums written within one month.

  1. Bronze Executive Director:

You generate $2,400 in personal membership premiums written within one month.

  1. Silver Executive Director:

You generate $3,200 in personal membership premiums written within one month.

  1. Gold Executive Director:

You generate $4,000 in personal membership premiums written within one month.

  1. Platinum Executive Director:

You generate $4,800 in personal membership premiums within one month.

Commissions are based on rank and paid based on membership premiums written. The commission amounts represent a one-year advance. In case a membership is canceled during the advance period, you’ll get charged back against your future commission advances.

Here is an overview of the 2021 commission plan:

LegalShield commission planPin

The current fee to become an Associate is $99. You will also be charged any applicable state licensing fees.

You can check through the company website to find a Sales Associate in your area. Associates can walk you through various plan options as well as member benefits.


Section 3 – Services

This section evaluates LegalShield’s services to reveal the company’s unique selling proposition.


What Does Legalshield Sell? (Video)

LegalShield offers affordable legal and privacy services to its members through two main services: LegalShield and IDShield.

LegalShield provides its members with access to experienced lawyers, allowing them to receive legal advice through affordable monthly payments instead of high hourly costs.

Members can use an app or computer to choose a legal category, speak to a local lawyer within a business day, and deal with their legal issues.

Personal/ family, and Small Business plans are available, as well as legal help for entrepreneurs starting a business.

IDShield is a privacy/ security management service that offers members alert notifications and resolution services to restore their online reputations in cases of potential theft and fraud.

LegalShield’s network of provider law firms features thousands of lawyers to help members navigate through various legal matters, from warranty issues to real estate, speeding tickets to estate planning. They also offer a 24/7 emergency access option for covered situations. And members receive a 25% discount on legal matters that aren’t covered.

LegalShield’s legal plan covers a wide range of legal issues, from advice and consultation to representation in court.

Here’s what you can expect from your plan:

  1. Advice, Consultation & Representation:
    1. Phone consultations for any personal legal matter
    2. Letters and phone calls on your behalf
    3. Contract and document review
    4. Trial defense
    5. 24/7 emergency access
  2. Family Matters:
    1. Uncontested name changes
    2. Uncontested separations
    3. Uncontested divorces
  3. Document Preparation:
    1. Preparation of wills, physician’s directives, living wills, and power of attorney
    2. Residential loan document assistance
  4. Traffic:
    1. Assistance with non-criminal, moving traffic matters
    2. Representation for criminal charges resulting in death
    3. Assistance for driver’s license reinstatement and property damage claims
  5. IRS Audit Assistance: Representation if audited by the IRS on personal tax returns
  6. 25% off Additional Legal Services: Beyond plan features (excluding contingency matters)

What IDShield Covers

IDShield covers a range of monitoring, tracking, and other privacy management aspects.

Here is an overview of the features:

  • Credit Bureau Monitoring with Alerts
  • Password Manager
  • Social Media Monitoring
  • Financial Account Monitoring
  • Monthly Credit Score Tracker
  • Online Privacy Management
  • Reputation Score
  • Reputation Management
  • High-Risk Application and Transaction Monitoring
  • Investment Account Number Monitoring
  • Instant Hard Credit Inquiry Alerts
  • Public Records Monitoring
  • Identity Fraud Protection Plan worth $1 Million
  • Court Records Monitoring
  • Address Change Verification
  • Identity Threat Alerts
  • Internet Dark Web Monitoring
  • Consultation on Cyber-Security
  • Data Breach Notifications
  • 24/7 Emergency Assistance
  • Live Member Support
  • Cyberbullying Consultation

LegalShield reveals that its services are regulated in multiple states, including:

  • Pre-Paid Legal Casualty, Inc. in Alabama, Arkansas, Arizona, Illinois, Mississippi, Massachusetts, Montana, New Jersey, Nebraska, Oklahoma, Utah, Tennessee, and Wisconsin
  • Pre-Paid Legal Services, Inc. in North Dakota
  • Legal Service Plans of Virginia, Inc. in Virginia
  • Pre-Paid Legal Access, Inc. in Georgia and Oregon

Moreover, the company only functions as a service provider to give access to registered professional law firms and lawyers.

LegalShield is a leading provider of pre-paid legal service plans, but it has faced several legal and financial issues.

In 2001, the Wyoming attorney general accused the company of using prohibited income representations when promoting its multi-level marketing program. Pre-Paid denied the violation but agreed to change its marketing messaging and paid $7,000 (including $2,000 refunded to members who alleged that the company misled them).

The U.S. Securities and Exchange Commission (SEC) also required Pre-Paid Legal to stop counting commissions paid to sales associates in 2000 as assets rather than expenses. That resulted in a significant decrease in reported earnings ($43.6 million down to $20.5 million) and stockholder equity ($147 million down to $42 million).

The Better Business Bureau (BBB) also highlighted several complaints about LegalShield’s service, advertising, billing/ collections, contracts, refund/ exchange, and customer service. Various customers have reported attorneys not filing the correct paperwork, not coming prepared to court, and not being knowledgeable about clients’ needs. The BBB has encouraged the business to address this pattern of complaints.

Despite those issues, LegalShield has received many positive ratings on its app in the App Store, with a 4.7/5-star rating from over 10,000 ratings.

The company was also rated as one of the 200 best small companies in the U.S. by Forbes in 1996 and had a “Strong Buy” rating for its stock in 1997 by Sovereign Equity and Salomon Brothers.

LegalShield remains a BBB-accredited business with an A+ rating.


In this section, you’ll find out the truth about critical issues that may not be clear about the company.


LegalShield is a legal insurance provider, much like other insurance providers that cater to different issues like medical or cars.

While LegalShield itself isn’t a law firm, it offers people and businesses legal protection through a network of legitimate law firms and lawyers. And the company has been in business for roughly 50 years.

Whether prepaid legal services are worth it depends on an individual’s circumstances and legal needs. For those who may require legal assistance frequently or expect to face costly legal issues, prepaid legal services can be a cost-effective option.

However, for individuals who may not require legal assistance often, or for those with complex legal issues, prepaid legal services may not provide the level of expertise needed. It’s important to consider the specific plan’s costs, benefits, and coverage limitations; as well as your legal needs and budget.


Section 5 – FAQs and Recap

In conclusion, we summarize some key concepts by answering frequently asked questions about LegalShield.


What is LegalShield and what services does it offer?

LegalShield is a legal insurance MLM company that provides affordable legal plans to individuals, families, and small businesses. These plans grant access to a network of experienced attorneys that help with various legal issues for a small monthly fee.

How does LegalShield’s business model work?

LegalShield uses a multi-level marketing (MLM) model, where sales associates earn income through personal sales, commissions from downline associates, renewals, and bonuses. This structure enables individuals to build a part-time or full-time business by selling LegalShield plans and recruiting other sales associates.

How can I become a LegalShield Associate?

To become a LegalShield Associate, you need to sign up by paying a one-time fee of $99, plus any applicable state licensing fees. As an Associate, you can sell LegalShield plans and earn commissions or bonuses based on your sales performance and the performance of your downline associates.

What is the average income for LegalShield Associates?

According to the company’s 2020 Income Disclosure Statement, the average annual earnings for associates with 0-2 years experience and at least one sale were $798 in 2019. It’s important to note that building a successful business with LegalShield takes hard work and time, with many associates earning a part-time income.

How can I find a LegalShield Associate in my area?

You can find a LegalShield Sales Associate in your area by visiting the company’s website and searching for an Associate near you. Associates can guide you through the various plan options and member benefits available to you.


Sources

Credits (images)

  • PPLSI
  • WeAreLegalShield
  1. eXp Realty
  2. Primerica
  3. Telecom Plus

Author: Victor Nyorani

Victor Nyorani - Network Marketing Start

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