When Ronald Ballerini was offered access to a group legal benefit through his employer, he was convinced of its value just after reading the brochure.
The firefighter and paramedic, who’s employed by the Southfield Fire Department in Southfield, Mich., was thinking of doing some estate and trust planning. He also thought it might come in handy if he needed help with some mortgage financing and document review.
But that wasn’t the case.
Ballerini instead used the benefit during the completion of a home he was building. The contractor he hired wasn’t completing the final punch list. Ballerini picked up the phone and called Hyatt Legal Plans, his legal benefit provider, and was given the name of a local attorney who promptly sent the contractor a letter.
“Since it was from an attorney, he took care of it pretty quickly,” Ballerini says.
Last year, Ballerini used the plan again when he stopped paying homeowner’s association dues on another house because he questioned the services the association was providing—the association wouldn’t release its expenditures and it wasn’t having meetings for members. The HOA took him to small claims court. After some legal maneuvering, Ballerini thought the case was settled back in May 2011, but the plaintiff re-opened the case and it went to a higher court.
Again, Ballerini contacted Hyatt Legal Plans, which put him in touch with a local attorney. The judge eventually dismissed the case.
“If I had to pay for the service of the attorney, it wouldn’t have been worth my time hiring the attorney,” Ballerini says. “Easily, this would have been a couple thousand dollars.”
Ballerini’s story is one of many from an industry that’s continuing to grow. Because group legal benefits cost very little, are easy to administrate and have positive effects on employee performance, more and more employers are considering making them a part of their voluntary benefits packages, and they shouldn’t need a subpoena to get information about the plans from brokers.
That means brokers need to be prepared as potential clients look to offer more benefits options, plan participants spread the benefit’s advantages and attorneys sign up to become part of the networks.
Here’s a brief on how group legal plans work. Most plans are affordable—not more than $20 per month and cover a host of pre-determined legal services. Phone and office consultations are covered, but employees use the plans for many other real-world legal actions including estate planning, document preparation, real estate transactions, family law matters, civil lawsuits, juvenile court and consumer issues. Some employees use the benefit to draft a will or fight a traffic citation in court. As a bonus, providers sometimes include identity theft as part a package while others cover identity theft within the plan. Plans offer access to a network of thousands of attorneys through a phone number or website. Often times, there’s no deductible associated with the benefit, either.
All of those positives mean group legal benefits have grown from a little known offering to a point where they have a relatively strong foothold in voluntary benefits packages in the country’s largest companies and some of the smallest local employers.
While group legal benefits aren’t ubiquitous in the United States, they are in Europe. Employees there have an expectation of group legal coverage in their benefits packages and have been part of those packages for decades, says Tori Wible, executive director of the American Pre-Paid Legal Services Institute.
In the United States, group legal plans have been around for about 30 years. One of the first plans was negotiated by the United Auto Workers in the late 1970s. Industry sources say the benefit moved into the mainstream of voluntary benefits offerings in the 1990s.
“I used to go to monthly tradeshows and people would come and look at my booth and they’d look at my logos and they’d say, ‘That’s interesting, but what the heck is it?’” says Marcia Bowers, marketing and sales director for Hyatt Legal Plans. “In the 1990s, my job was to educate the public about this benefit, and we did so through a lot of marketing. Now most big companies are aware of these benefits and it’s only a matter of time before they offer it.”
Hyatt Legal Plans, a subsidiary at MetLife, was in the vanguard of companies offering group legal plans. Hyatt signed their first client in 1981, and had 55 accounts when they were acquired by MetLife in 1997. Today, they have more than 1,400 accounts—145 of which are from Fortune 500 companies. ARAG, based in Des Moines, Iowa, also is an industry leader, and several other smaller companies are making waves including LegalShield of Dallas and Legal Club of America in Sunrise, Fla.
“Business is robust, the good news is that there are still a lot of companies that don’t have legal plans as product categories,” Bowers says. “Hyatt and its competitors have penetrated about 34 percent of the market.”
Industry sources say employers should take a close look at offering group legal benefits for their employees—and the reasons why can be measured in dollars and sense.
“The biggest reason I’ve seen companies bring a legal plan on board is to help employees reduce stress and reduce absenteeism, and that increases an employer’s bottom line,” says Tony Petrill, vice president of sales for LegalShield. “The whole concept is to keep the employee more productive. If they have a challenge and they don’t know where to turn, we may be just the benefit they’re praying for. Let us handle it and let the employees can get back to their jobs.”
LegalShield traditionally has focused on smaller employers, mainly those with 300 employees or fewer. However, LegalShield is starting a broker initiative in the first quarter of 2012 and is aggressively marketing to larger companies to build on their current client roster.
Also, employers may find value in offering the benefit as a way to show their employees they understand what’s going on in their lives and can offer help. In days when employers are asking workers to contribute more to benefits like health insurance, it’s a way to provide employees with a coverage that can be of real value—and potentially help with recruitment and retention.
Employers should also be aware that offering the benefit costs them little or nothing, and most plans don’t require extensive paper work, claims forms or other administrative hassles.
But how are group legal plans beneficial to employees? Simple. The plans help employees overcome what they perceive to be major obstacles standing between them and the legal system—expense and fear.
Industry sources report that one of the major reasons Americans don’t use attorneys is the expense. Group legal benefits make representation affordable. Think of the benefit as an inexpensive way to put an army of lawyers on retainer.
“This is the kind of benefit where an employee says, ‘Look at what my employer is doing for me. I can use the plan as much as I want without any deductibles,’” Bowers says.
But it’s also a way for employees to interact with the legal system in a way that isn’t intimidating. Thanks to the Great Recession, many American workers are facing financial pressure, which can mean having to file for bankruptcy, fight a foreclosure or deal with a tax audit. Employees may be going through a divorce or facing a custody battle. Face it, life happens and a group legal plan offers employees access to lawyers that can help face these ordeals.
“Employees are going to have these scenarios and they need access to the legal system in a non-threatening manner,” says Donald Rowe, vice president of employee benefits for Legal Club of America in Sunrise, Fla. “To me, there are a lot of people in my client base who sign up who are intimidated by the legal system. We give them access to fair treatment at a fair price.”
Brokers looking to diversify their portfolios should consider offering group legal benefits, industry sources say. Of particular interest to brokers are some statistics from Hyatt. Bowers says 87 percent of employees use the benefit more than once a year and 83 percent re-enroll.
Word is getting out about the benefit and brokers should be ready to discuss the benefit with potential clients. Most industry sources say employees who sign up for the benefit often talk about the benefit’s advantages with their fellow employees, who may then sign up or have questions.
“At work, a few of the other guys have asked about it and I had talked about my case,” Ballerini says. “I told them it wasn’t just about the case, they can do trusts and there’s all kinds of different things they can do other than defense.”
Brokers should be prepared to offer the same time-tested ways of communicating the benefit’s value such as open enrollment, benefits fairs and luncheons as they would with other benefits. A good strong dialogue between employees and the company’s human resources department helps, too.
For attorneys, the argument for signing on a group plan is strong. It can mean a steady source of guaranteed income for their firms, more referrals and a way to re-direct their financial resources.
“Truth be told, the attorneys might treat the group legal plans just a bit more responsively that some other clients,” Bowers says. “Here’s why—they get paid right away. We handle the billing and they don’t have to hassle with their clients. We pay them twice a month. They value legal plan clients greatly. The attorneys really like servicing these clients."
Wible adds that the benefit also can help attorneys obtain more work.
“Once you get a client in the door, if the attorney does a great job on the coverage services that client is more likely to come back to them for something else or refer friends who may not be in the plan to that lawyer,” Wible says. “They might not make a lot of money on the coverage services, but it generates referrals.”
And Rowe points out network attorneys can save some money in terms of getting clients.
“It’s a client generator for them, and it’s at no cost,” Rowe says. “Here inFlorida, lawyers are allowed to advertise. That costs money. I’m sending them paying customers for no hard-dollar acquisition costs.”
Given all the advantages for the parties involved, it’s not possible to say the jury is still out on group legal benefits—they’re going to continue to show up in more and more benefits packages.
Plenty of big employers offer the benefit, including American Airlines, Target, MillerCoors and those are just a few from Hyatt’s client list.
But for an employee in the current work force, it may all come down to one simple thing —peace of mind.
“I have that in my back pocket—anytime I need it, I just call,” Ballerini said. “They ask what I need, what the problem is and what I’m looking for and I go from there. It worked great. I would highly recommend it and will probably use it again.”
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Nathan Solheim is a Denver-area writer. He can be reached at email@example.com.
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