Pre-Paid Legal Services
Encyclopedia
LegalShield is a privately held corporation that offers specialized legal service products in the United States and Canada. The original company, Pre-Paid Legal Services, Inc., was founded on August 8, 1972, and made its initial public offering
in 1984. Pre-Paid Legal Services, Inc. was a member of the S&P 600
SmallCap index and the S&P 1500
Super Comp index, prior to being acquired by Mid Ocean Partners. The company's name changed to LegalShield after the acquisition.
monitoring and restoration services through its partnership with Kroll Inc.
. Currently most of the company's sales are described as multi-level marketing
. Products are also sold as an employee benefit through payroll deduction. The company has legal service plans for small businesses as well advertised with NFL Hall of Fame player Fran Tarkenton
as spokesman.
. The company owns several subsidiaries. Pre-Paid Legal Casualty, Inc. operates in Alabama
, Arizona
, Arkansas
, Georgia
, Illinois
, Montana
, Nebraska
, Tennessee
, & Wisconsin
. There are three subsidiaries that serve individual states: Pre-Paid Legal Services, Inc. of Florida, National Pre-Paid Legal Services of Mississippi, Inc. and Legal Service Plans of Virginia, Inc. PPL Legal Care of Canada Corporation operates in the country of Canada
.
National Market System in 1984, and is currently listed on the New York Stock Exchange
.
In 2001, the Wyoming Attorney General issued a press release announcing "When we discovered that Pre-Paid was using prohibited income representations to promote their multilevel marketing program, we warned them that the representations were prohibited by Wyoming law". Pre-Paid paid $
4,000 in lieu of civil penalties, reimbursed the state for $1,000 in costs, and refunded $2,000 to participants who claimed to have been misled. In July the same year, the company was forced by the U.S. Securities and Exchange Commission (SEC) to stop counting the commissions they paid out to sales associates as asset
s, instead of expense
s, though they did not release their updated, halved, 2000 earnings figures until February 2002.
Pre-Paid Legal has faced ongoing troubles in Missouri. After the company settled complaints in 2001, a number of similar suits arose. The company won in a jury trial against two plaintiffs, but after losing others, including one in which a former customer was awarded $9.9 million settled with more than 400 others. The company, and the U.S. Chamber of Commerce of which Pre-Paid Legal CEO Harland Stonecipher is a director, have described the lawsuits against the company as "frivolous" and "abusive".
Pre-Paid Legal reported to the SEC that less than 25% of its sales representatives sold more than one insurance plan in 2005, but avoids reporting such information to prospective sales representatives.
In October 2009, Tulsa World
reported that Pre-Paid Legal had been subpoenaed by the SEC for various documents including those pertaining to a stock repurchase program that Pre-Paid started in April 1999. (And in 2006, the company said it would repurchase $27.4 million of shares owned by executives.) The SEC reported that thus far that its demand for documents is a "fact finding" mission.
On November 19, 2009, Pre-Paid Legal announced that it received a complaint from the Federal Trade Commission
(FTC). The proposed draft complaint alleged that Pre-Paid's "ADRS program and related materials violate Section 5(a) of the FTC Act regarding asserted misleading representations, express or implied." On July 27, 2010 the FTC ended its three year investigation of Pre-Paid Legal Services, Inc. without any action.
Forbes magazine again in November 2010 ranked Pre-Paid Legal Services as number 78 out of the 100 best companies in America.
In January 2011, Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners
, a premier private equity firm headquartered in New York which it says is "focused on the middle market." The transaction would result in the company becoming privately held. The deal closed on June 31, 2011.
On September 10, 2011, the company announced that it would change its name to LegalShield. The new corporate name for the 40 year old company was said by the company to be part of an overall re-branding initiative following the acquisition of Pre-Paid Legal Services, Inc. by MidOcean Partners.
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
in 1984. Pre-Paid Legal Services, Inc. was a member of the S&P 600
S&P 600
The S&P 600 SmallCap Index, more commonly known as the S&P 600, is a stock market index from Standard & Poor's. It covers roughly the small-cap range of US stocks, using a capitalization-weighted index...
SmallCap index and the S&P 1500
S&P 1500
The S&P 1500, or S&P 1500 Composite Index, is a stock market index of US stocks made by Standard & Poor's. It includes all stocks in the S&P 500, S&P 400, and S&P 600.-Annual returns:-External links:* * *...
Super Comp index, prior to being acquired by Mid Ocean Partners. The company's name changed to LegalShield after the acquisition.
Company description
LegalShield develops, and markets pre-paid legal service plans through a network of more than 50 independent provider law firms across the U.S. and Canada. The Company also markets an identity theftIdentity theft
Identity theft is a form of stealing another person's identity in which someone pretends to be someone else by assuming that person's identity, typically in order to access resources or obtain credit and other benefits in that person's name...
monitoring and restoration services through its partnership with Kroll Inc.
Kroll Inc.
Kroll is a risk consultancy firm based in Midtown Manhattan, New York City. and established in 1972.- History:Kroll was founded in 1972 by Jules B. Kroll as a consultant to corporate purchasing departments...
. Currently most of the company's sales are described as multi-level marketing
Multi-level marketing
Multi-level marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation...
. Products are also sold as an employee benefit through payroll deduction. The company has legal service plans for small businesses as well advertised with NFL Hall of Fame player Fran Tarkenton
Fran Tarkenton
Francis Asbury "Fran" Tarkenton is a former professional football player, TV personality, and computer software executive....
as spokesman.
Subsidiaries
Today, LegalShield has its headquarters in Ada, OklahomaAda, Oklahoma
Ada is a city in and the county seat of Pontotoc County, Oklahoma, United States. The population was 16,008 at the 2000 census. As of 2009, the city population was estimated at 17,019....
. The company owns several subsidiaries. Pre-Paid Legal Casualty, Inc. operates in Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
, Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
, Arkansas
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
, Montana
Montana
Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...
, Nebraska
Nebraska
Nebraska is a state on the Great Plains of the Midwestern United States. The state's capital is Lincoln and its largest city is Omaha, on the Missouri River....
, Tennessee
Tennessee
Tennessee is a U.S. state located in the Southeastern United States. It has a population of 6,346,105, making it the nation's 17th-largest state by population, and covers , making it the 36th-largest by total land area...
, & Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
. There are three subsidiaries that serve individual states: Pre-Paid Legal Services, Inc. of Florida, National Pre-Paid Legal Services of Mississippi, Inc. and Legal Service Plans of Virginia, Inc. PPL Legal Care of Canada Corporation operates in the country of Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
.
History
On July 11, 1969, former CEO and founder Harland C. Stonecipher of Ada, Oklahoma was involved in a motor vehicle accident and was hospitalized. Although the other party was cited for fault, they had filed a suit against him for the accident. He hired a lawyer to defend himself in court, but in doing so, depleted his life savings. After researching the industry of European legal expense plans, Stonecipher created Pre-Paid Legal's predecessor, The Sportsman’s Motor Club, on August 8, 1972. The club offered legal expense reimbursement to its members. Pre-Paid Legal began utilizing "network marketing" (multi-level marketing or MLM) in 1983. Pre-Paid Legal went public on the NASDAQNASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
National Market System in 1984, and is currently listed on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
.
In 2001, the Wyoming Attorney General issued a press release announcing "When we discovered that Pre-Paid was using prohibited income representations to promote their multilevel marketing program, we warned them that the representations were prohibited by Wyoming law". Pre-Paid paid $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
4,000 in lieu of civil penalties, reimbursed the state for $1,000 in costs, and refunded $2,000 to participants who claimed to have been misled. In July the same year, the company was forced by the U.S. Securities and Exchange Commission (SEC) to stop counting the commissions they paid out to sales associates as asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
s, instead of expense
Expense
In common usage, an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs. For a tenant, rent is an expense. For students or parents, tuition is an expense. Buying food, clothing, furniture or an automobile is often...
s, though they did not release their updated, halved, 2000 earnings figures until February 2002.
Pre-Paid Legal has faced ongoing troubles in Missouri. After the company settled complaints in 2001, a number of similar suits arose. The company won in a jury trial against two plaintiffs, but after losing others, including one in which a former customer was awarded $9.9 million settled with more than 400 others. The company, and the U.S. Chamber of Commerce of which Pre-Paid Legal CEO Harland Stonecipher is a director, have described the lawsuits against the company as "frivolous" and "abusive".
Pre-Paid Legal reported to the SEC that less than 25% of its sales representatives sold more than one insurance plan in 2005, but avoids reporting such information to prospective sales representatives.
In October 2009, Tulsa World
Tulsa World
Tulsa World is the daily newspaper for the city of Tulsa, Oklahoma, is the primary newspaper for the northeastern and eastern portions of Oklahoma, and is the second-most widely circulated newspaper in the state, after The Oklahoman. It was founded in 1905 and remains an independent newspaper,...
reported that Pre-Paid Legal had been subpoenaed by the SEC for various documents including those pertaining to a stock repurchase program that Pre-Paid started in April 1999. (And in 2006, the company said it would repurchase $27.4 million of shares owned by executives.) The SEC reported that thus far that its demand for documents is a "fact finding" mission.
On November 19, 2009, Pre-Paid Legal announced that it received a complaint from the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
(FTC). The proposed draft complaint alleged that Pre-Paid's "ADRS program and related materials violate Section 5(a) of the FTC Act regarding asserted misleading representations, express or implied." On July 27, 2010 the FTC ended its three year investigation of Pre-Paid Legal Services, Inc. without any action.
Forbes magazine again in November 2010 ranked Pre-Paid Legal Services as number 78 out of the 100 best companies in America.
In January 2011, Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners
MidOcean Partners
MidOcean Partners is a private equity firm specializing in leveraged buyouts, recapitalizations and growth capital investments in middle-market companies...
, a premier private equity firm headquartered in New York which it says is "focused on the middle market." The transaction would result in the company becoming privately held. The deal closed on June 31, 2011.
On September 10, 2011, the company announced that it would change its name to LegalShield. The new corporate name for the 40 year old company was said by the company to be part of an overall re-branding initiative following the acquisition of Pre-Paid Legal Services, Inc. by MidOcean Partners.
External links
- Pre-Paid Legal Services, Inc. — Official site
- Prepaid Legal to Merge with MidOcean Partners, Acquisition for $650 Million July 2011
- CBC News Report on PPL
- Pre-Paid Weathers Guilty Verdict
- Pre-Paid Legal's Colorful Workforce
- Attorney General’s Office Nets Refunds From Multi-Level Marketer
- Forbes Best 200 Small Companies in America #120
- Forbes 2008 Best 200 Companies in America
- Forbes 2009 Best 200 Companies in America #68
- Forbes 2010 Best 100 Small Companies in America #78
- Information on the Pre-Paid Legal MLM business
- Pre-Paid Legal Services Becomes LegalShield