Are Group Legal Plans Worth It?

No employer likes to deliver bad news to employees, particularly when it means more money out of their checks to pay for increased health premiums or co-pays. To offset that pain, many companies are providing voluntary benefits, including legal plans.

Jon Trevisan, managing consultant with Hilb Rogal & Hobbs, says adding a group legal plan to a suite of benefits garners appreciation from employees, who are becoming increasingly more educated about the overall usefulness of having legal services as an option. It also allows employers to have some good news when open enrollment time comes around, particularly if they’re forced to raise health care premiums.

Recent growth

“Let’s face it, employers are looking for ways to shift the costs of benefits to employees. One way to soften the blow of that reality is that if you’re going to start having employees pay more for benefits at least give them more choices so that they can maximize the value of their benefits package for their own individual needs,” Bill Brooks, Hyatt Legal Plans (a MetLife company) CEO explains. “That is definitely a factor that is helping us.”

Marcia Messett, marketing director for Hyatt echoes that sentiment, reporting that last year her company installed 174 brand new accounts. This year promises more of the same. “As early as February, we were looking at record sales,” she says.

“We’re seeing much greater interest overall from companies looking to add these programs, looking for new ways to add value as health costs are being shifted to employees,” Mike Solomon, president of Omni Law Legal Plans Inc., says. “Over the last three years, we’ve doubled the number of clients we’ve had. We had some 50 client companies in 2001, and now we have 140 covering about 8 million employees.”

“We’re finding that with our existing programs with clients like Target, Pepsi and American Express, enrollment grows every year,” Brooks says. “Now we’re finding an additional $4 million just from our old accounts because more people keep joining them. We view that as the ultimate test as to whether or not we’re doing what we set out to do in providing people with affordable access to legal services.”

As more employers begin offering a group legal plan, Brooks says more employees have come to expect it as part of their benefit options.

Services offered

Certainly having an attorney available for routine traffic tickets or auto accidents can be a godsend, but group legal plans cover a great deal more. Whether it is for drafting a will, estate planning, adopting a child, buying or refinancing homes and numerous other critical endeavors, Messett says the benefits community recognizes that employees need attorneys. She points to numerous studies done in recent years showing most Americans do not even have a will, mainly because they fear high legal fees and are generally intimidated by the system.

Most workers, she explains, are “simply unaware” of a legal plan’s overall value. “A legal plan puts people in touch with pre-qualified attorneys, and that access to legal assistance is the fundamental value of a legal plan,” Messett says. “For a monthly premium of as little as $20, an employee can receive a whole host of fully covered services.”

Messett says a recent American Bar Association survey reveals that 71% of respondents said they had a legal issue that would have been resolved more favorably had they been able to see an attorney.

Brooks points to the word-of-mouth from other employees who have enrolled in plans as another key factor in the spread of their popularity, noting that you don’t need to be in legal trouble to benefit from having an attorney.

“They’ll tell other people at their workplace, Gee, you should enroll in the legal plan. It’s a great deal. For $200 a year, you get wills and house closings, debt counseling, and you can talk to your lawyers as many times as you want,'” Brooks says.

Trevisan agrees, saying just having that resource available can have a dramatically positive impact on any employee’s life.

“At various points in their life, people need legal resources. Whether it be buying a first house or setting up a will or a trust, all are covered by group legal plans,” Trevisan explains. “If you look at many of the leading legal service providers, there’s really a laundry list of services they can provide and it can positively impact whatever stage of life an employee is in.”

Trevisan adds that legal plans are always adding new kinds of coverage to keep pace with an ever-changing society.

“For example, identity theft protection is one of the things that’s relatively new that legal plans are covering because that’s becoming more and more of a serious concern and so many people are impacted,” he says.

Solomon confirms that, saying Omni has seen a rise in interest over identity theft and fraud protection services.

“We get calls occasionally from people who have had their credit card information stolen over the Internet,” Solomon says. “When that happens it can take an employee away from work and require up to 30-40 hours just to get their lives back. Having the assistance of a program like ours greatly reduces the time and energy that they have to spend putting together the pieces and deciding what it is they have to do to start to reclaim everything.”

Ease of administration

One of the attractive aspects of group legal plans is that they cost very little from an employer’s standpoint, Trevisan says. “A legal plan is an employee payout program, so employers are able to offer it to meet the diverse needs of their work force without having to spend significant dollars.”

All employers really need to do is establish payroll deduction for interested workers, and plan administrators handle the rest. Additionally, most providers can tailor their legal plans to meet any specific needs.

“Companies do spend a lot of time, energy and resources on the core benefits such as life, health and dental insurance, and they are trying to find the best prices and keep claims down,” Messett says. “The beauty of a legal plan is that the carrier manages the claims. We pay the attorneys directly; there’s really no red tape. Our call center handles all the client’s employee questions on any issues that may arise, so it’s really hands free for employers.”

Solomon explains that potential clients are usually given a quote for a group plan based on the size of their work force.

“We don’t ask for much actuarial or historical data. We don’t discriminate between different classes or levels of income,” Solomon explains. “There’s really very little administration once a plan is implemented because we do all of the work. We’ll come on site if employers want us to; we’ll do all of the enrollment education and materials. We do all of the billing through whatever method they want, whether it’s through direct billing or a third-party administrator.”

Client satisfaction

Employees for Eckerd Drugs have enjoyed a group legal plan benefit through Hyatt for four years. Debbie Seatz, Eckerd’s benefits manager, says the feedback is predominantly positive.

“I would definitely say it’s a very attractive benefit – one of those extras that we can offer. It’s very inexpensive for us to offer, doesn’t cost us anything on our side, and we have enough participation that we haven’t seen a rate increase in years, which is another great incentive in getting people to enroll,” Seatz says.

Currently 2,600 Eckerd associates are enrolled in the plan out of an eligible 31,000. Seatz says it has been gaining popularity with each open enrollment period.

“Each year we have a benefits fair, and the Hyatt representative always brings a great little setup with the whole table stand and free giveaways,” Seats explains. “He knows the answers to all the questions and really gets involved with the people who are interested. That kind of face-to-face means a lot to people because there’s so little of that these days, and that table is usually the most popular one at the fair.”

Overall, employers who have opted to offer legal plans have been satisfied with their decision.

“There have been so many people who have called in to thank us and say they’ve saved hundreds or thousands of dollars, particularly during the last few years of the home refinancing boom,” Messett says. “Those people will sign up again next year because they know that next year they might have some kind of legal need, and it’s very comforting to know that they have an attorney that they can call or stop in and get some advice.”

For Eckerd, the group legal benefit is now easily considered a staple among its suite of benefits.

“It’s been a real easy plan to manage. We’ve had no problems documenting it and getting the necessary materials out to our associates and then getting those approved by Hyatt,” Seatz says. “It’s a plan we will certainly be continuing. We have good feedback and positive participation, so it will definitely be with us in the future.”

Selling points

Legal plan providers and brokers already report impressive sales this year. Here are three reasons legal benefits are so attractive to employees.

  • Cost: For perhaps $20 a month, employees can access a wide range of legal services.
  • Coverage: Most plans provide wide-ranging legal assistance, including adoption of a child, mortgage refinance and estate planning.
  • Convenience: Attorneys in the plan network are usually local and readily available.