LegalShield

Formerly	Sportsman's Motor Club (1972?1976) Pre-Paid Legal Services, Inc. (1976?2011)
Company type	Private
Industry	Legal services
Founded	1972 ; 52 years ago  ( 1972 )
Founder	Harland Stonecipher
Headquarters	Ada, Oklahoma , U.S.
Areas served	United States Canada
Key people	Warren Schlichting ( CEO ) Kathy Pinson ( COO ) [1] [2] Steve Williamson ( CFO ) [3]
Products	Pre-paid legal services identity theft solutions
Services	Legal services identity theft monitoring and restoration
Revenue	est. $400 million [1]  (2014)
Owner	MidOcean Partners Stone Point Capital [4] Further Global [5] [6] [7]
Number of employees	700 [8]  (2014)
Website	legalshield .com

LegalShield (previously known as Pre-Paid Legal Services or simply Pre-Paid Legal ) is an American corporation that sells legal service products direct to consumer through employer groups and through multi-level marketing ^[9] in the United States , and Canada . It was available in the United Kingdom from 2019 ^[10] to 2021. ^[11] According to LegalShield's income disclosure regarding associates selling the product: "For Associates with 0-2 years of experience who made at least one sale, average annual earnings were $798 for 2019. Approximately 73% of all Associates across experience years made less than $1,000 in 2019." ^[12]

The company was founded in 1972, as the Sportsman's Motor Club. In 1976, it was incorporated as Pre-Paid Legal Services, Inc., and made its initial public offering in 1984.

In 2011, Pre-Paid Legal went from being traded on the New York Stock Exchange back to being a private company when it was acquired by MidOcean Partners and subsequently changed its name to LegalShield.

Services [ edit ]

LegalShield develops and markets pre-paid legal service plans through a network of more than 6,900 independent provider attorneys across the U.S. and Canada. ^[13] The company also markets IDShield, a privacy and reputation management service that also provides identity theft monitoring and restoration. ^{[14] [15]} The company's membership plans are sold as employee benefits, through its multi-level marketing division, and direct to consumers. ^[9]

History [ edit ]

Sportsman's Motor Club [ edit ]

LegalShield started as Sportsman's Motor Club in 1972 in Ada, Oklahoma . ^{[16] [8] [17]} Harland Stonecipher (1938?2014) was the company's founding president and chief executive officer (CEO). ^{[18] [19]} The life insurance salesman from Ada, Oklahoma, created the "motor service club" after being in a car accident in 1969. The other party in the crash was cited for fault but still filed suit against Stonecipher for the accident. Although he had health , life , and vehicle insurance coverage, he was required to hire a lawyer to defend himself in court and struggled to pay the legal expenses. ^[20] After researching the industry of European legal expense plans, he established the Sportsman's Motor Club to reimburse members for legal fees relating to vehicle accidents. ^{[20] [16]}

Pre-Paid Legal Services [ edit ]

The club changed its name and incorporated as Pre-Paid Legal Services, Inc. in 1976, ^[21] becoming the first company in the United States to provide pre-paid legal plans for individuals. ^[20] Initially, members could choose their own lawyer and seek reimbursement from Pre-Paid, but by the 1980s, the company directed members needing legal help to pre-selected firms. ^[20]

Pre-Paid Legal went public in 1984. ^[22] Pre-Paid was first listed on the NASDAQ , then moved to the American Stock Exchange in 1986, ^{[23] [24]} followed by the New York Stock Exchange in 1999, where it was listed as "PPD". ^{[19] [25] [26]}

In 1998 Pre-Paid acquired The People's Network, a marketing company based in Dallas . ^{[27] [28]}

In 1999 the company began offering plans in Canada in 1999, with some modifications to suit the Canadian legal system. By 2009, it covered 28,000 Canadian families across four provinces. ^{[29] [30]}

In 2000 Pre-Paid Legal was criticised by CBC's Marketplace for operating as a multi-level marketing model and encouraging sales associates to buy training material. ^[31]

In 2003, the company moved into a new corporate headquarters in Ada, Oklahoma . ^[30]

In November 2006, Pre-Paid announced plans to spend $27.4 million to repurchase shares owned by executives. ^[25]

In 2010, Stonecipher resigned from the positions of president and CEO. Randy Harp and Mark Brown were appointed as co-CEOs, with Harp assuming the role of company president. Stonecipher retained his position as chairman of the company's board. ^[30]

Controversies [ edit ]

In 2001, a Wyoming attorney general announced, "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 denied violating the law, but agreed to adjust its marketing messaging and pay $7,000, including $2,000 refunded to participants who alleged the company had misled them. ^{[32] [33]} In the same year, the U.S. Securities and Exchange Commission (SEC) required Pre-Paid to stop counting the commissions paid out to sales associates as assets instead of expenses , which reduced reported earnings by over half. ^[18] As a result, Pre-Paid amended its reporting and filed its 2000 financial statements in February 2002. The statements showed huge decreases in earnings (from $43.6 million to $20.5 million) and stockholder equity (from $147 million to $42 million). ^[34] Later that year, however, the Denver Business Journal reported that Pre-Paid earned a $27.1 million profit on $303.7 million in revenue, a large increase from its $1.9 million profit on revenues of $129.6 million in 1997, and its members had access to a network of 46 firms with 1,270 lawyers. ^[35]

In 2004, approximately 250 plaintiffs filed about 30 lawsuits in Alabama against Pre-Paid, all of which were dismissed or settled by 2006. ^[25] Pre-Paid faced two lawsuits in Mississippi , one in October 2004, and the other in February 2005. A jury ruled in favor of the company in the first suit. In the second, a jury found Pre-Paid and Stonecipher guilty of deceptive advertising and fraud ^[18] and required them, in November 2005, to pay $9.9 million in punitive damages. ^[36] TheStreet.com reported that Pre-Paid faced additional lawsuits filed by 400 Mississippi plaintiffs which were ultimately settled. ^[25] TheStreet.com also noted that the company had had some success in court, including the overturning of a fraud verdict and the defeat of a class action lawsuit alleging the company was a pyramid scheme . ^[36] The company and the U.S. Chamber of Commerce, which had Stonecipher on its board of directors, ^[19] called the lawsuits "frivolous" and "abusive". ^[37]

Pre-Paid's independent auditor was unable to approve the company's 2004 financial statements because of "material weaknesses" related to the processing of commissions. ^[18] Two weeks later, Pre-Paid filed 2004 financial statements approved by its auditor, Grant Thornton . ^[38] New rules proposed by the Federal Trade Commission (FTC) required Pre-Paid to disclose to potential associates that less than 25 percent of its sales representatives sold multiple insurance plans in 2005, which the company confirmed in an SEC filing. ^[25]

In 2007, the FTC began investigating Pre-Paid's marketing of its identity theft service and Affirmative Defense Response System (ADRS), which the company developed to increase group sales. ^[39] Pre-Paid changed its marketing materials in 2009 after regulators found the company's claims about ADRS misleading. ^[40] According to an SEC filing, the FTC and Pre-Paid "[reached] a mutually agreeable solution", and in 2010 the agency ended its three-year investigation without any action. ^[39]

PrePaid was the top corporate donor to the 2008 re-election campaign for Utah Attorney General Mark Shurtleff , who has defended the operation of multi-level marketing firms in that state. ^[41]

LegalShield [ edit ]

In January 2011, Pre-Paid Legal agreed to be bought out for $650 million USD with entities formed by MidOcean Partners , a New York private equity firm that describes itself as "focused on the middle market". ^[42] The deal closed on June 30, 2011, and the company once again became privately held. ^[43] In July 2011, Rip Mason began serving as LegalShield's CEO. In late 2011, the company changed its name to LegalShield as part of an overall re-branding initiative. ^[44]

In July 2014, Jeff Bell replaced Mason as CEO, and Mason became chairman of the board . ^[45] He retired in 2022. ^[46]

Stone Point Capital, another private equity firm, purchased a majority stake in LegalShield from MidOcean Partners in 2018. ^[47] In 2019, the company expanded into the UK with offices in Oxford and an arrangement with Slater & Gordon UK providing legal advice via the LegalDefence app. ^{[10] [48]} The venture in the UK went into liquidation in May 2021. ^[11]

Former Dish Network and Sling TV executive Warren Schlichting became CEO in December 2022. ^[49]

References [ edit ]

External links [ edit ]

• Official website
• 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