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  • Sportsman's Motor Club (1972–1976)
  • Pre-Paid Legal Services, Inc. (1976–2011)
IndustryMulti-level marketing, Legal services
Founded1972; 47 years ago (1972)
FounderHarland Stonecipher
Areas served
  • United States
  • Canada
Key people
  • Legal services
  • identity theft monitoring and restoration
Revenueest. $400 million[1] (2014)
OwnerMidOcean Partners
Number of employees
700[3] (2014)

LegalShield (previously known as Pre-Paid Legal) is an American corporation that sells legal service products through multi-level marketing in the United States and Canada.

The company was founded in Ada, Oklahoma[4] on August 8, 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.

Pre-Paid Legal Services, Inc. went from being traded on the New York Stock Exchange back to a private company in 2011 when it was acquired by MidOcean Partners for $650 million and subsequently changed its name to LegalShield.

Company description[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. The company also markets an identity theft monitoring and restoration services through its partnership with Kroll Inc..[5] The company's membership plans are sold as employee benefits and directly through its multi-level marketing division.[6]


Exterior of the company's headquarters in Ada, Oklahoma (2012)

LegalShield was established as Sportsman's Motor Club in 1972, then known as Pre-Paid Legal Services, Inc. from 1976 until its acquisition by MidOcean Partners in 2011.[3][7]

Harland Stonecipher (1938–2014) served as the company's founding president and chief executive officer (CEO).[8][9] The life insurance salesman from Ada, Oklahoma, created Pre-Paid's predecessor, a "motor service club", after being involved in a car accident in 1969. Although the other party was cited for fault, they filed a suit against him for the accident. Stonecipher had health, life, and vehicle insurance coverage, but was required to hire a lawyer to defend himself in court and struggled to pay associated legal expenses.[10] After researching the industry of European legal expense plans, he created the Sportsman's Motor Club to reimburse members for legal fees.[10][4]

Pre-Paid Legal began using "network marketing" (multi-level marketing or MLM) in 1983. The club changed its name and incorporated as Pre-Paid Legal Services, Inc. in 1976,[11] becoming the first company in the United States to provide pre-paid legal plans for individuals.[10] Initially, members could choose their own lawyer and seek reimbursement from Pre-Paid, but by the 1980s, the company established a way to direct members needing legal assistance to preselected firms.[10]

The company went public in 1984.[12] Pre-Paid was first listed on the NASDAQ, then moved to the American Stock Exchange in 1986,[13][14] followed by the New York Stock Exchange in 1999, being listed as "PPD".[9][15][16] In 1998 Pre-Paid acquired The People's Network, a marketing company based in Dallas.[17][18]

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.[19][20] In the same year the Securities and Exchange Commission 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.[8] Pre-Paid did not file its financial statements for 2000 until February 2002. The statements showed decreases in earnings from $43.6 million to $20.5 million and stockholder equity from $147 million to $42 million.[21]

The Denver Business Journal reported in 2002 that Pre-Paid earned a $27.1 million profit on $303.7 million in revenue, an increase from its $1.9 million profit on revenues of $129.6 million in 1997, and provided its members access to a network of 46 firms with 1,270 lawyers.[22]

About 30 lawsuits by approximately 250 plaintiffs were filed in Alabama in 2004 against Pre-Paid. All of these were dismissed or settled by 2006.[15]

Pre-Paid faced two lawsuits in Mississippi in October 2004 and February 2005. A jury ruled in favor of the company in the first suit. In the second suit a jury found Pre-Paid and Stonecipher guilty of deceptive advertising and fraud.[8] In November 2005, Pre-Paid and Stonecipher were required to pay $9.9 million in punitive damages.[23] reported that Pre-Paid faced additional lawsuits filed by 400 Mississippi plaintiffs. These were ultimately settled.[15] also noted that the company has had a number of legal successes, including the defeat of a class action lawsuit alleging the company was a pyramid scheme, as well as overturning a fraud verdict.[23] The company and the Oklahoma Chamber of Commerce, of which Stonecipher served as a director,[9] described the lawsuits against the company as "frivolous" and "abusive".[24]

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.[8] 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 a U.S. Securities and Exchange Commission (SEC) filing.[15]

In November 2006 Pre-Paid announced plans to spend $27.4 million to repurchase shares owned by executives.[15]

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. Pre-Paid changed its marketing materials in 2009, after regulators found the company’s claims misleading regarding ADRS.[25] 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. Pre-Paid remained the focus of an informal SEC inquiry; the agency requested documentation about the company's stock repurchasing, consumer complaints related to provider law firms, payment card compliance, Stonecipher's resignation in April 2010,[7] as well as the resignation of director Tom Smith.[25]

In January 2011 Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners, a 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 30, 2011.[26] Beginning in July 2011 Rip Mason served as Legal Shield’s Chief Executive Officer.

On September 10, 2011 the company announced [27] 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.

In July 2014 Jeff Bell was appointed Legal Shield's Chief Executive Officer replacing Rip Mason. Rip Mason assumed the position of Chairman of the Board.[28]


  1. ^ a b c d Silcox, Beth Douglass (March 2, 2015). "Company Spotlight Equal Access, Equal Adaptability: LegalShield's Moral Imperative to Grow". Direct Selling News. Plano, Texas: VideoPlus. ISSN 1554-6470. Retrieved March 8, 2017.
  2. ^ a b c d e "Company Information: Leadership". LegalShield. Retrieved March 8, 2017.
  3. ^ a b Burkes, Paula (September 7, 2014). "Executive Q&A: LegalShield chief comes home to Oklahoma roots". The Oklahoman. Oklahoma City: The Oklahoman Media Company. Retrieved February 24, 2017.
  4. ^ a b Swanson, Eric (November 11, 2014). "LegalShield founder and community booster Harland Stonecipher dies at 76". Ada Evening News. Retrieved March 9, 2017.
  5. ^ "Pre-Paid Legal Services to Add Identity Theft Benefits Provided by Kroll Background America". Kroll Inc. Retrieved March 7, 2010.
  6. ^ "Pre-paid legal services: Worth the money?".
  7. ^ a b "Pre-Paid Legal in $650 Million Buyout". The New York Times. The New York Times Company. January 31, 2011. ISSN 0362-4331. OCLC 1645522. Retrieved March 7, 2017.
  8. ^ a b c d Davis, Melissa (February 22, 2005). "Pre-Paid Weathers Guilty Verdict". Retrieved March 6, 2017.
  9. ^ a b c "U.S Chamber Reappoints Harland Stonecipher CEO of Pre-Paid Legal Services, to Board of Directors". United States Chamber of Commerce. June 27, 2005. Archived from the original on December 2, 2006. Retrieved March 7, 2017.
  10. ^ a b c d Martin, Douglas (November 20, 2014). "Harland Stonecipher, Insurance Pioneer, Dies at 76". The New York Times. Retrieved March 7, 2017.
  11. ^ "Form 10K Pre-Paid Legal Services, Inc". United States Securities Exchange Commission. December 31, 2010. Retrieved June 26, 2017.
  12. ^ Gene Lehmann (August 23, 2011). "New firm to rebrand Pre-Paid Legal in Ada". The Ada News. Retrieved 26 June 2017.
  13. ^ The Big Book of Home Business Company Directory. Ouvrage Collectif. June 21, 2016. p. 48. Retrieved March 9, 2017.
  14. ^ Adelson, Andrea (May 26, 1996). "Earning It; Getting Legal Advice, Without Billable Hours". The New York Times. Retrieved March 9, 2017.
  15. ^ a b c d e Duhigg, Charles (November 13, 2006). "Why Short Sellers Want to Crash the Tupperware Party". The New York Times. Retrieved March 7, 2017.
  16. ^ "Hardland Stonecipher". The Oklahoman. November 12, 2014. Retrieved March 9, 2017.
  17. ^ "Pre-Paid Legal acquires satellite TV channel". The Journal Record. Oklahoma City, Oklahoma. September 25, 1998. Retrieved May 9, 2017.
  18. ^ Hogan, Gypsy (September 25, 1998). "Pre-Paid Legal Plans Satellite Channel Buy". The Oklahoman. Retrieved May 9, 2017.
  19. ^ Bernick, Bob, Jr. (October 30, 2008). "Shurtleff's Fundraising Trounces Hill's | Deseret News (Salt Lake City) Newspaper | Find Articles at BNET". Archived from the original on October 31, 2009. Retrieved October 23, 2009.
  20. ^ "Newell letter" (PDF). Archived from the original (PDF) on 2002-10-15. Retrieved October 23, 2009.
  21. ^ Morgenson, Gretchen (April 18, 2003). "Exchange to Warn Investors on Companies". The New York Times. Retrieved March 7, 2017.
  22. ^ Fletcher, Amy (September 15, 2002). "Prepaid legal is a cheaper way to get lawyer's services". Denver Business Journal. Retrieved March 9, 2017.
  23. ^ a b Davis, Melissa. "Verdict Hammers Pre-Paid". Retrieved March 7, 2017.
  24. ^ "Chamber Joins Miss. Case against Frivolous Lawsuits Pre-Paid Legal Services Targeted Improperly". United States Chamber of Commerce. November 24, 2004. Archived from the original on August 16, 2012. Retrieved March 7, 2017.
  25. ^ a b Mecoy, Don (July 27, 2010). "FTC ends investigation of Pre-Paid Legal". The Oklahoman. Retrieved March 7, 2017.
  26. ^ Winslow, Laurie (February 1, 2011). "Pre-Paid to Merge with MidOcean". Tulsa World..
  27. ^ "Pre-Paid Legal Services Becomes LegalShield". Pre-Paid Legal Services. Retrieved September 22, 2011.
  28. ^ PR Newswire. "LegalShield Names Jeff Bell as Chief Executive Officer". Reuters. Retrieved 7 September 2014.

External links[edit]