Low-cost, Enticing Benefit: Legal Plans

03/05/07

According to a study conducted by the American Bar Association a few years ago, 62 percent of moderate-income Americans—your employees—had a legal problem or a situation involving the law. But they didn’t have a lawyer.

That’s not surprising, since many people feel uncomfortable with lawyers and the legal system. As a result, some of your employees will value a benefit offered by more and more organizations: legal services plans. And it needn’t cost you an arm and a leg—or anything, for that matter.

A Smorgasbord of Services
Why do employees like legal plans? Says Marcia Messett, sales director for MetLife’s Hyatt Legal Plans, “We offer the most frequently needed personal legal services that typical employees need—and through a network of local attorneys.” Those services include:

Wills and estate planning

Trusts and powers of attorney

Real estate transactions

Eviction defense and tenant disputes for those who rent

Family law issues, like name changes, prenuptial agreements, uncontested adoptions

Consumer protection matters

Document review (deeds, mortgages, notes, affidavits)

While services offered by Hyatt and other providers like Zurich North America, Signature Legal Care, and Broad Reach Benefits typically include the actual preparation of wills, promissory notes, and other documents, Messett says the most-used feature of Hyatt’s legal plans is consultation on any legal matter. Employees enrolled in the plan can call or visit an attorney and discuss things not on the list above, like divorce, DUI, or criminal defense. “Attorneys will explain the law, explain your case as it relates to the law, and offer a plan of action.”

Employees Happy to Pay
Sounds good, but offering a legal plan probably costs a fortune, right? The basic services just described, from Hyatt, cost just $15-$16 per employee each month. And Messett says most employers don’t bother to subsidize the cost; employees, seeing a good value, sign up and shoulder the entire cost through payroll deduction.

“What the employer is really giving the employee is group purchasing power,” says Messett. For less than $200 a year, for example, an employee can have a will prepared or a contract drafted, get help with a real-estate transaction, process an adoption, and obtain unlimited consultation on any other matter.

Surprisingly, No Risk
All the legal plans mentioned make it explicit: They won’t pay for labor-related litigation. Thus, you won’t be encouraging employees to bite the hand that feeds them. And Hyatt’s plan holds employers harmless if an employee brings a malpractice suit against a plan attorney. “In twenty-five years,” says Messett, “we’ve never had a problem with an employer. The program runs very smoothly because we have lots of safety nets.”

The one downside: Hyatt and Broad Reach require your organization to have at least two hundred employees. (But that doesn’t mean two hundred need sign up.) The minimum for plans offered by Zurich and Signature Legal Care is five hundred. Enterprising HR people in smaller companies can get around that minimum—at least through Hyatt—by encouraging your local professional association, chamber of commerce, or other professional group to sponsor a plan for members.

Also, legal plans do not qualify for Section 125 (cafeteria plan) tax treatment. Thus, the deduction from paychecks is post-tax instead of pre-tax.

But that’s not really an issue, says Messett, since the actual deduction is so small and the benefit so big to employees. When you enroll, she concludes, “You have your own attorney. Having a lawyer warms up the legal process and gives employees someone they can trust. And that improves their comfort level with the system.”