I.  PROBLEMS WITH THE CURRENT LEGAL SERVICE DELIVERY SYSTEM

II.  BRIEF HISTORY OF PREPAID LEGAL SERVICE PLANS IN AMERICAN

III.  CURRENT REGULATION OF PREPAID LEGAL SERVICE PLANS

IV.  FLORIDA'S CHAPTER 9, ALLOWING LAWYER-RUN PREPAID LEGAL PLANS

V.  BENEFITS OF LAWYER-RUN PREPAID PLANS

VI.  LAWYER-RUN PREPAID PLANS AND PROFESSIONAL ETHICS

VII.  CONCLUSION

ENDNOTES

 A possible solution for both clients and lawyers is to allow lawyers to establish, own and operate prepaid legal service plans.  Prepaid legal service plans owned and operated by non-lawyers already exist in most parts of the county.
Prepaid legal service plans initially met with hostility from the bar, but starting in the 1960's, insurance-like plans run by non-lawyers have been accepted by the bar and society at large.  Such services have benefited consumers by providing affordable access to lawyers.  They also benefit lawyers by providing a more stable source of income.

Allowing lawyers to run their own prepaid legal service plans can increase both benefits.  This is because profit margins for group legal service plan providers are estimated at around fifteen percent.2  This is four times higher than profit margins for group health plans.3  A third party currently captures this profit.  Allowing lawyers to operate their own plans, without a third party intermediary, could simultaneously lower the cost of prepaid legal plans to consumers while raising profits for lawyers by cutting out the middleman.  Of course, it could simply result only in an increase of profits for the lawyers.

Any new means of delivering legal services raises issues of professional ethics and their regulation.  However, lawyer-run prepaid plans probably comply more effectively with professional ethics rules than insurance-like, non-lawyer run prepaid plans.  The State of Florida already has a regulatory system that allows lawyers to run their own prepaid legal service plans.4  Using the Florida system as a model, this paper proposes that all states allow, and regulate lawyer-owned prepaid legal service plans.

I.  PROBLEMS WITH THE CURRENT LEGAL SERVICE DELIVERY SYSTEM.

 Each individual in America is nearly three times more likely to end up in court than in a hospital.5  The average American family has from four to six legal issues arise every year that could greatly affect their economic well-being and quality of life. 6  Most Americans see access to health care as a necessity, but not access to legal services.7  While it is understandable that most people would consider access to health care extremely important, it is puzzling why lack of access to legal care is not seen as equally important.  Whether it is a lack of knowledge that legal services are needed, or the knowing avoidance of incurring the stress and high costs of legal representation, many Americans are not seeking the legal advice they need.
Prepaid legal service plans give moderate-income families access to competent legal advice, for a low monthly charge.  At the very least, these plans can help families identify those potential legal problems to which they need to respond to most urgently.

 A.  Lack of access for low and middle-income families.

 Some of Americans' failure to seek legal advice can be attributed to ignorance.  However, there is data to suggest that in many circumstances people know they need legal representation, but fail to obtain it.  A 1994 survey conducted by the American Bar Association revealed that 61% of moderate income Americans with legal problems did not interact with the legal system.8  Considering that the average family has four to six legal issues arise per year that leaves an enormous number of legal problems that are going unaddressed.

 Even more striking, in 1990 52% of the divorces in America were obtained without either party having the assistance of an attorney.9  And in 88% of divorces, at least one party was self-represented or failed to appear.10  It is a reasonable assumption that most Americans understand a divorce to be a legal proceeding.  Presumably, most people think their interests would best be served in such a proceeding by hiring an attorney.  Thus, the lack of legal representation for divorcing parties is most likely attributable to high cost.  Most Americans either cannot afford, or believe they cannot afford, the services of an attorney, even when they know they need one.

Other than establishing cannons of ethics recommending attorneys to spend 50 hours per year on pro bono work, lawyers have not done much to remedy the lack of access to lawyers for many Americans.11  Generally, pro bono work is done for the poorest of Americans, still leaving low and middle-income Americans without access to a lawyer.12  The Florida Bar has recognized this problem, stating that:

"Every citizen of this state should have access to the legal system.  A person's ability to gain such access is enhanced by the assistance of and representation by an attorney duly licensed to practice law in this state.  However, many persons simply do not seek legal assistance because of a failure to recognize the existence of a legal problem, inability to locate an attorney, fears of excessive cost of legal representation, or other reason.  To this end, it is the policy of the Florida Bar to support the concept and to actively encourage the establishment, operation, growth and development of legal service plans as one means of increasing a person's ability to obtain legal services at an affordable cost in order to have the opportunity to better gain access to the legal system."

 What the Florida Bar's Rule does not explicitly acknowledge, is that prepaid legal service plans can benefit lawyers as well.

B.  Lawyers are having increasing difficulty maintaining adequate and stable client bases and income.

 Lawyers are not generally perceived as having low incomes.  However, local bar journals report common complaints from lawyers regarding the increased competition for clients, and the difficulty of maintaining client bases and generating a steady volume of business.13  The income disparity between large law firm partners, serving mostly corporate and other wealthy clients, and the incomes of solo and small firm lawyers, serving mostly individual clients, has increased dramatically since 1975.14

 If small-scale legal professionals are to remain in business, they need to look at new methods of generating a client base and income.  Without such small-scale legal professionals, the lack of access for moderate income Americans will only get worse because most individuals who utilize legal services at all, use solo practitioners and small firms.  Individuals simply cannot afford the extremely high hourly rate that corporations and other businesses can pay large law firms.  Since prepaid legal service plans can provide solo and small practitioners with a more stable client base and income flow, such prepaid plans are an important part of making legal services available to low and moderate income Americans.

II.  BRIEF HISTORY OF PREPAID LEGAL SERVICE PLANS IN AMERICAN

 Until recently, clients bore the primary responsibility for recognizing that they had a legal problem, locating a lawyer, and hiring that lawyer on the basis of fees-for-services.15  Traditional ethics rules strictly prohibiting advertising, solicitation and volunteering advice made lawyers' roles those of a passive and reactive service provider.

A.  One man with a vision.

 An insurance company employee, Harlan Stonecipher, developed the concept of prepaid legal services.  Mr. Stonecipher was sued by a driver who caused an automobile accident in which he was injured.16  Mr. Stonecipher was forced to spend a large sum of money to defend the frivolous lawsuit.17  Unhappy with the situation, Stonecipher created a legal insurance network.18  This network, Pre-Paid Legal Services, Inc., offers legal insurance plans, starting at $14.95 per month, that offer unlimited free legal advice over the phone, certain free legal services (such as simple will preparation), and access to reduced hourly rates for more complex matters.19  Pre-Paid Legal, and other insurance type plans, do not employ their own staff attorneys to provide the legal services.20  Instead, Pre-Paid Legal contracts with independent attorneys in several states to provide the legal services to its members.21  Pre-Paid Legal is now a publicly traded company on the New York Stock Exchange.22

 However, before lawyers could lawfully provide legal services to Pre-Paid Legal Services, Inc. customers, there needed to be changes to the ethical and disciplinary rules that governed lawyers' conduct.

 B.  Supreme Court's pressure for change.

 Three supreme court cases in the mid-1960's forced bar associations to relax the strict ethics rules that prohibited lawyers from providing group legal services.  In NAACP v. Button, the NAACP was providing information about its civil rights litigation efforts at local school meetings and churches.  Those people attending were persuaded to join and support the NAACP and its litigation efforts.  The NAACP would often pre-determine a target for a lawsuit and seek out specific plaintiffs from the community.  This practice allowed the NNACP to have standing to bring a civil rights suit.  The Supreme Court held that the NAACP had a constitutionally protected right of political association and to provide attorneys willing to bring civil rights cases on behalf of its members.23

In Brotherhood of Railroad Trainmen v. Virginia ex rel Virginia State Bar (BRT), the union established a program referring injured workers and their families to lawyers who would prosecute claims against the railroad.24  The Bar claimed such a practice violated anti-solicitation rules and constituted the unauthorized practice of law.25  The Supreme Court said state opposition to such conduct violated the rights of free speech, petition and assembly.26

 After these two cases, many member of the American Bar Association still thought that a prohibition of group prepaid legal services was constitutionally permissible.27  That opposition was dealt a final deathblow with the decision in United Mine Workers v. Illinois State Bar Association.28  The Supreme Court upheld the legality of the UMW's closed panel plan, in which the union referred injured members' compensation claims to a private lawyer salaried by the union.29

 C.  The ABA's continued opposition to prepaid legal plans.

 By the end of the 1960's, the American Bar Association came to recognize the need to provide legal services to the middle class.30  However, the idea of lawyers participating in prepaid legal service plans continued to produce vigorous opposition from the general practice section of the Bar.31  Their objections to prepaid plans were supposedly based on the fear that non-lawyers would have too much control over the provision of legal services, that increased advertising and solicitation would create litigation-seeking plans, and that there would be an overall reduction in the quality of legal services.32  It is also apparent, that much of such opposition was the product of economic protectionism from general practitioners who did not want the competition of prepaid plans.33

 Legal professionals used ethics opinions, and even a few court decisions, to slow the spread of prepaid legal plans.  As late as 1983, the Iowa Supreme Court Board of Professional Ethics and Conduct ruled that it would be improper for Iowa attorneys to participate in a prepaid legal service plan.34  Ethics opinions generally focused on violations of disciplinary rules prohibiting advertising and solicitation, and sometimes found violations in the form of an attorney's practice, such as fee-sharing with a non-lawyer.35  As time passed, the organized bar became more comfortable with prepaid legal service plans and opposition to them in bar ethics opinions relaxed.36  In fact, acceptance of prepaid legal services was finally verified in an ABA formal ethics opinion in 1987.37

Judicial opposition to attorney participation in prepaid legal service plans can be seen in Allison v. Louisiana State Bar Association.38  In Allison, the Louisiana Supreme Court upheld the constitutionality of attorney disciplinary rules that prohibit solicitation by lawyers.39  The law firm was found to be in violation of the disciplinary rules prohibiting solicitation for participating in a prepaid legal service plan sponsored by local employers.40

D.  Modern acceptance of insurance-like prepaid legal plans.

The American Bar Association finally recognized the validity of prepaid legal service plan in formal ethics opinion 87-355, published December 14, 1987.  The opinion stated that lawyer participation in a for-profit prepaid legal service plan is permissible, provided the plan is in compliance with the Model Rules of Professional Conduct and guidelines established in the opinion.41

Formal opinion 87-355 established specific guidelines that lawyers providing services for  prepaid legal service plans must follow.  The plan must allow the lawyer to exercise independent professional judgment on behalf of clients, to maintain client confidences, to avoid conflicts of interest, and to practice competently.42  The operation of the plan must not involve improper advertising or solicitation, or improper fee sharing with non-lawyers.43  Participating lawyers have the responsibility to ensure that prepaid legal service plans comply with the Model Rules of Professional Conduct.44

The prepaid legal service plans that have gained acceptance from the bar are what can be described as insurance-like plans.  These plans involve a non-lawyer contracting with customers to provide certain legal services for a flat monthly fee.45  The non-lawyer also contracts with individual lawyers to provide the legal services to plan members.46
Prepaid legal plans that are established by lawyers who contract directly with customers are prohibited in nearly every state.  The following summary of the current regulation of prepaid legal service plans will highlight how insurance-like plans are allowed, while lawyer direct plans are not.  Later sections of this paper will describe a state system that allows lawyer direct prepaid plans, and describe why all states should allow such plans.

III.  CURRENT REGULATION OF PREPAID LEGAL SERVICE PLANS.

 While current lawyer regulation ethical rules and opinions allow lawyers to participate as provider attorneys for insurance-like prepaid legal plans, most state's rules do not allow lawyers to run their own plans.  Commentators generally construe the current Model Rules of Professional Conduct to allow prepaid insurance plans so long as (1) they are not owned of directed by lawyers, and (2) they do not engage in targeted mail solicitations.47  The second requirement means that prepaid plans may aggressively market general memberships in the nature of insurance policies against future needs for legal services, but may not use such aggressive techniques to sign up new members in order to handle their existing legal problems.48

 A.  Regulation of insurance-like third party run prepaid plans.

 The ABA accepted prepaid legal insurance plans in formal ethics opinion 87-355.  ABA acceptance of prepaid plans is conditioned on the plans' conformity to the Model Rules of Professional Conduct.  The rules that prepaid plans are most likely to conflict with are those concerning professional independence of lawyers, advertising, and solicitation.49  Since non-lawyer run prepaid plans are not subject to bar association regulation, it is the responsibility of participating lawyers to ensure a plan's compliance with the ethical rules of her jurisdiction.50

 Many states have chosen to regulate prepaid legal service plans as insurance policies, through the state's department of insurance.  Generally, plans must file with and receive licensure from a state insurance board.51  Prepaid legal service plans must also make showings of solvency and that they have contracted with enough attorneys to provide the promised legal services.52  Bar associations only get to regulate insurance-like prepaid legal plans because lawyers can only ethically provide services for plans that comply with the applicable rules of professional conduct and have obtained insurance department approval.53

 The regulation of prepaid legal service plan by state insurance departments has not completely alleviated bar association skepticism about the propriety of prepaid plans.  For example, prepaid legal service plans cannot use an independent marketing company to help market and/or advertise a prepaid plan.54  The use of a marketing agent, whose pay is generally tied to the success of the marketing plan, would create an incentive for the marketing agent to aggressively market legal services in violation of the Model Rules.55

 Concerns that prepaid legal plans interfere with the professional independence of a lawyer have also persisted.  The main objections to prepaid plans are that prepaid plans administrators (non-lawyers) will influence how much time a lawyer may spend on a particular case or problem; and that prepaid plans constitute unauthorized fee sharing with a non-lawyer.  The ABA has relaxed its opposition to insurance-like, third party prepaid legal plans on these grounds.56  However, if a prepaid plan is not set-up or run so as not to offend the Model Rules, bar association ethics committees will still find a lawyer in violation for participating in such a plan.

 B.  Hostility towards lawyer-run prepaid legal plans.

 It is still unethical in most states for a lawyer to establish, own or operate a prepaid legal service plan.  In Iowa, lawyer disciplinary rules provide that "Neither the lawyer... shall have initiated or promoted such organization [prepaid legal service provider] for the primary purpose of providing financial or other benefit to such lawyer, partner, associate or affiliated lawyer."57  This rule prohibits a lawyer from establishing a for-profit prepaid plan directly with a group of potential clients.

 Courts have also found it a violation of ethics rules for lawyers to contact an employer for the purpose of having the employer pay dues on behalf of employees in a prepaid plan.58  This prohibits lawyers from establishing prepaid legal services as employee benefit plans.59

 The opposition to lawyer-run prepaid plans stems from Model Rule of Professional Conduct 7.3, which regulates advertising and solicitation by lawyers to potential clients.60  Acceptance of even insurance-like third party prepaid plans was never gained under the original Model Rules of Professional Conduct.61  Prepaid plans were only accepted in any form when Rule 7.3 was amended to add subsection (d), which states:

"Notwithstanding the prohibitions in paragraph (a), a lawyer may participate with a prepaid or group legal service plan operated by an organization not owned or directed by the lawyer which uses in-person or telephone contact to solicit memberships or subscriptions for the plan from persons who are not known to need legal services in a particular matter covered by the plan."

 The prohibition against lawyer-run prepaid legal plans is a result of long-standing opposition to all prepaid legal plans.  Insurance-like plans are accepted only because of a specific amendment to the Model Rules of Professional Conduct.  Lawyer-run prepaid plans are subjected to the same archaic and outdated opposition that existed against all prepaid legal plans.  Lawyer-run legal plans, whether by inadvertence or design, were not granted the right to exist at the same time as non-lawyer run prepaid legal plans.  This is a mistake.  As will be discussed later, lawyer-run prepaid plans comply more effectively than insurance-like plans with the intent of professional ethics rules. In addition, lawyer-run prepaid plans provide all of the benefits of non-lawyer run plans, and provide additional advantages to both consumer/clients and the lawyers who would run them.

IV.  FLORIDA'S CHAPTER 9, ALLOWING LAWYER-RUN PREPAID LEGAL PLANS.

  In Florida, lawyers are allowed to contract and run their own prepaid legal plans if they follow the requirements of Chapter 9 of the Rules Regulating the Florida Bar.  Chapter 9 jurisdiction is invoked whenever a legal service plan is "an arrangement whereby a sponsor contracts directly with a managing attorney for the provision of legal services to its members."63  A "sponsor" is a "group" that provides a plan for the benefit of its members.64  A "group" is an organization of two or more persons whose individual members are identifiable in terms of some common interest or affinity.65  Examples of "group" includes, but is not limited to churches, educational institutions, credit unions, employing units and associations.66
 Florida's Chapter 9 allows an attorney to contract directly with an employer or other groups to establish a prepaid legal service plan.  Such a relationship benefits both consumers and attorneys more than insurance-like prepaid plans.  Attorneys operating Chapter 9 plans must comply with specific regulatory requirements.

 Rule 9-2.2 provides that a plan application shall consist of five separate components.67  Rule 9-2.2(a) requires the managing attorney to make specific assurances about the plan operation to the bar.68  Rule 9-2.2(b) requires that the managing attorney and sponsor shall both execute a written agreement containing certain specified information.69  Rule 9-2.2(c) requires that the managing attorney and plan attorney shall both execute a written agreement containing certain specified information.70  Rule 9-2.2(d) allows the Bar committee to request any other documents as part of the plan application at its discretion.  Finally, Rule 9-2.2(e) requires an application fee of $50 to be submitted with every plan application.

 The Chapter 9 plan application is then reviewed by a bar association committee responsible for group legal plan oversight.  The committee may either approve the plan as is, approve the plan conditionally upon specified changes being made, require additional information, or disapprove the plan and advise the managing attorney as to why.71
Approved plans are subject to yearly renewal by the committee.  Renewals are granted if the plan files a renewal request, the plan continues to comply with Chapter 9 regulations, and a $25 renewal fee accompanies the renewal request.72  The committee also has the power to revoke approval of any plan, at any time, if the plan does not comply with any rule or regulation within the Rules Governing the Florida Bar.73

 There is a specific rule governing the scope and extent of marketing and administrative activities ethically permissible by attorneys in the operation of Chapter 9 plans.74  Rule 9-3.1(a) allows a managing attorney to directly contact representatives or fiduciaries of groups for the purpose of informing them of the availability of a group legal plan offered by the attorney.  Rule 9-3.1(b) provides that the managing attorney may engage in written communication to the same persons and for the same reasons outlined in Rule 9-3.1(a), but only to the extent such communication does not violate any other ethical rule concerning advertising or solicitation.

Basically, a managing attorney can ethically communicate in writing directly with a representative of a group (such as a Human Resource Manager or benefits coordinator) without constraint.75  However, when a managing attorney directly contacts individual members of a group, such communication must conform to the regular advertising and solicitation ethical rules regulating the bar.76

There is one final restraint on the permissible conduct of attorneys operating a lawyer-run prepaid legal service plan concerning the performance of administrative tasks.  Managing attorneys are expressly prohibited from contracting with a third party of any type or kind to perform administrative activities regarding the prepaid plan.77  This provision must be intended to prevent insurance-like third party run plans from creatively structuring their businesses to avoid insurance department regulation and fall under the more relaxed regulation of Chapter 9.  Florida presumably wants to maintain the advantages of this less demanding regulatory oversight for attorneys only.

V.  BENEFITS OF LAWYER-RUN PREPAID PLANS

 Allowing lawyer-run prepaid legal service plans would be of great benefit to both the public as legal consumers, and to lawyers who establish, own and operate them. All states should adopt rules similar to Florida's Chapter 9 to allow and regulate lawyer-run prepaid legal plans.  Although Florida lawyers have not overwhelmingly used the opportunities available to them under Chapter 9 (As of April 3, 1998 there were 45 active approved plans)78, this is likely due to a lack of knowledge.  The benefits of lawyer-run prepaid plans include those of insurance-like prepaid plans, and include additional positive aspects flowing from the direct relationship between the lawyer and plan sponsors and participants.

 A.  Increased access to lawyers for average Americans.

 Low and middle-income Americans do not have enough realistic access to a lawyer.  Prepaid legal plans help alleviate this problem because they offer a variety of commonly needed legal services for a low monthly fee, ranging from $8-$25 per month depending on the extent of the coverage.79  The fastest growing types of plans are those purchased individually by the customer, and those purchased as part of a payroll deduction plan through their employer.80  Enrollment in these plans has increased 20% in the last two years.81  This is encouraging because individually paid and payroll deduction plans are those that customers use the most once enrolled.82  Since one of the main goals of prepaid plans is to increase access to lawyers, such access will increase the most if prepaid plans are actually used by customers.  Therefore, plans paid directly by the individual or through payroll deductions will most increase access to lawyers.

Individuals or payroll deductions will most likely pay lawyer-run prepaid plans, in a system like Chapter 9.  Lawyers may permissibly contact group representatives and fiduciaries to recruit members for their plans.83  These representatives and fiduciaries will likely be of smaller organizations than those that typically offer free prepaid plans (such as the AARP, United Auto Workers, Hilton Co.).  Thus, the organizations and employers will not be likely to pay the premiums for their members or employees.  This means the individual members will have to pay directly or through payroll deductions for prepaid legal coverage.  Based on current data, this makes them more likely to use the prepaid plans.  Thus, allowing lawyer-run prepaid plans serves to increase access to the legal system at a lower cost.

 There are many benefits for low and middle-income Americans associated with the increased access to lawyers stemming from prepaid legal plans.  One is that customers have access to preventative legal advice.84  The ability to receive legal advice early on in a potential dispute is shown to decrease the overall time and cost of resolution.  Often, parties who have access to legal advice early on solve their dispute on their own, outside of the expensive formal legal system.
 Other benefits of prepaid legal service plans include piece of mind and decreased costs for disputes that proceed to litigation.  Knowing that they have access to a lawyer through a prepaid plan gives people confidence in conducting their affairs.85  This promotes fairness by preventing others from taking advantage of prepaid plan members.  In the event that a prepaid plan member becomes involved in a matter not entirely covered by the plan, the member still receives a discounted rate on a lawyer's services.86

 B.  Lower price than insurance-like prepaid plans.

 Allowing lawyer-run prepaid insurance plans should decrease the cost of such plans to consumers.  Under current prepaid legal plans, the customer contracts with a plan administrator (a non-lawyer insurance-type company), who then contracts with attorneys to provide legal services.  Both the plan administrator and plan attorneys need to generate a profit.  In effect, there is a middleman in the transaction.  It is estimated that profit margins for the current middlemen, the prepaid plan administrators like Pre-Paid Legal Services, Inc., are around fifteen percent. 87   This profit margin is more than four times that of health insurance companies.88

 Lawyer-run prepaid plans would eliminate the middleman and his fifteen percent profit.  Granted, lawyers administering plans would capture some of the fifteen percent profit margin, but there is a good chance that prices of prepaid plans would still decrease.  With one less party needing to turn a profit on each transaction, the overall cost is likely to decrease.
 Under a regulatory system like Florida's Chapter 9, the lawyer running the prepaid plan could not contract with a third party to administer the plan.  Lawyers would be forced to internalize the administrative tasks of running prepaid plans.  This would increase the cost of running the plan for the lawyer, but not enough to offset the overall decrease in cost associated with cutting out a middleman taking a fifteen percent profit.

 C.  Benefits to employers and other plan sponsors.

 Employers or other organizations that provide their members with prepaid legal service plans often realize valuable benefits themselves.  Prepaid legal plans help to resolve employee personal problems that detract from productivity and add to absenteeism.89  Employees and group members perceive prepaid legal services as a "high visibility" benefit for which they have a real need.90  Prepaid legal plans are low-cost employee benefits that generate a high level of satisfaction.91

 The existence of such benefits to employers and organizations demonstrates the potential value of prepaid legal service plans.  Lawyers are in the best position to inform employers and organizations about such benefits.  They know best what the potential legal pitfalls are for the average person.  Lawyers know best how to help the average person avoid legal problems.  Lawyers should be in charge of operating prepaid plans designed to help the average person.  Lawyers should be educating and selling prepaid plans to employers and organizations.

 D.  Benefits to Lawyers.

 The average low and middle-income American would benefit by allowing lawyer-run prepaid legal service plans, as discussed above.  Employers and organizations would benefit as well.  It should also not be overlooked that those who would benefit the most be allowing lawyer-run prepaid legal plans are those lawyers who take the risk and establish their own prepaid legal service plan.

 As mentioned earlier, current prepaid plan administrators (the middlemen), have profit margins estimated at fifteen percent.92  Lawyers who own and operate prepaid plans would be in a position to capture this profit margin.  Of course, operating a Chapter 9 plan would require lawyers to internalize all administrative aspects of a plan.  Florida's Chapter 9 does not allow lawyers running prepaid plans to contract with a third party to perform administrative functions.93  Therefore, lawyers would have to run the business aspects of a prepaid plan, as well as the provision of legal services.  The risk is all with the attorney, and high profit margins are not guaranteed.

 Benefits to lawyers who run prepaid legal service plan go beyond just bare profit margins on the plans.  Prepaid legal service plans provide participating attorneys with a stable client base and steady cash flow.94  These are two of the main problems faced by many solo and small law practices.

 Lawyers who own and operate prepaid legal plans also benefit by being able to assist individuals who could not otherwise afford their services and thereby increasing access to lawyers for all.95  While the current stigma in society may not reflect lawyers' desire to help those of lesser means, lawyers have a long tradition of helping the less fortunate.  The provision of legal services to those other than the affluent has diminished in recent years.  Lawyer-run prepaid plans provide an opportunity to reverse this trend.  Providing greater access to lawyers for those other than the affluent creates an intrinsic benefit for lawyers.  It allows them to accomplish something meaningful through their work.

VI.  LAWYER-RUN PREPAID PLANS AND PROFESSIONAL ETHICS.

 The traditional resistance to prepaid legal plans, and more specifically lawyer-run prepaid plans, has centered on violations of professional ethical rules governing advertisement, solicitation and professional independence of lawyers.  Lawyer-run prepaid plans can exist in compliance with the spirit of these rules as well as, or better than, insurance-like prepaid legal plans.

 A.  Professional Independence.

 Opposition to prepaid legal services focused on the threat of non-lawyers, overseeing the financial success of prepaid legal plans, limiting the time and quality of service lawyers would provide under prepaid plans.  Generally, this argument against prepaid plans has been overcome.  Prepaid plans generally must provide that participating lawyers have independence to decide and provide services in the best interest of the client, not the plan.

 Lawyer-run prepaid plans provide even greater assurance that non-lawyers will not have control over the provision of legal services.  In lawyer-run plans, there are no non-lawyers running the business.  The person in charge of the plan and its services is a lawyer.  Lawyer-run prepaid plans satisfy the ethical requirements of professional independence far better than insurance-like prepaid plans.

 B.  Advertising and solicitation.

 Lawyers are subject to ethical restraints on how they may advertise and solicit clients.  Maintenance of such rules was the grounds for the original opposition to prepaid legal service plans.  Insurance-like prepaid legal service plans have come to be accepted under these rules.  Lawyer-run prepaid plans regulated in a manner similar to Florida's Chapter 9 better  comply with the spirit of the rules governing lawyer advertising and solicitation.

 The basic premise behind prohibiting lawyers from advertising and soliciting for clients was the prevention of "barrasting."  Barrasting is the seeking out and provocation of litigation simply for the purpose of generating legal fees.  Such a rationale simply has no place as an obstacle to prepaid legal plans.  Prepaid legal plans as a business make more money when their members use less legal services.  The clients pay a flat monthly fee, regardless of the amount of legal services they use, and receive certain legal services for no additional charge.  Prepaid plan clients who get involved in litigation do generally have to pay an additional hourly rate for litigation related services, but such hourly rate is greatly reduced from the lawyers standard rate, usually 25-50%.  Lawyers participating in prepaid plans get their money up front, the same amount regardless of the services provided.  The incentive for lawyers is to resolve conflicts without litigation, because their compensation is generally the same either way.

 Additionally, insurance-like prepaid plans are not subject to professional ethical restraints on advertising and solicitation.  The check on their actions is done by prohibiting lawyers from participating in prepaid plans that do not comply with attorney ethical rules.  However, it is generally up to the lawyer to determine if a prepaid plan complies with ethical rules.  Therefore, the regulation of insurance-like prepaid plans with regard to advertising and solicitation is second hand, not direct.  The regulation of lawyer-run prepaid plans would be direct.  Lawyers operating prepaid plans would be directly subject to ethical rules governing advertising and solicitation.  This would provide the bar greater control and oversight of prepaid legal plans.

 Further, regulating lawyer-run prepaid plans under a scheme similar to Florida's Chapter 9 would enhance compliance with ethical rules regarding advertising and solicitation.  Currently, advertising and solicitation by prepaid plans are governed by state bar association rules.  Different states have different rules, or interpret similar rules in a conflicting manner.  Thus, what currently exists is a patchwork system where prepaid plans are subject to different regulatory standards in different states.

 Chapter 9 provides easy to follow advertising and solicitation guidelines for lawyer-run prepaid services.  Lawyer-run plans may contact a fiduciary or representative of a group, which is an employer or organization.96  There is no contact with individual members in their individual capacities.  Limiting contact to fiduciaries and representatives lessens the risk of barrasting and other undesirable results of prepaid plan solicitation.  Fiduciaries and representatives are used to being contacted by someone trying to sell a good or service to the organization.  The fiduciary or representative has knowledge and experience to determine the value of a good or service to their members.  Fiduciaries and representatives are less likely to be taken advantage of by an unscrupulous seller of goods or services.  Thus, limiting lawyer-run plan contact to fiduciaries and representatives provides a consistent, easy to understand scheme for upholding the spirit of restricting lawyers actions in advertising and soliciting potential clients.

VII.  CONCLUSION

 The goal of this paper was to inform the reader about the existence of a new alternative method of delivering legal services in America, the lawyer-run prepaid legal service plan.  Prepaid legal service plans have existed for over 30 years, but in most states they have to be owned and operated by non-lawyers.  The time has come to allow lawyers to establish, own and operate their own prepaid legal service plans.  Such plans have the potential to solve two of the current major problems with the legal service delivery system, the lack of access to lawyers for low and middle-income Americans, and the increasing difficulty for the solo and small law practice to remain economically viable.

Lawyer-run prepaid legal plans provide all or the benefits of insurance-like prepaid plans that are currently allowed in every state.  Lawyer-run plans have the potential provide greater benefits to both consumers and participating attorneys.  Florida has adopted a regulatory scheme that allows lawyer-run prepaid plans to operate, while maintaining adequate protections to ensure compliance with attorney professional ethics rules.  Every state should adopt similar regulations to help increase access to the legal system for low and middle-income Americans and increase the ability of solo and small law practices to remain economically viable.

1 Iowa Code of Professional Responsibility Cannon 2 ("A lawyer should assist the legal profession in making counsel available.")
2 Brian Heid and Eitan Misulovin, The Group Legal Plan Revolution: Bright Horizon or Dark Future? 18 Hofstra Lab. & Emp. L.J. 335, 336 (2000).
3 Id.
4 See generally Rules Regulating the Florida Bar, Chapter 9, Section 9-1 et seq.
5 Pre-Paid Legal Services, Inc., What the ABA Says, at http://wserver0.prepaidlegal.com/product/need2.html (last visited 10/21/02).
6 The National Resource Center, What are Legal Plans, at http://www.nrccls.org/Publications/Consumers/what_are_legal_plans.html (last visited September 24, 2002).
7 Judith Maute, Pre-paid and Group Legal Services: Thirty Years After the Storm.  70 Fordam L.Rev. 915, 915-16 (2001).
8 ABA Consortium on Legal Services, Legal Needs and Civil Justice: A Survey of Americans, ABA (1994).
9 Darren Driscoll, A Critique of Legislative Reform of Prepaid Legal Services in Iowa, at http://www.uiowa.edu/~cyberlaw/elp01/papersff/ddff1107.html (October 17, 2001), citing ABA Standing Committee on the Delivery of Legal Services, Responding to the Needs of the Self-Represented in Divorce Litigation, ABA (1994).
10 Id.
11 Model Rule of Professional Responsibility 6.1.
12 Pre-Paid Legal Services, Inc., Is This You?, at http://wserver0.prepaidlegal.com/product/need3.html (last visited 10/22/02).
13 Ronald Glantz, Building Your Small Firm Practice on a Prepaid Foundation, 68 Fla. B.J. 48 (Jan. 1994).
14 American Bar Foundation, The Legal Profession: Chicago Lawyers II Study, at http://www.abf-sociolegal.org/2000rep/legalprof.shtml (last visited October 8, 2002).
15 Maute, supra note 4 at 917.
16 Harland Stonecipher and James Robinson, The Pre-Paid Legal Story.  1 (2000).
17 Id. at 3-4.
18 Id.
19 Id. at 67.
20 Id.
21 Pre-Paid Legal Services, Inc., What is a Pre-Paid Legal Plan?, at http://wserver0.prepaidlegal.com/product/whatis.html (last visited 10/21/02).
22 Stonecipher, supra note 16 at 6.
23 Maute, supra note 4 at 918 citing NAACP v. Button, 371 U.S. 415 (1963).
24 Maute, supra note 4 at 918 citing 377 U.S. 1 (1964).
25 Id.
26 Id. citing BRT, 377 U.S. at 5.
27 Maute, supra note 4 at 919-20.
28 389 U.S. 217 (1967).
29 Maute, supra note 4 at 920.
30 Id. at 919.
31 Id. at 922-23.
32 Id. at 923.
33 Id. at 923-25.
34 Iowa Supreme Court Board of Professional Ethics and Conduct, Formal Opinion 83-36 (Oct. 25, 1984).
35 Maute, supra note 4 at 929.
36 Id.
37 American Bar Association formal opinion 87-355 (Dec. 14, 1987).
38 362 So.2d 489 (La. 1978).
39 Id.
40 Id.
41 ABA formal ethics opinion 87-355 (Dec. 14, 1987).
42 Id.
43 Id.
44 Id.
45 National Resource Center for Consumers of Legal Services, What are Legal Plans?, at http://www.nrccls.org/Publications/Consumers/what_are_legal_plans.html (last visited 10/21/02).
46 Id.
47 Center for Professional Responsibility (American Bar Association), Annotated Model Rules of Professional Conduct 509 (3d ed. 1996)(Rule 7.3 comments on paragraph (d)).
48 Id. citing Jeffery C. Hazard & W. William Hodes, The Law of Lawyering 897 (2d ed. 1990).
49 Model Rules of Professional Conduct 5.4, 7.3 and 8.4.
50 Paul Friedberg, L.E.I. 97-03: Attorney Participation in Prepaid Legal Services Plans, 11 West Virginia Lawyer 20 (Feb. 1998).
51 McDonald & Carlson, Texas Civil Practice § 2:9 (1st ed. 2002).
52 Id.
53 See Iowa Supreme Court Board of Professional Ethics and Conduct, Ethics Opinions 98-05 (Sept. 2, 1998); 99-18 (June 7, 2000); and 99-21 (June 7, 2000).
54 New York State Bar Association, Ethics Opinion No. 565 (1984).
55 Id.
56 Annotate Rules of Professional Conduct 133-34 (comments to Rule 1.8) and 434-35 (comments to Rule 5.4).
57 Iowa Rules of Court, Disciplinary Rule 2-103(D)(4)(b).
58 Allison, 362 So.2d at 495.
59 Id.
60 The text of Rule 7.3 is as follows: "(a) A lawyer shall not by in-person or live telephone contact solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain.
 (b) A Lawyer shall not solicit professional employment from a prospective client by written or recorded communication or by in-person or telephone contact even when not otherwise prohibited by paragraph (a), if:
  (1) the prospective client has made known to the lawyer a desire not to be solicited by the lawyer; or  (2) the solicitation involves coercion, duress or harassment.
 (c) Every written or recorded communication from a lawyer soliciting professional employment from a prospective client known to be in need of legal services in a particular matter, and with whom the lawyer has no family or prior professional relationship, shall include the words "Advertising Material" on the outside envelope and at the beginning of any recorded communication.
 (d) Notwithstanding the prohibition in paragraph (a), a lawyer may participate with a prepaid or group legal service plan operated by an organization not owned or directed by the lawyer which uses in-person or telephone contact to solicit memberships or subscriptions for the plan from persons who are not known to need legal services in a particular matter covered by the plan."
61 Maute, supra note 4.
62 Model Rule of Professional Conduct 7.3(a).
63 Rules Regulating the Florida Bar, Chapter 9, Rule 9-1.3(e).
64 Rule 9-1.3(i).
65 Rule 9-1.3(d).
66 Id.
67 John Schaefer, A New Day Has Dawned for Legal Service Plans in Florida, 72 Florida Bar Journal 76, 76-77 (Nov. 1998).
68 Such assurances include: (1) to exercise reasonable effort in order to assure that the plan is ethical and in compliance with the Rules; (2) having at least $100,000 in malpractice insurance; (3) that there are a sufficient number of plan attorneys to properly provide legal services; (4) the plan will file written notice of proposed changes to the plan agreement with sponsor groups; (5) not implement any such changes without approval from the Bar; (6) provide 10 days written notice before termination or cessation of the plan; (7) filing a renewal request form with the Bar committee in charge; and (8) to affirm and verify that the managing attorney and any specified members of the managing attorney's law firm shall be the sole attorney(s) under the plan.  Rule 9-2.2(a)(1)-(8).
69 The written agreement shall include: (1) definition of who a plan participant will be; (2) description of any and all legal services to be provided under the plan; (3) description of the geographic area in which the legal services shall be provided; (4) amount and method of payment to be paid to the managing attorney by the sponsor under the plan;  (5) amount and method of payment to be paid to the managing attorney by the plan participants under the plan; (6) method of termination of the agreement; (7) affirmative statement that the plan participant is the client under the plan, and that the sponsor shall have no influence on the attorney-client relationship; (8) affirmative statement that a plan participant is free to use a non-plan attorney, at the plan participant's own expense or with reimbursement provided by the sponsor or managing attorney; (9) affirmative statement that the plan participant may file a complaint with the Florida Bar; and (10) the following disclaimer, "The Florida Bar does not guarantee in any way the success of the plan and gives no assurances of the quantity or quality of the legal services to be provided thereunder.  Total responsibility for the delivery of legal services under the plan rests solely and entirely with the sponsor and the managing attorney and the plan lawyers."  Rule 9-2.2(b).
70 The written agreement shall include: (1) an assurance by the plan attorney to carry $100,000 in malpractice insurance; (2) an affirmative statement that the plan attorney will complete the legal services to the extent provided for in the plan, if the plan terminates; (3) a detailed description of the legal services to be performed by the plan attorney under the plan; (4) the geographic area in which legal services shall be performed under the plan; (5) the amount and method of payment of fees to be paid to the plan attorney by the managing attorney; (6) the amount and method of payment of fees to be paid to the plan attorney by the plan participants; (7) a detailed description of the method of review and resolution of disputes and grievances arising under the plan; (8) a method of termination of the agreement by either the managing attorney or the plan attorney; and (9) an affirmative statement that the plan participant is the client of the plan attorney and neither the sponsor nor the managing attorney will have any influence whatsoever over the attorney-client relationship.  Rule 9-2.2(c).
71 Rules Regulating the Florida Bar, Chapter 9, Rule 9-2.3.
72 Rule 9-2.5.
73 Rule 9-2.6.
74 See generally Rule 9-3.1.
75 Schaefer, supra note 63 at 78.
76 Id.
77 Rules Regulating the Florida Bar, Chapter 9, Rule 9-3.1(c).
78 Schaefer, supra note 63 at 78, n. 27.
79 National Resource Center for Consumers of Legal Services, Legal Census 1, at http://www.nrccls.org/Publications/census2002/2002census.html (last visited 10/16/2002).
80 Id.
81 Id.
82 National Resource Center for Consumers of Legal Services, What are Legal Plans?, at http://www.nrccls.org/Publications/Consumers/what_are_legal_plans.html (last visited 10/16/2002).
83 Rules Governing the Florida Bar, Chapter 9, Rule 9-3.1(a).
84 National Resource Center for Consumers of Legal Services, Are You Legally Healthy?, at http://www.nrccls.org/Publications/Preventive_Law/are_you_legally_healthy.htm (last visited 10/22/02).
85 National Resource Center for Consumers of Legal Services, What are Legal Plans?, at http://www.nrccls.org/Publications/Consumers/what_are_legal_plans.html (last visited 10/16/2002).
86 Id.
87 Hied and Misulovin, supra note 2 at 336.
88 Id.
89 Gantz, supra note 10 at 51.
90 Id.
91 Id.
92 Hied and Misulovin, supra note 2 at 336.
93 Rules Regulating the Florida Bar, Chapter 9, Rule 9-3.1(c).
94 Gantz, supra note 10 at 51; See also Hyatt Legal Plans, Attorney FAQS, at http://www.legalplans.com/att-faqs.html (last visited 10/20/02).
95 Id.
96 Rules Governing the Florida Bar, Chapter 9, Rule 9-3.1(a).