legal-shield-logoPrepaid Legal was a MLM company founded in 1983 by Harland Stonecipher (no that’s not a made up name). So the story goes,

way back in 1969 Stonecipher was in a car accident.

Frustrated at the lack of legal insurance options available at the time, Stonecipher started up ‘The Sportsman’s Motor Club’ in 1972 offering members ‘legal expense reimbursement services‘.

The Sportsman’s Motor Club continued on for 11 years relying on a traditional sales model before adopting a MLM style business model and compensation plan in 1983. PrePaid Legal was born.

In 1984 PrePaid Legal went public on the NASDAQ National Market System and in 1999 it was listed on the New York Stock Exchange, where it remained until 2011.

In January 2011 PrePaid Legal and MidOcean Partners got together and agreed upon the sale of PrePaid Legal to MidOcean Partners, a private equity firm.

The deal between PrePaid Legal and MidOcean Partners and PrePaid Legal was finalised in June 2011 and the company handed over.

In July 2011 PrePaid Legal applied for a Termination of Registration of a Class of Security, which is an application for ‘exceptions to the normal filing requirements for registering a security with the SEC’ (Investopedia). I believe this resulted in the pulling of PrePaid Legal from the stock exchange, being owned by MidOcean Partners it was no longer publicly traded.

Finally in September 2011 MidOcean Partners announced that they would be rebranding PrePaid Legal as Legal Shield and currently that’s where we sit today.

My question: Why the name change?

Part of the reason for the sale by StoneCipher could very well be the negative trend in PrePaid Legal memberships,

For the year 2010, new sales associates enrolled decreased 25.6% to 138,442 compared to 186,064 enrolled during 2009 while new memberships produced were 502,982, a decrease of 11.5% from 568,095.

Our active memberships decreased 4.8% during 2010 from 1,547,585 to 1,473,237. From the 3rd quarter of 2010 to the 4th quarter of 2010, our active memberships decreased by 19,896 memberships.

Or after finally paying off the PrePaid Legal’s debt in December 2010, perhaps Stonecipher had just had enough of MLM. Who knows.

One particular point of interest is that in the PrePaid Legal compensation plan, the company paid its members an ‘advanced commission’ on a 12 month membership subscription. If the member cancelled their subscription, PrePaid Legal associates had to pay part of the commission paid out to them back to the company.

As you can imagine these chargebacks must have been quite stressful and potentially devastating to the PrePaid Legal memberbase. Especially when we’re talking 74,000+ memberships being cancelled in 2010 alone.

Who knows what the numbers are for this year.

As far as I can see, apart from the name change to Legal Shield, nothing else has changed regarding the MLM side of PrePaid Legal. It still costs $249 to become an Legal Shield of the company and the plans offered look pretty much the same (there might be some technical differences but what is offered to members looks untouched).

It is noted that the company currently does not provide a publicly viewable compensation plan on the Legal Shield website. As far as MLM companies go this is a huge red flag as a compensation plan is a pretty big deciding factor when considering a MLM opportunity.

Despite PrePaid Legal sending out a ‘Compensation Plan Survey’ to its members and then MidOcean Operating Executive Rip Mason (now CEO of Legal Shield, photo right), outlining ‘the need to secure Plan stability and decrease promotional/incentive activity to support the Field and position the Company for long term growth‘ in February 2011, as of yet nine months later nothing has materialized.

Legal Shield has the same legal plans, same compensation plan and with it come the same concerns I highlighted in the conclusion of my original review of PrePaid Legal.

If I didn’t know any better I’d say MidOcean were simply rebranding and distancing themselves from PrePaid legal’s forty-year history as a brand. Legal Shield isn’t publicly traded so why tarnish it with the negative trending track record of PrePaid Legal.


If anything does materialize in the form of actual changes to the Legal Shield MLM opportunity I’ll of course give the company a new complete review. Until then though you might as well just rely on my PrePaid Legal review and simply substitute ‘PrePaid Legal’ for ‘Legal Shield’.

Legal Shield – New owners, new brand, same business model.

Come on guys, this is the age of internet MLM marketing – you can’t just erase the past of a company with just a simple name change…