Is Legal Shield a pyramid scheme? We have taken an extensive look at the data available but could not decisively prove that they are a pyramid scheme.
At the heart of Legal Shield is providing legal and trial defense services for as low as $18 per month. This business model is supported by an MLM structure that allows entrepreneurs to earn a small commission for selling their services.
But we don’t use the word ‘small’ lightly here because most recruits will barely make $50 after grinding for months. A large number of recruits may not see payday at all.
Legal Shield’s commission structure is designed to keep serious and strong recruits. For example, their fine print shows that associates must make 3 sales every 3 months to qualify for team commissions. This unforgiving commission structure makes Legal Shield unsuitable to novice marketers who are just starting out.
In this Legal Shield review, we will take you through the company’s humble beginnings, its steady rise to the top, and what makes it well-suited to experienced associates.
This article is written by our Editorial Team at Incomepedia with the help of a former Legal Shield associate.
Table of Contents
A Cursory Look at Legal Shield
Legal Shield was founded by Harland Stonecipher after a life-changing car accident in 1969. Stonecipher struggled to find quality legal representation for his situation and realized that the problem wasn’t isolated to his case. This inspired Stonecipher to start his own legal service company in the summer of 1972.
Stonecipher founded The Sportsman’s Motor Club which specialized in “Legal Expenses Reimbursement Service”. The business model for the company was fairly conventional and didn’t transition into MLM until 1983. A year later, the company was listed on the NASDAQ and the New York Stock Exchange in 1999.
This indicates decades of proven success at the market. In 2011, Stonecipher’s company was acquired by MidOcean Partners and the name was rebranded into Legal Shield.
Their prepaid legal services have changed lives for the better and provided legal representation to individuals who would otherwise not fare well in the justice system. It is also the only online legal service that provides a home business supplement.
The company has since expanded to include a broad range of services that cater to small businesses and individuals alike. Legal Shield taps into an aggressive marketing system that allows them to keep the wheels of business turning. The compensation their associates receive are proportional to their sales.
But their punishing compensation system isn’t for every associate. You have to be skilled at the trade to bring in more sales. Don’t quit your day job to join Legal Shield. It won’t pay the bills – at least in the first few months of your journey with Legal Shield.
You should be aware of the risks of joining Legal Shield.
Legal Shield Services
The main target audience for Legal Shield is individuals and small businesses. Their service plans are customized for individuals as ‘personal plans’ and for businesses as ‘small business plans’.
Personal Plan
The personal plan starts at only $24.95 per month. It mostly covers basic legal representation in areas such as family matters, IRS auditing, auto insurance, document preparation, and identity theft.
The individual plan for their prepaid legal services is further categorized into two sections:
- ID Plan starting at $14.95 per month
- ID Premium starting at $29.95 per month
The premium version of the personal legal plan includes more services for clients.
Business Plan
The business plan starts at just under $40 per month. The services cover landlord/tenant disputes, trial defense, contract review, and debt collection. Legal Shield provides a dedicated service for business plans under their website called “Launch”.
The business plans are created to suit the specific needs of a company. The pricing depends on the size of the company and the services that it has hired.
- Small Biz with 10 or fewer employees at $39 per month
- Small Biz with 50 or fewer employees at $89 per month
- Small Biz with 100 or fewer employees at $139 per month
- Home Business Supplement at $9.95 with Personal Legal Plan
Legal Shield also offers miscellaneous plans such as business formation and registered agent services starting at $145 and $120, respectively. The exact prices for business formation services depend on the location.
Who Should Join Legal Shield?
As we mentioned earlier, Legal Shield is better suited to experienced marketers who know the ins and outs of sales. If you have an outgoing personality with exceptional people skills, then joining Legal Shield could do wonders for your wallet.
If you are passionate about connecting individuals with affordable legal services, then Legal Shield is a good way to earn some cash on the side.
As is true with most MLM schemes, there will be associates whose marketing skills won’t be up to scratch. These associates will end up paying startup costs to Legal Shield without getting anything in return.
It is tempting for associates who have barely made any progress in describing the company’s business process as a scam. If you’re looking for a quick payday with minimal effort, then this job isn’t for you. But if you’ve built up a substantial following on social media with a dedicated fan base, then you might have a shot of generating a reliable revenue stream with Legal Shield.
What Does it Cost to Join Legal Shield?
Associates can collect sales commissions when they are able to sell Legal Shield services to a customer.
The exact compensation plan depends on an associate’s ‘rank’ within the hierarchy. Like any other MLM, associates earn by hiring more people into the fold.
After selling a plan, you will receive a 20% commission. This means if a customer signed up for a $20 per month plan, you get $4 per month in commissions. You also get commissions if customers choose to renew the 12 month legal plan.
The real earning starts when you can ‘recruit’ other associates into the business and collect a percentage of the revenue that they generate.
Get 3 families to join and recruit 1 new associate to get promoted to Senior Associate. This rank earns you $180.
You also get bonuses in the form of points that can be used for special events within the company such as trips and contests. The points may also be redeemed for discounts, deals, and tax advantages.
The enrollment fee to become a Legal Shield associate is $149 along with any License Application fees (that vary by state). Associates are incentivized to attend events and conferences that may require an extra expense of $150 – which may not be inclusive of travel and accommodation.
The hierarchy is distributed across seven base levels that include:
- Associate
- Senior Associate
- Manager
- Senior Manager
- Director
- Senior Director
- Executive Director
The further up the ladder you go, the greater your compensation.
Below is a more detailed look at the hierarchy.
Junior Associate
Junior Associates are at the bottom of the barrel with a lot to prove. They will have to sell 3 personal sales to earn a commission of $50 per sale.
Associate
You can work your way up to become an Associate and earn $75 per sale. You must sell at least three legal plans to be eligible for this rank. Associates also have the right to have one personal recruit.
You can automatically become an Associate by recruiting two people. These members will need to make five sales within the first 30 days of joining.
Senior Associate
The so-called senior associate would have to recruit three junior associates who must play an active role with Legal Shield. The rank requires you to sell at least 30 sales. The commission rate for Senior Associates is a decent $100 per sale. That’s a lot of money for a side hustle!
Manager
Managers must be able to recruit three active Associates (not Junior Associates). This means you have to play the role of mentor to your recruits and help them graduate from Junior Associate to Senior Associate. This will not come easy.
You also need to secure at least 100 sales. This will give you a decent $125 per sale. Are the commissions worth the effort? Given that 50% of clients cancel their accounts before the expiration of services, probably not!
Director
Directors must maintain a network of three Senior Associates under them. But that’s not all, they also need to secure at least 200 sales. The rank of Director will earn you $150 for each sale.
Executive Director
Now we’re hitting the big leagues – but it won’t come easy. Executive Directors are getting very close to the top of the hierarchy and will earn a nice $182 per sale. You also need to secure 50 personal sales (these are not organizational sales).
The position of Executive Director only comes after extensive hard work, grinding, and investment of personal time.
What are My Chances of Making Money with Legal Shield?
Like most MLMs, Legal Shield is optimized to help members at the top of the hierarchy. The company hasn’t made the business lucrative enough for the average person to join. Their commission structure demands too much from new recruits.
A major disadvantage of joining Legal Shield is the requirement of making 3 sales every 3 months. Failing to do so will disqualify you from team commissions. Worse still, you will lose the entire team and any future commissions from that team.
But what happens to the profits? They are passed along to the higher ups. But that’s not why we’re worried – the real trouble starts when customers start requesting refunds. Nearly 50% of all customers will ask for refunds before their 12 months are complete.
Legal Shield will recoup this amount from their associates. This is one reason why the vast majority of associates end up quitting after not realizing any profits at all.
The statistics are not stacked in the favor of associates since 75% fail to sell more than one plan.
The annual earnings of top associates is a paltry $878 per year. These figures were disclosed by Legal Shield in 2015 for earnings made by associates.
Those who are exceptionally good at making sales can earn well over six figures. Legal Shield only has 400 associates who have broken the six figure milestone.
The company makes it clear that income from Legal Shield is not guaranteed whatsoever. This means you should never put all your eggs in one basket and maintain alternative sources of revenue.
Online Review for Legal Shield
Legal Shield has one of the best marketing teams, so it comes as no surprise that they have collected hundreds of five star reviews on platforms like TrustPilot.
Legal Shield has a review of 4.5 from over 2400 accounts. Most of these reviews are from end-users (not associates) who have expressed their satisfaction with Legal Shield services.
But we would like to express a major concern that TrustPilot reviews are easy to fabricate. For a complete picture of a company’s public perception, we recommend digging deeper.
For example, Legal Shield has a concerning 1.5/5 rating on ConsumerAffairs.com from 45 votes.
Ratings on SiteJabber don’t inspire much confidence either at only 1.5/5 stars.
Legal Shield fared much better with the Better Business Bureau and secured an A+ rating (which indicates legitimacy). Customer reviews, however, are not so pleasant with only 1.91/5 stars. This indicates that the end-user is not satisfied with the services received.
So how can we explain this discrepancy in customer ratings from TrustPilot to BBB? We would not accuse Legal Shield of foul play here but reviews from TrustPilot are relatively easy to acquire.
However, the overwhelming public perception of Legal Shield is positive. Customers were happy that their problems were promptly taken care of. Most reviewers claimed they saved a lot of money and headache by hiring Legal Shield services.
The negative reviews mostly complained about the difficulty of canceling Legal Shield services. Some reviewers claimed that they were being billed long after they terminated services from Legal Shield.
Advantages of Joining Legal Shield
There are several reasons to join Legal Shield. For one, they have a proven history of making money online and are well-respected as a legal services provider. Their pre-paid legal plans are designed to help individuals and small businesses with a limited budget.
Let’s discuss some of the biggest advantages of joining Legal Shield.
Home Business Supplement
Legal Shield is the only company of its kind that provides a home business supplement. Customers can tack on the service to their existing legal package for as little as $10 per month. What makes this service so useful is that it acts as a one stop shop solution for customers as individuals, their family, and their businesses.
Affordable Lawyers That are Always in Demand
Legal Shield has a recession proof business model because lawyers are always in great demand. This is definitely true in the case of affordable legal representation.
As an associate, you are becoming a part of a business that is bound to be profitable. Most people will hire Legal Shield because they can get affordable legal representation. There is no need to spend excessively on lawyers when you have Legal Shield to do your bidding.
Legal Shield provides the same quality of services as other law firms. Paying a small monthly fee is cheaper than spending a fortune on other law firms.
Established Business
This is another major reason why Legal Shield will always be in demand. Most MLM companies don’t have a history of proven success. But Legal Shield has been around since 1972 and seems to be thriving. This ensures that your career is in safe hands – but it’s no guarantee of an income.
Disadvantages of Joining Legal Shield
Joining Legal Shield isn’t without its disadvantages. For one, the compensation plan is rigged in favor of the higher ups. The high refund rates means that Legal Shield will take back some of the commissions they end up paying you. This is a major deal breaker for novice marketers.
Tough Compensation Plan
The compensation plan for Legal Shield is tough as nails to understand. You will have to go through several pages of PowerPoint slides that explain the ranks and incomes that associates make.
However, Legal Shield is extremely transparent about their compensation plan. We do recommend reading it thoroughly to understand what you’re getting yourself into.
Insists on Recruiting More Associates
Legal Shields is very clear that you must recruit other associates to earn commissions. While there are many good things about Legal Shield, their insistence on increasing recruits is a major problem.
Finding new recruits is easier said than done – especially if you have no connections. Legal Shields will probably not provide you with any clues on how to network with like-minded individuals to bring them into your fold. As a result, most associates are more likely to go after their close friends and family members.
Low Success Rate
There are very few associates who have broken into the six-figure range. Even Legal Shield admits that only around 400 associates have managed a six figure income.
The overwhelming majority of associates will find it very hard to recuperate their investments and the time spent networking to recruit more associates.
This is why we only recommend experienced individuals to become associates with Legal Shield.
The startup costs for joining Legal Shield are also excessive. You will be expected to pay a lot to Legal Shields for licenses, conferences, and other events. In other words, you are the ‘customer’!
For all the stress, money, and time you spend with Legal Shield, we believe that the juice is not worth the squeeze.
History of Lawsuits
Legal Shield has been swept up by dozens of lawsuits by customers who accuse them of misrepresenting and falsely advertising their services. In 2001, The SEC required Legal Shield (then Pre-Paid) to stop counting the commissions as assets instead of expenses. These statements showed a massive decrease in earnings (by over half).
Hundreds of plaintiffs have filed lawsuits against the company, most of which were either dismissed or settled. Least to say, Legal Shield has managed to dodge its way – although by the skin of their teeth – out of every lawsuit so far.
They even overturned a fraud verdict and defeated a class action lawsuit that alleged that the company was a pyramid scheme.
Legal Shield also dabbled in lobbying and was the top corporate donor to Mark Shurtleff in 2008 for his re-election campaign in Utah. Shurtleff defended the company in his state and further cemented its legitimacy. As we mentioned earlier, Legal Shield is exceptionally good at marketing.
All this indicates that the top brass of Legal Shield is some really clever individuals who know the legal system in and out. Can they use their services to help the end-user? Online reviews show that the company is a hit and miss with its services.
Wrapping Up: Is Legal Shield a Pyramid Scheme?
Legal Shield is not a pyramid scheme.
Previously known as Pre-Paid Legal Services, it is a listed company with a legitimate business model that sells actual services.
The quality of their services may be a hit or miss depending on who you ask, but they are very real. A major advantage of Legal Shield is that there will always be a demand for affordable legal representation.
You might not like the fact that associates have to spend so much of their time and money to secure commissions per sale. We also don’t appreciate how Legal Shield takes back the commissions for refunds. This means you will be at the edge of your seat hoping that the customer does not cancel their plan.
Imagine having this do-or-die mindset round the clock throughout the year, knowing that the money you have just earned could be taken back. This makes getting a steady income stream from Legal Shield difficult.
Sources
- Compensation Plan: https://legalshield.myvoffice.com/pdf/en/2495_comp_plan_011320.pdf –
- Trustpilot Reviews: https://www.trustpilot.com/review/legalshield.com
- Better Business Bureau: https://www.bbb.org/us/ok/ada/profile/legal-services/legalshield-0995-9000434/customer-reviews
- Lobbying activities: https://web.archive.org/web/20091031144218/http://findarticles.com/p/articles/mi_qn4188/is_20081030/ai_n30951143/ –
