A Growing Market You Should Know About – Group Legal Plans
by Jim Barone

Offering the same core medical, dental, life and disability programs is leaving employers and employees unsatisfied. Is there a benefit offering that can help employees cope with one of the worst recessions in nearly seven decades? The answer is yes. There’s an employee benefit category that’s experiencing double-digit growth. You should get to know more about group legal plans.

The group legal industry is experiencing significant growth and is attracting new clients across many types of businesses and non-profit organizations. The legal services category has been one of the fastest growing voluntary and employer-sponsored benefits in the marketplace for several years – averaging more than 20% year-over-year sales growth, according to the Society of Human Resource Management.

Amid the recession, there’s a heightened sense of public concern about jobs, benefits and personal financial, family, home, automobile-related matters. Eighty-eight percent of American workers are concerned about one or more personal financial or legal matters, according to a new Russell Research workplace study, commissioned by group legal plan provider, Arag.

What Are Group Legal Plans?

You might not have realized that group legal plans have been around for nearly 40 years. Like medical, dental and vision programs, they emerged as an employer-paid benefit that was collectively bargained by labor organizations in the 1970s. They gained wide acceptance during the 1980s with the growth in employer-paid products. However, group legal plans are no longer the exclusive offering of collectively bargained employers. They went mainstream at a time when brokers and employers were focusing on ever escalating healthcare costs.

In some respects, group legal plans can be compared to health insurance coverage, which is offered through a PPO model. Members enroll directly or through their employer. They get access to a group of attorneys and other legal resources to help meet various legal needs for an affordable premium. The average premium for one year of comprehensive group legal coverage is about the cost of a roadside assistance membership.

The leading national group legal plan providers contract with attorneys, just as health plan insurers credential their hospitals and physicians. The quality of the attorneys’ representation is monitored just as health insurers track medical outcomes. However, unlike most health insurance programs today, the most comprehensive legal plans offer paid-in-full representations versus the up-front deductibles and co-insurances typically found in other employee benefit programs. The plans are offered as employer-sponsored and voluntary offerings

What Do Group Legal Plans Cover?

The very things we’re worried about are covered by most group legal plans: wills, trusts, and estate representations; divorce; bankruptcy; IRS audits; contractor disputes; and even traffic offense defense. But comprehensive group legal plans often cover much more.

The nation’s most reputable and comprehensive group legal insurers also offer financial counseling, identity theft coverage, as well as comprehensive paid in full legal services. Financial matters, such as the creation of a will, estate plan or trust, caring for an elderly family member, purchase, sale or renovation of a primary residence, and personal identity theft are often covered.

Why the broad coverage? The reasons are simple: people have a wide range of legal concerns and they need coverage that can address the different life stages, lifestyles, and life events that are experienced by today’s multi-generational workforce. Sixty-seven percent of people have experienced one or more legal events in the past 12 months.

Financial and home-related legal needs have reached staggering proportions in California with bankruptcy filings increasing by more than 70% in the past year. Nationally, one leading legal insurer reports that bankruptcy claims increased nearly 50% for the first quarter of 2009 compared to the same period last year. There continues to be a rising trend in consumer protection issues, such as contractor disputes and debt collection defense matters. A provider of employer-paid plans notes that plan usage among union members has also risen over the past few months.

Why Not Talk to Clients About Group Legal Plans Before Others Do?

Human resource professionals recognize that employees are less productive in the workplace when they are facing stressful personal issues, such as financial, legal, or health-related matters. Think of how financial and legal issues can affect an employee’s outlook. Think of the effect that employee stress may have on the cost to the employer that provides health benefits. Consider the direct connection between stress over unresolved financial or legal issues and the cost of mental health and substance abuse coverage. When these issues are unresolved, the employee and the employer suffer the effects as productivity drops, absenteeism and presenteeism rise, and operating costs or benefit costs go up.

Research from a leading legal plan provider reveals that employees spend and average of 57 hours addressing personal legal matters at work and 13 days away from work. It’s no wonder that employers are looking for viable solutions to save money and make sense for their workforce. Many savvy employers have turned to group legal plans to help their employees resolve personal financial and legal matters – matters that seem to occur with greater frequency and severity in our increasingly complex society.

What’s The Outlook for Group Legal Plans?

Nationally, group legal plans are attracting the attention of progressive companies and associations. And naturally, California is setting the trend. It’s among the fastest growing states where group legal plans have taken a foothold among all types of organizations, including many Fortune 500 companies. The top two plan providers have each enrolled more than 100,000 plan members in California.

Only 20% to 30% of America’s employers offer group legal plans. The market is underserved and largely untapped, but waiting for harvest. As California helped drive the growth of managed healthcare in the late 1970s and early 1980s, Californians are again setting the trend in the group legal industry.  As one who is invested in the employee benefit industry, your understanding of this market movement is central to your role as an employer advocate.

Legal needs occur regardless of ability to pay for legal assistance to prevent or resolve matters. Your peers and members of the employee benefit consulting community recognize the relationship among the cost of delivering medical coverage, mental healthcare, and group legal plans.

Oddly enough, attorneys could be just what the doctor ordered. Your prescription for success is delivering group legal plans to employers besieged by ever-rising medical, dental, vision and disability plans, at a time when employers are clamoring for good news from their trusted advisors – the California brokerage community.
–––––––––
As senior vice president and chief sales officer, Jim Barone leads an experienced ARAG sales team in working with businesses, brokers and benefit professionals to provide legal plans that provide a smart and trusted path for resolving legal issues. This enables people to protect their families, finances and futures.
Barone has more than 20 years of experience as a sales executive in the employer sponsored and voluntary market. Before joining ARAG in 2008, he was a sales and marketing executive for managed vision products provider Luxottica Retail, and for Anthem Blue Cross and Blue Shield, where he managed sales and distribution programs in the individual, group and national healthcare market. Barone earned a bachelor’s degree from the University of Cincinnati. He received a juris doctorate from the University of Toledo College of Law, and is a member of the Ohio State Bar