If you think you’re going to need legal help — whether you’re creating a will or worried that you might have to handle a kid’s DWI in the future — a little-known program may make it more affordable.
Texas is the only state that still has a comprehensive legal insurance program, according to James W. Buck, president of Austin-based Texas Legal.
The nonprofit organization was started in 1972 by the State Bar of Texas and the Legislature to offer legal insurance with affordable premiums.
“At the time, the American Bar Association conducted a study on the status of the legal community as a whole,” Buck said. “What they found was that Americans didn’t know where to turn on legal needs.”
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The study discovered that the top 20 percent of income earners in America could afford to pay an attorney out of pocket, while the bottom 20 percent had access to lawyers through pro bono work and legal aid.
The rest of the country was often stuck struggling to pay for unanticipated legal issues, Buck said.
“The state bar and the Texas Legislature decided, ‘We’re going to do something about that here,’” he said. A number of other states followed suit, but their programs have since closed down.
“During our 40th anniversary in 2012, we reached out to the American Bar Association to acknowledge similar plans in other states,” Buck said. “They came back and told us there were none.”
To be clear — the Texas Legal policy is not a prepaid discount legal policy similar to what’s offered by companies like Ada, Okla.-based LegalShield (formerly Pre-Paid Legal).
“Texas Legal is the only state-bar-affiliated plan,” Buck said. “The attorneys in our network bill us directly.”
Other differences: Prepaid plans generally assign lawyers and give a percentage discount for legal services, with a cap, Buck said. The rest is paid out of pocket. All prepaid plans are also for-profit entities.
In contrast, Texas Legal covers 100 percent of the cost from six areas of law, with a one-time annual use from each area:
▪ Estate planning (wills and related documents)
▪ Family law (divorce, adoption, etc.)
▪ Criminal law (including misdemeanors, felonies, DWIs)
▪ Financial law (bankruptcy and foreclosure)
▪ Consumer law (civil action defense, creditor rights and collections)
▪ Other (including traffic tickets, Medicaid/Medicare issues and identity theft)
Policyholders choose from a network of 500 attorneys, including 112 in North Texas, Buck said. Restrictions include a 90-day wait for bankruptcy use and a six-month wait for divorce, as well as exclusion of any pre-existing legal conditions (so don’t try to sign up from jail). Otherwise, policyholders can access benefits immediately after signing up, Buck said.
Monthly premiums are reasonable, especially if you are in a group plan through your employer or an association, where costs are $20 for an individual or $30 for a family. Texas Legal began an individual plan in 2011 with monthly premiums of $26 for an individual and $40 for a family.
To put costs in perspective, Margaret Crosby, a Fort Worth attorney in the network, said she typically charges $800 for a couple’s estate package, including a will, legal and medical powers of attorney, and a physician’s directive or living will.
“That’s all covered under Texas Legal,” she said. “After the work is done, I send a bill to Texas Legal.”
Estate planning is the most frequent use by policyholders, Buck said.
“Everybody needs a will, even if you don’t have millions of dollars,” he said. “Everybody needs an advanced directive and durable power of attorney.”
Family law is the second-most-popular use — for filing divorce and adoption papers, prenuptial agreements and elder-law issues — he said. Other popular uses are for bankruptcies and drunken-driving cases.
Texas Legal has 18,000 policyholders covering around 35,000 individuals, Buck said. Eighty percent of policyholders work for a state agency, including the Texas Department of Transportation, the Texas Health and Human Services Commission, and the Texas Department of Criminal Justice.
“I think it’s a great thing,” said Crosby, who uses the plan to build her client base. “You don’t have to worry about costs being expensive. Going through the insurance is significantly lower than my hourly rate would be.”
Richard Alderman, director of the Center for Consumer Law at the University of Houston, said legal insurance in general can provide the average person with an affordable attorney for the most common problems.
“In today’s society, it is likely you will need an attorney, and this can be a good way to have referrals at a reasonable price,” he said. “Before signing up for any plan, think about why you might need an attorney. For example, do you need a will? And do some research to see if the group you are thinking about has had many complaints.”
For more information on Texas Legal, go to www.TexasLegal.org.
Teresa McUsic’s column appears Saturdays.