Cheap Counsel

Profile and analysis of a start-up legal services firm.

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Does every citizen need a lawyer on private retainer? The founder of Landmark Legal Plans Inc. thinks so

As soon as you hear about him you're going to think Christopher P. Nolan works at your company.

That's because someone like him probably does. He's one of your top people, but also your harshest critic. Even as he's pocketing commission checks -- in Nolan's case, $2,465.57 one day, $29.40 the next, and $371.68 the day after that -- he's thinking that your marketing approach is lousy and your financial acumen worse. As founder, you always fear what he's thinking: What do I need this guy for? You just hope it's an impulse he'll never act on.

After all, it took even Nolan himself a few years to make the leap. He first started considering it back in 1985, when he was a salesman at Pre-Paid Legal Services Inc., in Ada, Okla. The company, which by 1987 ranked 92d on the INC. 100 list of the fastest-growing public companies, specialized in selling legal plans, a nascent concept that sounded great: for a relatively small yearly fee, the average person could keep a lawyer on retainer. The problem, Nolan thought, was the way the plans were marketed.

Like most companies in the field, Pre-Paid used multilevel marketing to sell the plans. Via tent shows, it recruited part-time salespeople to buy the policies and then sell their friends on the idea of joining up. The part-timers would receive a cut of every sale their recruits made.

Multilevel marketing got the product on the street -- and sold it -- very fast. But Nolan believed the strategy was better suited for selling a tangible item than a service like legal plans. The problem, as he saw it, was this: the sales force had every interest in selling a plan but none whatsoever in servicing it. Understandably, most customers had questions about the unfamiliar plans. Unable to find answers, they checked the "no" box when it came time to renew.

Many fine prospects, Nolan observed, simply wouldn't buy anything sold through multilevel marketing. "Is this like Amway?" he'd hear as the door was closing. Small-business owners were the worst. "Their fear was that once you sold them a plan, you'd try to recruit them to sell the product," says Nolan.

Nolan didn't think the attorneys were getting a good deal either. Most plans paid them less than $2 per plan per month -- not enough, Nolan felt, to keep them motivated. You really should start a company of your own, some of them urged.

No way, he thought; surely there's another company that sees the same opportunity. In search of it, Nolan jumped to a competitor, where he encountered what in his view were the same problems. Unprofessional salespeople. Underpaid lawyers. Unfocused marketing. "I became even more convinced that it was a great idea," he says, "and that nobody was doing it right.'

Chances are that the Christopher Nolan at your company will criticize and carp but stick around to enjoy those regular commission checks. Not so this Christopher Nolan.

"I am sure I can do better," says the 37-year-old founder of Landmark Legal Plans Inc., based in Denver. "I'm betting everything I have on it.'

Let's suppose your business is bickering with a supplier over whether that company fulfilled the terms of its contract last month, or you're not sure how to comply with a new piece of legislation. And what are your rights if your spouse is a louse or your car a lemon?

If you're well heeled, you probably already have an attentive lawyer to handle such matters. But for most people, contacting an attorney -- and, more to the point, paying one -- is as appealing as spending a night in jail. Those people will even pay up front to make sure they have an affordable lawyer lined up.

At least that's the presumption behind legal plans. For a yearly fee, consumers receive certain legal services. Usually these include half-hour phone consultations, letters and calls to third parties (suppliers, landlords, and so on), the review of such documents as leases and contracts, and the writing of wills. For all of these, consumers call on their "access attorney," whose number is printed on a wallet-size card.

For more specialized legal matters, such as bankruptcy, the access attorney turns to a list of "referral attorneys." Typically, plans offer these lawyers at about 25% less than their usual hourly rates. Some plans include a roster of legal matters, such as deeds and misdemeanors, with maximum-fee caps. For the most sophisticated work, such as a merger, Landmark offers specialist firms at a 10% to 25% discount.

Since 1977, when a Supreme Court ruling paved the way for such plans, marketers -- which now include such heavyweights as Amway and Montgomery Ward -- have been seeking a balance between a plan that consumers are eager to buy and one that lawyers are willing to service. At the rates they've been used to getting, access attorneys aren't very eager to provide many free services. At the same time, plan marketers need to lure consumers. Hence there have been plans that, for instance, boast of covering such potentially expensive transgressions as vehicular homicide. Read the fine print, though, and you'll see that alcohol- or drug-related charges aren't covered -- which excludes, by one lawyer's reckoning, around 90% of all those cases. "Some plans verge on being illusory," notes David Baker, an industry consultant.

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