LegalShield (previously known as Pre-Paid Legal) is an American corporation that sells legal service products through direct sales and multi-level marketing in the United States and Canada.
The company was founded August 8, 1972 as the Sportsman's Motor Club. In 1976 it was incorporated as Pre-Paid Legal Services, Inc., and made its initial public offering in 1984.
Pre-Paid Legal Services, Inc. went from being traded on the New York Stock Exchange back to a private company in 2011 when it was acquired by MidOcean Partners for $650 million and subsequently changed its name to LegalShield.
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Company description
LegalShield develops and markets pre-paid legal service plans through a network of more than 6,900 independent provider attorneys across the U.S. and Canada. The company also markets an identity theft monitoring and restoration services through its partnership with Kroll Inc.. The company's service plans are sold through its business-to-business channel (B-2-B), its employee benefits division, and also through its multi-level marketing division.
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History
On July 11, 1969, former CEO and founder Harland C. Stonecipher of Ada, Oklahoma, was involved in a motor vehicle accident and was hospitalized. Although the other party was cited for fault, they filed a suit against him for the accident. He hired a lawyer to defend himself in court, but in doing so, depleted his life savings. After researching the industry of European legal expense plans, Stonecipher created Pre-Paid Legal's predecessor, the Sportsman's Motor Club, on August 8, 1972. The club offered legal expense reimbursement to its members. Pre-Paid Legal began using "network marketing" (multi-level marketing or MLM) in 1983. Pre-Paid Legal went public on the NASDAQ National Market System in 1984. In 1997, Pre-Paid Legal bought the People's Network (TPN), a satellite television network dedicated to personal development. Two years later, the company moved to the American Stock Exchange and then on May 13, 1999, Pre-Paid Legal was listed on the New York Stock Exchange.
In 2001, the Wyoming Attorney General issued a press release announcing "When we discovered that Pre-Paid was using prohibited income representations to promote their multilevel marketing program, we warned them that the representations were prohibited by Wyoming law". Pre-Paid paid $4,000 in lieu of civil penalties, reimbursed the state for $1,000 in costs, and refunded $2,000 to participants who claimed to have been misled. In July the same year, the company was forced by the U.S. Securities and Exchange Commission (SEC) to stop counting the commissions they paid out to sales associates as assets, instead of expenses, the same way other types of insurance companies do, though they did not release their updated, halved, 2000 earnings figures until February 2002.
Pre-Paid Legal has faced ongoing troubles in Mississippi. After the company settled complaints in 2001, a number of similar suits arose. The company won in a jury trial against two plaintiffs, but after losing others, including one in which a former customer was awarded $9.9 million settled with more than 400 others. The company, and the U.S. Chamber of Commerce of which Pre-Paid Legal CEO Harland Stonecipher is a director, have described the lawsuits against the company as "frivolous" and "abusive".
Pre-Paid Legal reported to the SEC that less than 25% of its sales representatives sold more than one insurance plan in 2005, but avoids reporting such information to prospective sales representatives.
In October 2009, Tulsa World reported that Pre-Paid Legal had been subpoenaed by the SEC for various documents including those pertaining to a stock repurchase program that Pre-Paid started in April 1999. (And in 2006, the company said it would repurchase $27.4 million of shares owned by executives.) The SEC reported that thus far that its demand for documents is a "fact finding" mission.
On November 19, 2009, Pre-Paid Legal announced that it received a complaint from the Federal Trade Commission (FTC). The proposed draft complaint alleged that Pre-Paid's "ADRS program and related materials violate Section 5(a) of the FTC Act regarding asserted misleading representations, express or implied." On July 27, 2010 the FTC ended its three-year investigation of Pre-Paid Legal Services, Inc. without any action.
In January 2011, Pre-Paid Legal agreed to merge with entities formed by MidOcean Partners, a private equity firm headquartered in New York which it says is "focused on the middle market." The transaction would result in the company becoming privately held. The deal closed on June 31, 2011. Beginning in July 2011, Rip Mason served as Legal Shield's Chief Executive Officer.
On September 10, 2011, the company announced that it would change its name to LegalShield. The new corporate name for the 40-year-old company was said by the company to be part of an overall re-branding initiative following the acquisition of Pre-Paid Legal Services, Inc. by MidOcean Partners.
In July 2014, Jeff Bell was appointed Legal Shield's Chief Executive Officer replacing Rip Mason. Rip Mason assumed the position of Chairman of the Board.
Source of the article : Wikipedia
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