Welcome to my Legal Shield review! If you are wondering Is LegalShield pyramid scheme or a scam, I'm here to help you out! I've researched the company thoroughly and in this article, I will share my results with you
I'm glad to see you doing your research since it's the only way to avoid all the scams out there and to find the legit opportunities to work from home.
LegalShield is a well established MLM company that sells "pre-paid" legal service packages. There is no evidence that it would be a pyramid scheme or a scam. It uses the multi-level marketing business model however, so there are some similarities with a pyramid scheme. The key difference is that MLMs are legal even though the FTC has issued concerns about the business model and tightened its guidelines of what constitutes a pyramid scheme in recent years. For the time being there is nothing illegal in the business model, at least in the US.
The chances are that you wound up here because someone recommended Legal Shields products to you or approached you about the business opportunity they offer.
You might have been interested but the little voice in your head said "Hold on! Could this be one of those pyramid schemes? Let's investigate before making any rash decisions". And I must congratulate you for following that voice, it's the only way to avoid all the scams out there.
Before we continue with the review, I want you to know that I'm not affiliated with Legal Shield in any way or form. My site is about reviewing work from home business opportunities, including MLM companies. So I check out different opportunities and share my findings and opinion with my readers.
I also occasionally recommend products I've found useful and trustworthy myself. I often include affiliate links in these recommendations. I want to be completely transparent about this because I trust the products 100% and I offer you my full support if you end up buying through one of my links.
Company Name: LegalShield
Business Opportunity: MLM company in pre-paid legal services niche
Product Price: $99 to join
LegalShield is a well established MLM company that offer pre-paid legal service packages to consumers, mainly families.
The company has been around for over 40 years, there are real service products being sold for over $400 million annually and there aren't any too concerning lawsuits in it's past.
For those reasons I would definitely not call LegalShield a pyramid scheme. I actually think their products might be quite useful.
That said, I can't really recommend their business opportunity, since most associates don't make full-time income even after 20 years. It's still hard work.
You can create a very successful online business in 5 years for example that can produce full-time income and more with a similar daily time investment. It of course all depend on you and there are no guarantees.
If you want to learn how this stuff works and what it actually involves, check out my number one recommendation for more information through the link below.
What Is A Pyramid Scheme
What Is a Pyramid Model
Before we continue with the Legal Shield review, I want to take a minute to explain to you what exactly is a pyramid scheme, because people often really don't know what exactly is a pyramid scheme. They often confuse MLM (multi-level marketing) with pyramid schemes.
It's important to recognize that MLMs and pyramid schemes do have some similarities, but at least for the time being MLMs are completely legal in the US and in many other countries. Pyramid schemes, on the other hand, are illegal almost everywhere.
Both MLMs and Pyramid Schemes include a multi-level referral model, aka a pyramid model. Everyone within the system is an individual "sales rep" or "associate" and they are allowed to recruit other reps below them.
An associate will earn a share of the income their recruits make. What makes it multi-level or pyramid is the fact that you can earn commissions over several levels of recruitment.
So the people you recruit can recruit more people and they can recruit even more people. You will earn income from all of them for several levels down, depending on the system.
When you draw this model on paper, presuming all levels recruit equal amounts of people, the form resembles a pyramid and that's where the name pyramid marketing and pyramid scheme comes from.
The people above you are called your upline and the people below are your downline. A share of the income you make from sales is spread over several levels in your upline, just like you earn commissions over several levels in your downline.
If you understand a bit of math you will realize that your downline grows in an exponential manner. You can have thousands of people in your downline just a few levels down.
So if you get in early to a popular pyramid scheme or MLM, you can have millions of people below you earning you income on automation. That's very unlikely to happen by the way, because MLMs and pyramid schemes have a huge turnover of associates. People simply don't stick with them.
What Is A Pyramid Scheme
So like I said, MLMs and pyramid schemes have similarities, mainly the pyramid model we just discussed. But there are a couple of key differences.
In an illegal pyramid scheme, there are either no products or the products are just a front for recruiting new members into the system.
Pyramid schemes get all or at least the majority of the revenue from participation fees of new recruits. The individual sales reps only serve a function to recruit more people into the system.
Another key difference in a pyramid scheme is that the upline gets a share of the actual participation fee unlike in legit MLMs where they only get a share from the sales revenue.
The participation fee is often disguised as either training or investment opportunity in a pyramid scheme. When it's disguised as an investment fee and the uplines ROI is brought in from the downlines participation fee, it becomes technically a Ponzi scheme.
One common theme with Pyramid schemes is that they are usually short-lived. The pyramid model can't grow endlessly and the people at the bottom will eventually catch up and realize they are being conned.
At this point, the authorities usually start investigations, and then the top of the pyramid either disappears with the money or the company gets shut down by authorities.
What Is A Legit MLM
There are a couple things that they always seem to look for. The first is that the main function of the individual sales reps or associates should be selling products or services of the company. Not recruiting.
The way they look at it is that if the majority of revenue is coming from sales instead of recruitment fees, it's likely considered legit.
The other criteria are that the individual associates don't get a share of any possible fees a new recruit has to pay. They only get a share of the revenue they get from sales.
The idea here is that in a legit MLM a sales rep shouldn't be able to live off recruiting people and telling them to recruit more people. The focus needs to be on sales or otherwise there won't be income.
Now that we know what's the difference between MLMs and pyramid schemes, let's look more closely at Legal Shield to find out if it could be a pyramid scheme.
What Is LegalShield
LegalShield is an American MLM company that has been operating for over 40 years. The company specializes in selling legal service plans to American families.
The company was founded by Harland Stonecipher in 1972 and was originally called Sportsman's Motor Club. The company offered legal insurance that would reimburse members for legal fees related to vehicle accidents.
There was clearly a demand for such pre-paid legal services so the company expanded it's services to general pre-paid legal plans. In 1976 the company was officially registered as Pre-Paid Legal Services, Inc.
In 1983 the company started to use network marketing as it's the main distribution method. The company became public in 1984 when it made its original IPO.
In 2011 the company was acquired by MidOcean Partners for $650 million. The company name was changed to LegalShield and it became a privately owned company again.
LegalShield uses a network of independent provider attorneys to offer its services and it has over 6900 of them across the US and Canada.
The company has kept with network marketing, aka MLM business model since 1983. So their services are sold by independent sales associates.
An important fact is that LegalShield or it's associates don't offer any legal services, that is handled by the independent attorneys and law firms. LegalShield simply sells the membership packages that give members access to the legal service of the independent attorneys.
People Behind LegalShield
The original founder and owner of the company were Harland Stonecipher. The company was bought by MidOcean Partners in 2014. Currently, the company is owned by PPL Holdings Corporation.
The CEO of the company is currently Jeff Bell. Jeff has a long history at Ford Motor Company, Chrysler, and Microsoft.
The basic product of LegalShield is a personal legal service package that includes unlimited attorney consultation, something that would regularly cost up to $500/hour.
The personal plan starts at $24.95 and covers your whole immediate family (spouse and dependents). It gives you unlimited access to attorneys and they can provide you advice by phone, write letters and make phone calls on your behalf and review documents.
The personal plan also includes Estate Planning Services feature which covers standard will preparation, living will preparation, and durable power of attorney services.
It also includes Traffic Tickets and Motor Vehicle Services that cover the defense of moving violations, auto accidents, and criminal charge assistance and suspended, canceled or revoked driver's license and damage collection.
The most common use for the personal plan are apparently consumer finance issues, traffic violations, and accidents, estate planning, landlord/tenant legal services, family law and divorce and real estate.
They also offer supplemental plans for:
- Home Business
- Trial Defense
- Gun Owner
LegalShield also offers a small business plan that includes legal consultation for example letter & calls, documents & contracts, and trial defense for covered civil lawsuits.
They also offer a service for starting a business. As you might know, there are a lot of legal matters you need to take into consideration when you form a company.
The Business Opportunity
Since LegalShield is a network marketing company, they offer a business opportunity by becoming a LegalShield Associate. Here is the breakdown of the business opportunity:
What Does It Cost To Become An Associate
The current cost of becoming a LegalShield associate is $99 plus state licensing fees. There is a 30-day refund policy if an associate decides to terminate the agreement.
How Can You Make Money With LegalShield
Since it's an MLM opportunity, there are basically three ways to make income:
- Selling services to consumers. You get a regular sales commission from the sales you make. The commissions depend on your level within the marketing plan, i.e. your previous sales performance.
- Recruiting people into your sales organization. You earn a share of the revenue your "sponsored associates" aka your downline make. You need to reach a Senior Associate level before you can earn commissions of your sponsored associates sales.
- Bonuses. There are bonuses if you manage to sell a certain number of memberships in a given period.
- An additional way you can earn with LegalShield is through renewals. When a membership is renewed beyond the original advance period, you will earn a commission each month that membership continues to be active.
The compensation plan of LegalShield is a typical MLM jargon. A lot of information on a small sheet. (In my opinion) Complicated bonuses and level structures. You can find the Compensation Plan for the LegalShield associate program here: LegalShield Compensation Plan
How Much Money Can You Make With LegalShield?
Well, they make no claims about income and they are upfront about the fact that it takes hard work and time to build a sustainable income as an associate. In facto, most associates do it as a part-time thing to earn supplemental income.
According to their website, in 2018 the average income of their associates after one year was about $862 from the individual sales and $2,233 from group sales.
After the 20+ years, the corresponding average figures were $7,383 and $16,544 dollars.
Since it's a pyramid structure, we can presume there are people making a lot more money at the top but they are the minority. Those figures will also skew the average income unless they cut out the highest and lowest percentile incomes from those figures.
So, all in all, I would say that LegalShield associates can expect to make some supplemental income with the business opportunity with reasonable effort.
Is LegalShield A Pyramid Scheme?
So, is a LegalShield pyramid scheme? If you read the difference between pyramid schemes and MLMs at the start of this post, you will remember that network marketing isn't the same thing as a pyramid scheme. And it's clear that LegalShield is an MLM business.
While your definition of a pyramid scheme might be different, legally speaking MLMs aren't considered pyramid schemes. So how do you know if an MLM is not a disguised pyramid scheme?
Well, there are three questions I like to present when assessing if an MLM company might be a Pyramid Scheme.
1. How Long Has The Company Been Around?
Pyramid schemes are usually very short-lived, 5 years tops. This is because sooner or later the members and authorities will realize what's going on.
LegalShield has been around for over 40 years and it's been previously listed publically. It's currently owned by a larger corporation and has a very well qualified CEO with a background in legit businesses.
Definitely not a typical history of a typical pyramid scheme. So nothing alarming on question number one.
2. Are There Any Real Products or Services Being Sold?
Pyramid schemes rely on the participation fees of the new recruits. So the system needs to grow constantly or there won't be any income.
An MLM will get most of its revenue from sales of actual products or services. The recruiting is a secondary function, designed to grow the sales force of the company.
LegalShield has an estimated annual revenue of $400 million in 2014. The services they provide are real and there are thousands (if not millions) of customers that are paying for the services without participating in the sales organization.
So definitely not a pyramid scheme in this regard.
3. Are There Any Lawsuits?
I did some digging around and there are some older lawsuits concerning deceptive advertising and fraud with varying end results. It is my understanding that the former lawsuits and FTC regulations have required the company to be more open about the advertising, income potential, and commissions of the associates, just like every other long-standing MLM company out there. It seems that LegalShield has complied when necessary.
More notably, apparently in 2018 Lc Technologies International has filed a proposed class action, claiming Harvard Risk Management and Pre-Paid Legal Services (LegalShield) have sent unlawful, unsolicited fax messages as a part of a pyramid sales scheme. It seems that the case was settled and dismissed.
These types of lawsuits are very common with all of the larger MLM companies. In my opinion, they don't point to LegalShield being a pyramid scheme in any way or form, since there are no court rulings or FTC suspicions of a pyramid scheme.
So, Is It?
In my opinion, there is nothing that would point to LegalShield being a pyramid scheme. On the contrary, they seem to be very honest about the business opportunity and its limitations compared to many other MLMs.
The products also seem like something that have actual demand and offers legit value to the customers. So I would categorize LegalShield as one of the better MLMs out there.
That said, I can't really recommend the business opportunity as I know there is so much more potential in the online world that you can learn to leverage as well.
Is LegalShield A Scam?
No. I wouldn't definitely call LegalShield a scam. They are simply an MLM business that sells pre-paid legal packages. I actually think the coverage of their Personal Plan seems very good considering the price.
Its a cheap insurance in case you get into legal trouble as attorney services can be extremely expensive and presenting yourself can be very risky and not always even possible.
The business opportunity they offer is something I would consider twice. The MLM business model is notorious for the fact that most people never end up making any profit. That's why they never make any claims about income.
The fact is that if you want to make serious bucks with MLMs, you need to become proficient in recruiting people into your downline and help them make sales. This way you can multiply the income of your efforts.
But most people aren't cut out for this. It requires experience, a correct mindset, and perseverance. You need to be very active and proficient in sales to grow your sales organization.
If you can manage all that, MLMs can offer you a good chance for some supplemental income to your actual career, and LegalShield is probably one of the better options out there since the products are always in demand and high quality.
There has also been some controversy concerning the company as evidenced by the lawsuits we discussed earlier.
An Alternative Business Model To MLMs
So if MLMs aren't that great of a business opportunity, what can you do? Well, first of all, I personally recommend you leverage the online world because it offers a huge opportunity for automating your sales process.
The way I personally do it is by combining affiliate marketing with search engine optimization. It's basically glorified blogging. But hey, it works! I have two income-producing websites in completely different niches.
The one your reading now is about home-based business opportunities and the other one is about strength training. I also have a few other projects that are waiting for me to invest time in growing them.
The basic idea is to pick a niche, create a website around it, find out what keywords people are looking for in Google, and create content around those topics.
Eventually, your content will be found by Google and people will come to your site. You provide the information or solution they are looking for.
To make money with this, affiliate marketing is one of the best ways. There are affiliate programs for almost anything, so you can recommend products and services in your content as a solution to your readers. The solution has to be naturally a good and relevant one or your never make any sales.
While this sounds easy on paper, there's a lot you need to know. But with the right training, it's still very much possible to create a successful online business using this business model in 2020.
If you want to learn more about my story and how this business model works, check out my Wealthy Affiliate review and also consider joining my free 7-day course where I show you how to set up a website of your own in less then a week.
Oh, by the way, this business model works great for getting leads for your MLM business as well in case you are interested in growing your network and deadset on sticking with MLM.
I hope you found this Legal Shield review useful. If you have any questions, feel free to leave them in the comments section below and I'll get back to you.
Legal Shield is definitely an MLM but there is no evidence that it would be a pyramid scheme or a scam. The company has it's issues like all MLMs do, but you could reasonably make income with it IF you are proficient in sales. MLMs are not suitable for most people, however.
If you want to start working from home on your own terms, my recommendation is online affiliate marketing. It has so many advantages over other business models that it's almost hard to believe.
But it takes a lot of time to get things going and you need to be willing to work consistently without any instant rewards in the beginning. But you are working for your future and the goal is well worth the trouble.
So get started today. Keep your day job and grow your business in your spare time. Then when your business is producing enough income, you have the option to do what you want.
Thanks for reading and if you found this review useful feel free to share it on social media!