Need legal assistance but don’t have out-of-pocket money for a lawyer? Fear not, there are prepaid legal insurance plans that can help you. At this year’s Annual Convention of the Florida Bar, host Laurence Colletti welcomes legal insurance expert Howard Rosenblatt to talk about affordable access to the legal system. They begin the discussion explaining the difference between Chapter 9 and Chapter 642, and then dive into why legal insurance can be very beneficial for those seeking legal assistance and for attorneys. Howard then continues to breakdown the types of legal matters the insurance does and doesn’t cover and why quality of service matters for both parties.
Howard M. Rosenblatt is an attorney specializing in estate planning, probate, and elder law.
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The Florida Bar Podcast
Florida Bar Annual Convention 2019 Chapter 9 and Prepaid Legal Insurance Plans
Intro: Welcome to The Florida Bar Podcast, where we highlight the latest trends in law office and legal practice management to help you run your firm, brought to you by The Florida Bar’s Practice Resource Center. You are listening to Legal Talk Network.
Laurence Colletti: Hello welcome to the Florida Bar podcast recorded from the 2019 Florida Bar Annual Convention in Boca Raton, Florida. This is Laurence Colletti and I’m the host for today’s show. I’m standing again in here for Christine Bilbrey and Karla Eckardt your regular host and so hopefully I do a good job here, but fear not, I have a wonderful guest joining us today.
I have Howard Rosenblatt joining us. How’re you going today sir?
Howard M. Rosenblatt: It’s going very well.
Laurence Colletti: Alright so you just presented at a presentation session called Chapter 9 and Prepaid Legal Insurance Plans, a Florida Attorney’s gateway to increase clientele and revenue. So that’s a very long title, did you come up with that?
Howard M. Rosenblatt: No. Somebody else came up with that, but I accepted it as a valid title.
Laurence Colletti: You accepted the challenge?
Howard M. Rosenblatt: Yes.
Laurence Colletti: Okay well before we get into the nature of your presentation within there, let’s know little bit more about you for the benefit of our audience where do you work? What do you do?
Howard M. Rosenblatt: I have a pretty much of a full time law practice. I am of counsel to Bogin, Munns & Munns or my firm is one of counsel Bogin, Munns & Munns. I also have a partnership interest in an insurance agency and in a financial services firm both of which I did primarily until 2014 when I retired sort of and I designed myself to try to or I plan to focus primarily on the practice of law which had been a side source of business for me, while I was in the other businesses.
Laurence Colletti: So your legal work was a side hustle?
Howard M. Rosenblatt: Yeah I graduated from law school back in 1982 or 81 and I already had two full time businesses and so it was a question of easing it into my schedule and my lifestyle which I did but I was making a better living in the other two businesses so I didn’t want to give them up. And then in 2014 I decided it’s was a good time to just step those down. I have a partner that’s worked with me for 12 years in the insurance business and the three-year partnership in the financial services business.
Laurence Colletti: Now as I understand that your part of the presentation you covered both the Chapter 9 and the Chapter 642. So could you explain to us the differences and distinctions of those?
Howard M. Rosenblatt: Sure Chapter 9 and I served as a chair of the Florida Bar Committee on prepaid legal, is a part of the Florida Statute that allows an attorney to directly negotiate with an employer, union, other entity, to provide legal services to their employees, their members, things like that.
Chapter 642 is the Florida Insurance Statute which allows an insurance company to sell prepaid legal insurance to consumers, and they can do it by a group, or they can do it individually. And we have carriers in Florida that do both. Those are the distinctions and I am currently the President of Florida Lawyers Legal Insurance Corporation and the Florida Legal Insurance Plan which promotes prepaid legal insurance products flip. Florida legal insurance plan is an insurance company licensed with the State of Florida.
Laurence Colletti: So under the current, under our current state of the legal profession most clients hire an attorney they pay the rates that the lawyers are asking for and so I guess my first opening question and I think this is part of your presentation, why legal insurance, why do we need it?
Howard M. Rosenblatt: Well because I would disagree with your first presumption.
Laurence Colletti: Okay.
Howard M. Rosenblatt: I think a substantial portion of the public doesn’t hire attorneys. They try to represent themselves in matters that are beyond their skills, and they do that because of fear that they cannot afford legal services. And because they are not poor enough to qualify for Pro Bono Legal Services through Legal Aid and because they aren’t rich enough to in their opinion to afford a lawyer, and aren’t poor enough to qualify for government assisted legal services.
The reason we want legal insurance to be available is so that people can have affordable access to the legal system. If you only have to pay $20.00 a month or $25.00 a month, and you’re guaranteed access to an attorney for free legal consultation, for will, for traffic offense defense, I mean that’s $300.00 a year or less for all those benefits, it’s a bargain. And I think the consumer would realize that if it was made well known to him or her.
Laurence Colletti: So, just in lines of the typical like my understanding of insurance obviously with auto, I have an auto insurance plan and so pay a premium and you get a certain amount of coverage, and then at some point if something happens to you get an accident, you have to pay a deductible and you get covered up to a certain amount. So my guess is, is that legal insurance works in a similar way so when you say 20 or 25 dollars a month are you required to carry it for a period of time before the rights to legal representation vet?
Howard M. Rosenblatt: In most cases the answer is no. However in the case of for example divorce yes; you have to carry it for at least six months because we don’t want somebody to say oh I think I’ll get a divorce let me go get the legal insurance now. But for things that that you would not have notice of then no, the coverage is immediate not only that the deductible is zero. You get the consultation with an attorney without having to pay upfront anything.
Now there may be co-pays depending on the type of litigation but in most cases the legal fees are 100% paid by the insurance carrier. What you do have to pay is the costs. So if you have to go to court the $400.00 filing fee that’s your responsibility. The 300 to 500 dollars an hour that the attorney charges that’s the insurance company’s responsibility, you don’t pay that.
Laurence Colletti: So let’s talk about the types of legal matters that are covered by this type of insurance so you talked a little bit about family law, but what are some of the other areas of law?
Howard M. Rosenblatt: You get a free will up to once a year. If you have family coverage that’s two wills you and your spouse. You do not give wills to your children even though they would be covered for like a traffic accident. We would also cover adoption. We’d also cover non-contested divorce, misdemeanors, some felonies DUI, those are all covered and virtually none of them have an out-of-pocket expense but they have a cap on them which is to say the insurance company will say up to 12 hours, up to 20 hours beyond that it’s your responsibility.
Laurence Colletti: Any notable carve-outs that are specifically not covered by this type of insurance?
Howard M. Rosenblatt: Any notable carve-outs, well conflict of interest is clearly a carve-out, so if I’ve represented somebody that you’re trying to sue I can’t represent you. The other carve-outs really are in terms of major carve-outs beyond conflict of interest would be certain types of litigation which is just not covered because it’s too massive to deal with. In some cases we could handle defense but not plaintiff.
But generally speaking we don’t cover personal injury and the reason for that because 4 million lawyers advertise on TV that just call them, they don’t have to pay up front, and they’ll give you personal injury defense, so we don’t have to do that.
What we’re trying to cover are the things that like real estate closings, and wills, and trusts, and healthcare surrogates, things that people need but feel they can’t afford because they think the attorney is too expensive.
Laurence Colletti: So insurance as a general matter serves one of two or both functions are cost-shifting so it makes something that’s very expensive, more affordable just by sharing costs so it spreads that around, but it also does risks shifting which is why a lot of people carry well that’s why you carry auto insurance you spread the risk most drivers will not get an accident but some do and to that degree the money that’s pooled up will pay for those accidents even if the person’s not at fault, the car gets totaled.
So cost shifting, risk shifting, and you’re telling me from the client side of this insurance bargain that’s a good deal so they’re paying less. So I think I know the answer to my question in terms of the cost shifting if the client is saving money, getting legal representation that must mean that the lawyer is losing money providing it.
Howard M. Rosenblatt: The lawyers are agreeing to a discounted fee.
Laurence Colletti: Okay. So let’s say yes at least initially.
Howard M. Rosenblatt: It depends on your perspective.
Laurence Colletti: Well I’m looking at it from the dollars and cents perspective.
Howard M. Rosenblatt: Okay so if my normal rate is $300.00 an hour and the insurance company is going to pay me $100.00 an hour. I’m basically giving up $200.00 an hour for the acquisition of a client that I might not have had otherwise, and a client who couldn’t afford 300 and wouldn’t have hired me at 100 because he would think that’s too expensive.
But paying $20.00 a month and somebody else paying the $100.00 he’s in really good shape. So, you know, my feeling is that anything that allows the consumer to have easier more affordable access to the legal system is a plus.
Laurence Colletti: So, you talked about a relationship there where you have a client that pays $200.00 a month now has access to an attorney at a rate of $100.00 a month in your hypo that attorney would normally make $300.00 an hour, but now the attorneys got access to a new market they’re probably not looking at right now, what are some of the other benefits to attorneys participating in this type of program they’re making less per hour, but the benefits are?
Howard M. Rosenblatt: Well, let me clarify to you that the $100.00 an hour is not what the client is paying that’s what the insurance company is paying. So, from the consumer standpoint he has access to an attorney for free. The benefits to the attorney are, it allows him to build or increase his practice, expand his practice into areas where he may not be otherwise or previously.
It allows the attorney to develop relationships which can create referrals and bringing in additional clients who do not have the insurance and therefore are paying retail. It gives the attorney the time to or not the time, but the ability to enhance his or her practice in a particular area that he may want to do more work in, but he’s not getting it, that’s not the cases that are being generated toward him but in a legal insurance situation where you were on the panel if they refer a case to you, you don’t want to do the case you don’t have to do the case.
So you can take certain types of cases and use those and so you can hone your skills in that area and if somebody comes to you with a different kind of case or if the insurance company tells you here’s the client, it has a different kind of issue you don’t want to deal with it you just say thank you very much but I’ll pass on this one.
So for me example, I do a lot of estate planning and probate, and so I take all those cases. Every now and then you get a real property case which may involve some of that other stuff, but I don’t want to deal with that. So for me I just refuse the real property stuff and just take the estate planning, the elder law, the probate and those areas.
Laurence Colletti: So I’m going to put my attorney hat on for a second and obviously as attorney I care about my clients I have a responsibility to them and critics of utilizing insurance models to pay for certain types of services would say that, probably the purest in terms of the interaction between the service provider and the person buying the service is that one-on-one relationship where the client cares both about the price and the quality and so when you start introducing intermediaries for this transaction to take place like an insurance company, now the client says that well I don’t really care how much it costs I just want to be high quality.
In turn the insurance provider as long as everything’s paid for they may not be as concerned about the quality of the provider and maybe not so much dialed in for the cost because they’re dealing from a pool, it’s not coming from them personally and so how do you avoid those moral hazards when it comes to providing insurance for legal services?
Howard M. Rosenblatt: Okay. Well, I may want you to repeat part of the question so I am going to take the last part first. Provider is very, very concerned about the quality of the service because if the quality of the service isn’t any good and the client is upset and doesn’t have a good — and it’s going to badmouth the carrier, number one. Number two, he is going to bad-mouth and criticize the attorney the carrier referred him to.
Now the carrier cares about the quality and he wants or she wants, the carrier wants customer satisfaction because they want to expand and cover more people. The more people they cover the more profit they make because they know that only certain percentage will utilize their services of the people they have insured. So if you insure 5,000 people and 500, get a new will, you got 4,500 people who paid you for a service that they didn’t take advantage of. So the carrier definitely cares about the quality of the service.
Your second question about the customer caring about the cost, yes it does. The reason he cares about the cost is because some of the costs are his, costs are his fees are not. All the insurance company is paying for is the lawyer’s fees, not paying for the court costs, deposition costs, photocopying costs all those other costs are paid by the consumer, so the consumer does have a dog in the fight as the expression goes.
Laurence Colletti: Now in terms of like some of the more fixed costs, but obviously in that transaction the highest costs are going to be the lawyer’s time. So in a typical billable model the hourly rate, the attorney is going to be racking up at a billable hour rate and that is going to be most expensive component of legal representation not necessarily court fees and not necessarily a deposition or kind of a one-and-done thing, but the attorneys time which goes on and on is going to be your largest part of the bill generally speaking.
And so getting back to that moral hazard there, if the client is like, I pay 20 bucks a month I get this, I get the service provided for me what’s incentive for them and they don’t really care what it costs, let’s say to the insurance provider.
Howard M. Rosenblatt: No, but the attorney cares what it costs because the more time he puts in that he’s making less money than he could make otherwise, is a loser for him. So, the attorney functions as the backstop to keep costs down because the attorney only wants to invest three or four hours doing these things rather than 13 or 14 hours, because the insurance carrier is not going to pay for 14 hours.
The insurance carrier knows how long it should take to do a will, how long it should take to do a trust, how long it should take and then you start billing the insurance or telling the insurance company you took 17 hours and they’re going to start looking at you and saying you’re not going to be on the panel anymore, because you’re not efficient. So, that’s probably the safety may — you know, the clients may not care, but the attorney cares and the company cares and they keep an eye on each other.
Laurence Colletti: So I’m going to ask you one more difficult question just because I’m very interested and thank you for humoring me, I think some critics of health insurance, one of the relationships that they criticize similar to what we’re talking about is between the insured and the provider of healthcare insurance and when you separate them you lose that control on quality cost a little bit, it goes through an intermediary at the insurance company and as a result some people theorize that that’s why one driver of these you hear about these horrendous costs of surgery, the surgery cost $50,000.00, surgery cost $75,000.00 and the critics of it say there’s no way a surgery if you just billed directly would cost 50,000 or 75,000 because there’s no way a doctor could get it, there’s no mechanism to pay for it.
So, my question to you is let’s say this becomes very popular where most people are receiving their legal services being provided through insurance, are you worried about the overall costs being driven up to a point where it’s unsustainable if you go direct?
Howard M. Rosenblatt: No.
Laurence Colletti: Okay.
Howard M. Rosenblatt: I’m not and I’ll tell you why, because lawyers determine their fees based on what it costs them to run their operation, plus the amount of profit they want to get and I don’t think that’s going to change. The problem with medical procedures and why those costs are jacked up is because the government’s put so many regulations in that doctors have to hire two or three people who are non-medical people to do all the record-keeping to do all the reporting to do all this. I don’t see that happening in law.
Laurence Colletti: Now I’m going to push back and how do you — how do you see that not happening in law, I mean, aren’t most of our legislators are a good number of attorneys as well?
Howard M. Rosenblatt: Which is why I don’t see it happening in law.
Laurence Colletti: Okay. I just know when you get a bunch of lawyers in the room sometimes problems get more complicated than when they started, but —
Howard M. Rosenblatt: Well, that’s your subjective opinion. I go to bar meetings every year and we seem to work things out.
Laurence Colletti: Okay, fair enough, fair enough. I want to give you an opportunity to answer this last question here, the last substance question. So during our pre-game when you and I sat down together before this interview you talked about one of the — one of the issues you addressed or one of the questions you address in your presentation was how to make legal insurance profitable for the attorneys and so I wanted in closing up on this just want to give you an opportunity to speak on that.
Howard M. Rosenblatt: And that’s fine and I think that one of the things that I would remind you is the other thing I said was the primary thing is to provide access to the legal system for people who are not poor enough to qualify for legal aid and not rich enough to qualify.
And in order to make that real attorneys have to be incentivized to provide this service. For me it’s an ethical issue. I think that it’s a moral. Lawyers have the keys to the courthouse just like doctors have the keys to the hospital. I know how I feel when I have to go to the hospital and unfortunately I’ve had to go a few times in my life.
I want people who need to go to the courthouse to not be dissuaded from what they rightfully should do because of fear of costs and my expectation is that if we offer prepaid legal insurance they could do that. Now in order to do that you have to have enough people on the panel to offer that service so the way you incentivize them is a. You pay them something; b. You advertise their services, c. you let them know that their ability to get referrals from non-insured, from their insured’s clients for non-insured’s people will generate revenue for them.
If they do a good job for the insured client they will get a reference more often than not and it may take six weeks, it may take six months, it may take two years. I have an email from somebody who said I did work for them about three years ago and would I be able to see them, and of course, I’m down here in Boca at the Conference, I won’t be back till next week.
In the interim, I got a phone call from somebody last week who said that she was referred to me by them. Now mind you I haven’t seen them in five years but she was referred to me by them, so I did some legal work for her.
My answer to you is that you remind attorneys that they are either building their practice then they can use more client. Look if you’re working a 200-hour billable week, then you don’t have time to do this.
Most attorneys do not. So, most people want to grow their practices in the easiest way to grow it, is by attracting new clients, the easy way to attract new clients is to make it attractive for the new client to come, prepaid legal insurance makes it attractive for the new client to come.
Laurence Colletti: All right. Well it looks like we’ve reached the end of our program. I want to thank Howard for joining us today. Thank you, Sir.
Howard M. Rosenblatt: You’re welcome.
Laurence Colletti: So and if our listeners that they have questions, or they wish to follow up, how can they find you?
Howard M. Rosenblatt: Okay. This is Howard Rosenblatt. I am of counsel with Bogin, Munns & Munns. We have a website. So you can find me there, but you can also contact my office in Gainesville at 352-373-7100, or my email [email protected].
Laurence Colletti: That’s all the time we have for this episode of The Florida Bar Podcast. Thank you to our listeners for tuning in.
If you like what you heard, please rate and review us in Apple Podcasts, Google Podcasts, Spotify or best yet, your favorite podcasting app. I am Laurence Colletti, until next time, thank you for listening.
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