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Ready or not, here comes pre-paid legal insurance lawyer in every home By Rod Davis The “major legal” pays 80 percent of $5,000 in fees beyond the $500 for court appearances. Currently, the plan is available only to groups, but coverage for individuals is in the works. Employers can pay varying percentages of premiums, and, under terms of a new federal law, coverage is not subject to tax as a fringe benefit. Moreover, employers can deduct premium contributions as they do for employee health insurance. TLPP has actively marketed its program for ten months, but so far without much successonly two companies have signed up. One is Jackson Manufacturing of Dallas and the other is the State Bar. Doug Richnow, executive vice president of TLPP and its chief lobbyist, predicts a sharp gain in policyholders this year. Because of the attraction the plan holds for both labor and management as a fringe, it is expected to hit Texas bargaining tables when union contracts come up for renewal. Richnow is also lobbying to win permission for state employees to deduct prepaid legal insurance along with other checkoffs. The Ross Perot connection TLPP is a curious legal animal. Richnow insists it is separate from the any changes in the corporate charter of TLPP must be approved by directors of Richnow and his secretary are paid through a $40,000 subordinated debenture from the Bar. Richnow says the TLPP is the “alter ego” of the Bar, but that “we [TLPP] are not trying to use the name of the State Bar to promote our program.” To date, TLPP has not been challenged as, in effect, an insurance company with close links to a state agency. Neither the State Insurance Board nor the Attorney General sees a problem here. The other curiosity about the TLPP is that it is in the red. Until it can attract more clients, its chief income is the loan from the State Bar and a sort of percentage contract with EDS, Inc.Ross Perot’s huge data-processing company in Dallas, which also handles Blue Cross 44 and various government contracts. EDS is the management arm of TLPP. Although non-lawyer Richnow and a secretary are in Austin, EDS maintains a fulltime staff of seven in Dallas, concentrating on marketing and the administration of claims. “We are assuming the project will go,” says Ernie Rosenthal of EDS. When and if it does, EDS will be allowed to recover its costs and a profit under a flexible percentage for TLPP “expenses.” The State Board of Insurance can adjust the “expenses” percentage as well as premium rates as necessary to keep TLPP nonprofit. Neither Rosenthal nor Richnow could say how long EDS will handle TLPP on a deficit basis in expectation of future profits. The Insurance Board isn’t concerned, as it normally might be, about an unprofitable insurance program. For one thing, EDS is carrying its own burden; for another, policyholders are protected even if TLPP should fail. Under the TLPP charter, lawyers who agree to offer services in effect underwrite themselves. TLPP routes legal services to clients from a pool of attorneys who sign up with the plan. There are about 1,500, but any licensed attorney can get on the Attorneys on the panel agree that if for any reason TLPP takes the gas they will complete their obligation to policyholders. In event of failure, anyone with TLPP coverage would get his or her money’s worth. The only losers would February 25, 1977 9