The North Carolina State Bar is charged with registering prepaid legal services plans (“prepaid plans”) in North Carolina. A prepaid plan must be registered with the North Carolina State Bar before it can operate in North Carolina and before a North Carolina licensed attorney can provide legal services to participants in the prepaid plan. (See North Carolina General Statute Section 84-23.1.)
Definition of Prepaid Plan
A prepaid legal services plan or a group legal services plan is defined as any arrangement by which a person, firm, or corporation, not otherwise authorized to engage in the practice of law, in exchange for any valuable consideration, offers to provide or arranges the provision of legal services that are paid for in advance of the need for the service (“covered services”). In addition to covered services, a prepaid plan may provide specified legal services at fees that are less than what a non-member of the plan would normally pay. The legal services offered by a prepaid plan must be provided by a North Carolina licensed lawyer who is not an employee, director, or owner of the prepaid plan. A prepaid plan does not include the sale of an identified, limited legal service, such as drafting a will, for a fixed, one-time fee.
Registration Is Not Regulation
The North Carolina State Bar does not approve the prepaid plans registered with its office. The registration of any prepaid plan shall not be construed to indicate approval of the prepaid plan.
In addition, the North Carolina State Bas has no authority to regulate prepaid plans. However, the North Carolina State Bar does regulate the conduct of the lawyers who provide legal services to the participants in the prepaid plan.
27 NCAC 1, Subchapter E, Section .0300 contains the rules concerning prepaid legal services plans and should be read in its entirety.
Procedure for Registering a Prepaid Plan
The initial registration process for prepaid plans is as follows:
1. An initial registration statement must be submitted to the North Carolina State Bar, addressed to Prepaid Plans Counsel, PO Box 25908, Raleigh, NC 27611. The initial registration fee is $300 and non-refundable.
2. Upon receiving an initial application for registration, the State Bar’s staff counsel will provide the plan owner or sponsor with an estimate of how long it will take to make a determination as to the plan’s registration.
3. The State Bar’s prepaid plans counsel will review the plan’s initial registration statement to determine whether the registration statement is complete and the plan, as described in the registration statement, meets the definition of a prepaid legal services plan and otherwise satisfies the registration requirements provided by Regulation .0304.
4. North Carolina General Statute Section 84-23.1 requires that all prepaid plans registered with the North Carolina State Bar submit its plan information to the North Carolina Department of Insurance for a determination of whether the prepaid plan should be regulated by the North Carolina Department of Insurance.
Annual Renewal of Registration
The annual registration process of prepaid plans is as follows:
1. Annual registration renewal forms are mailed to registered prepaid plans in early to mid-October of each year. The annual registration renewal form can be found here.
2. The annual renewal registration form and an annual registration fee of $300 are due on or before January 31. The annual registration fee is non-refundable.
3. The prepaid plans counsel will review the prepaid plans’ annual renewal registration material to determine whether all annual registration information and the annual registration fee have been received.
4. The prepaid plan will be notified of its compliance with the annual registration procedure.
Revocation of Registration
A prepaid plan's failure to comply with the rules as set out in Section .0300 may result in revocation of its registration. See Regulation .0312 regarding the revocation of registration a prepaid plan.
Registration of Amendments
1. All amendments to prepaid plans shall be filed with the State Bar no later than 30 days after the adoption of the amendments. The amendments must be submitted in the same manner as the initial registration on a form provided by the State Bar. The amendments may not be implemented until the amended plan is registered in accord with Rule .0306. The form used to register amendments to prepaid plans can be found here.
2. The prepaid plans counsel shall notify the plan owner or sponsor of the State Bar’s action regarding registration of the amendments within 60 days of receipt of the amendments.