If you are looking into the business opportunity that Legal Shield offers you may have come across a fair amount of negative attention that this company has received for allegedly being a pyramid scheme. But what is the truth here? Is Legal Shield a pyramid scheme or is this just a baseless rumor that you should pay no mind to?
First let me start off by saying that this is not just a baseless rumor. There is a lot about Legal Shield’s business model that that resembles a pyramid scheme, yet it does not amount to one. I know this may sound confusing to you but I’ll explain it all.
Legal Shield Overview
Legal Shield came about in 2011 but was just a rename of Pre-paid Legal, which has been around since the 1970’s. Their mission is to make affordable attorneys available to anyone who needs one. They offer a variety of attorney assistance plans based on your personal needs.
But obviously that isn’t the reason you are here reading this post. You are here because of the business opportunity that they offer. Legal Shield uses what you call a direct sales business model. This means that all of their marketing and sales come from independent representatives. Anyone can join in as an independent rep and make money selling Legal Shield plans to customers. Alternatively they can also make money by recruiting other independent reps into the company where they will earn commissions off of their efforts. This is the multi-level marketing side of the company which is somewhat shady and resembles a pyramid scheme very much.
The MLM Compensation Plan
As an associate of the company there are 2 main ways that you can make money. You can of course make direct sales, where you personally sell one of LegalShield’s products to a customer, and, you can recruit other associates into the business below you, earning money from their sales.
Everyone that makes good money as an associate knows darn well that in order to do so you are going to need to recruit as a priority. The obvious reason is because the more people you get in your downline the more people you will be earning commissions from. But the not so obvious reason is because there are ranks within this business and in order to climb the ranks and make as much money possible you are going to have to recruit.
The six ranks of LegalShield include…
- Junior Associate
- Senior Associate
- Executive Director
When you start out at Junior Associate you will only make $50 per sale but if you climb your way up to Executive Director you will be making $182.50 per sale.
I’m not going to get into all the little details of what it takes to move up the ranks. But what you need to know is that to move up you will either be required to have a certain number of associates in your downline, or you will need a certain amount of “organizational sales”, which are the sales that come from you and your downline. So either way you look at it you are going to need to increase recruitment to move up.
So Is This a Pyramid Scheme?
When it comes to companies like this that operate under a mlm business model it can get confusing. The line between what is an illegal pyramid scheme and what is a legit mlm can somewhat be blurry.
You would think that LegalShield would of course be legit because they have been around for a while and the government still hasn’t stepped in to shut them down. However, its happened before to seasoned companies and it could happen again.
For them to be considered a pyramid scheme their revenues would have to be overly dependent on recruitment rather than product sales to the general public. So the questions is are they? That is up to SEC to decide. And as for now I would say they are legit.
They do rely on product sales to the public for sure, its just a questions of whether they do so enough.
Although I can say for certain whether this is a pyramid scheme or not, one thing is for darn sure… this is not the amazing business opportunity that you may have heard about. The bottom line is that only the top few of associates go on to make good money. These are the people that recruit like crazy. And those at the bottom stay broke with the false dreams they were sold from the associate that recruited them in to begin with.
Not many people actually make good money and associates are often inclined to recruit as much as possible which often leads to somewhat deceptive recruitment strategies.
Some people will join and go on to make great money but most will not. I’m not calling it a bad or terrible business. I just want people to know the reality of it.
Anyway… that is it for this post. I’m tired of writing about this place. If you have any comments, questions, or concerns make sure you leave them in the comment section below. 🙂