A Closer Look at Pre-Paid Legal Under Investigation – Why Is Pre-Paid Legal Under Investigation?

There are always a few shady claims concerning network marketing companies. But the claims against Pre-Paid Legal, currently being investigated by the SEC concerning a recent merger with a New York based company, are based on fact rather than rumor.

The unfortunate truth is that Pre-Paid Legal is being investigated by a law firm, according to the New York Times, the Shareholders Foundation, and Reuters.

The Reasons for Pre-Paid Legal Under Investigation

In early 2011, Pre-Paid Legal (PPL) was purchased for approximately $650 million by a New York based private equity firm, MidOcean Partners. The company is now being investigated to determine whether the deal provides a fair price to the company’s shareholders – who each received $66.50 per share. Reuters reports that there also may have been conflicts of interest amongst the company’s board members.

Although this is a serious matter, it’s not a particularly life-changing event for many PPL representatives. The issue has little to do with memberships and the manner in which representatives conduct their day to day business.

Should You Still Join Pre-Paid Legal, Under Investigation?

For those looking into joining the PPL opportunity, it is of course important to educate yourself on the ownership of the company before joining. But ultimately, this is a legitimate opportunity that currently supports over 1.4 million households in both the United States and Canada. Their representatives help members join in on plans that can assist them in all kinds of legal matters, from property damage to moving vehicle charges to identity theft.

Perhaps the most important question for those considering joining PPL or a network marketing opportunity, involves being able to answer the tough questions concerning the company and the products. This is, fortunately, a skill that can be learned, just like public speaking and debate. There are several resources on the web that can be used to help increase your downline, even in the midst of the “Pre-Paid Legal Under Investigation” debacle.

For those looking to become successful in a network marketing opportunity, PPL is still a viable option. But more importantly, it’s crucial to learn how to answer tough questions when your company comes under fire, and put potential representatives at ease when offering them the opportunity to join in on a potentially lucrative opportunity like this.

Both new and seasoned network marketers should take the time to learn these skills, and build a business skillset that will help them sell their products and their company. Especially with an opportunity like PPL, currently under fire, it’s a good move to ensure that you’re prepared to deal with any and every question concerning the company you represent.

Selling For Millions – The Top 10 Essentials For A High Company Valuation

It’s a common aim for entrepreneurs when they start their business. Building it up and selling it for at least a million, or maybe even multiple millions.

It’s certainly possible and many people have achieved the magic number but for every one that does there are thousands who never make it even close and never quite work out why. So what are the common factors in a multi-million pound sale? Here are the top 10 factors that contribute towards achieving that goal.

1. Multi-Million Sales And Profits

It may be obvious but this is the traditional and still the best real way to achieve a multi-million exit. That’s not to say it’s easy, you need to work hard to get to one million’s worth of sales and even harder to get to the next ten million. However, if you can achieve multi-million pound profits then your chances of a multi-million sale of your company are greatly enhanced, although still not guaranteed as it depends on the type of business you’re in.

2. A Very Scalable Business

When a buyer is looking to acquire a business they are looking for the future potential that will come from that company. The price they pay is a reflection of what they expect the future returns from the business to be. This means that the greater the potential of your business the greater the value. And the most important element in that potential is how easily the business can grow, its scalability. If your business is wholly dependent on you doing all the work because you have very specialist skills then there is a definite restriction on how much the business can grow as you only have 24 hours in the day. If you have a product or service that can be easily replicated at a low cost (e.g. software) then the company can grow far more easily with limited additional expenditure. This makes your company much more valuable because it has far greater potential for growth.

3. Valuable IPR

Businesses that achieve high valuations often have very strong Intellectual Property Rights (IPR). These are the patents, copyright, trademarks and legally protected inventions and brands that the company holds. If you have intellectual property that is legally protected so that other companies can’t easily copy it, then you benefit from scarcity value. If you have good IPR then it means customers have to come to you for the product or service, which makes what you’re selling more valuable. Large corporations and VCs like to acquire strong IPR with a company as it gives a greater justification if a high price is paid and it gives them exclusive access to the rights. It can be tough to achieve the higher valuations you want without IPR.

4. A Desirable Customer Base

Sometimes a company is bought simply to provide the buying company with access to the customer base. The alternative is for the buyer to generate the sales and customer base themselves but this takes time. If you have a loyal customer base of regular, high spending, credit worthy clients, then the value of your business is significantly enhanced. A buyer will be looking to see what value they can get from selling their products and services to your customers and they will also have expectations of increasing the value of sales to those customers. And that could mean millions for them and for you.

5. A Hot Sector That’s In Demand

This can be one of the best ways of achieving a high sales value but it’s very challenging to get the right sector at the right time and find the right buyer. For all the Facebooks and Bebos that get it right, there are many thousand also-rans who didn’t catch the market’s imagination. It’s not necessarily about being first but it’s about being early, fast growing and getting attention from the right people.

6. A Great Brand

If your company has spent significant time and money generating a very strong brand in the market and your brand name is the first one that people think of in your sector, then your chances of a high price sale increase significantly. Brands have huge value to businesses as they can keep customers coming back, through brand loyalty, and attract new customers, through brand recognition. The brand may be the most popular or it may be associated with high value, bringing higher value customers with it. Again, it can be a challenge to create a really strong brand but if you succeed the value can be huge.

7. Exclusive Rights

If your company has the exclusive, legally enforceable, rights to a territory then they can be worth a significant amount to a buyer. If your competitors can’t break into a particular geographic market because you have an agreement with a supplier that no-one else can sell their products or services in that territory then they will often want to buy you simply to gain that access. The alternative for a competitor could be that they have to ignore that whole territory or country which could bring down their own valuation. Whilst you should never over-pay (ideally you shouldn’t pay much at all) for exclusive rights, they are well worth having if you can agree them.

8. Highly Successful Marketing & PR

Sometimes a business achieves a high valuation purely on what appears to be hype and promotion. This is about being in the public domain and getting noticed. It’s certainly a lot harder to achieve a multi-million pound exit when no-one has heard of you. Of course, if you really want to get all the way to completing an exit you will ideally need to have a decent business to back-up the marketing, although it’s been achieved before without much substance. Getting your company known through marketing and PR should be a natural goal of the business anyway, as it generally allows you to sell more if done properly. However, it can be a dangerous route to start marketing programs just to gain the attention of people who might want to buy your company and you should always carefully measure the effectiveness of any campaign.

9. A Great Balance Sheet

If your business has a very strong balance sheet, with lots of assets and not so many liabilities, then you can achieve a multi-million sale of the business just on that basis. Generally, this will mean that you have achieved one or more of the other options in this list already, particularly the high sales and profits one. Another way of looking at this is that you are less likely to walk away with a multi-million deal if you have a very weak balance sheet that is burdened with debt. If you’ve had to borrow a huge amount to get your business to its current state then when you sell you can easily find all the money just goes to pay back the debt and you’re left with very little in the end. The stronger your balance sheet, the better your chances of a good deal that pays your millions when you sell.

10. Something To Plug The Gap In A Large Corporate

This covers a few of the previous factors because it really comes down to a large company asking themselves whether it would be best to spend the time and money to build up a customer base, brand, IPR and revenue stream themselves or whether it is better to just buy it ready made. Generally, this solution works for niche businesses that focus in a very specific area. Large companies will often conduct strategy reviews that look at how they are serving their customer base with a particular set of products or services. This will often give rise to a gap in the service offering that they will want to fill to provide a full service. If you have the business that fills that gap and you can get yourself in front of them, there can certainly be a multiple million sale on the cards.

Overall, all these factors will benefit your business whether you want to achieve a multi-million sale of your business, whether you want to create a great lifestyle business or whether you just want to create something you can be proud of. And on the way it will allow you to create jobs, boost the economy and benefit your local community. And if you sell for a large sum, just think of all the good you could do with that, along with maybe just a few small treats for yourself.

Rising Legal Costs – A Solution

1.0 Background

Globalization has brought tremendous changes in the global business arena and the BPOs and later LPOs are the direct offshoot of it. LPOs have come into being in India and elsewhere in the world primarily to cater to the clients of US and other developed nations as far as the legal processes are concerned to not only provide quality service but also to reduce the legal costs. In the past decade or so, a good number of LPOs have opened their businesses in India and in the light of rising legal costs and in order to find a workable solution to it we need to examine the issue in detail.

1.1 A Few Illustrations

Cisco’s Systems Inc., is a company that sells networking products, routing and switching systems. The company has a total legal spending that amounts to a little over one-third of 1% of company revenue, with non-litigation expenses running at about 0.16%. Measured in terms of dollars, Cisco’s 170-member lawyer department spends $38 million internally and $80 million a year on outside counsel. The $32.8 billion company has 51,000 employees spanning across 80 countries. (Leslie A. Gordon in GC California Magazine Published in their website http://www.law.com.) Microsoft managed to reduce its legal costs for the last fiscal year but still the company is involved in lot more litigation matters in Europe (Todd Bishop in P-I reporter). It would be an interesting scenario to collect the info pertaining to each US Company’s annual spending on the legal costs. It will certainly not please those who manage the companies, not in the least the shareholders.

2.0 Existing Arrangements

There are certain existing arrangements in place to deal with the issue of legal costs. The arrangements include in-house counsel department for every company. The in-house counsel takes care of all the legal matters pertaining to the company he works for and he also depends on outside counsels for the same. It would be appropriate if we understand the roles played by the in-house counsels and outside counsels vis-à-vis the legal costs.

2.1 In-house Counsels

The American Bar Association developed a model rule on foreign legal consultants (FLCs) in 1993. FLCs offer legal advice on international law and the law of the countries in which they are qualified to practice if they meet certain requirements. American Bar Association recently endorsed recommendations of its Commission based on Multijurisdictional Practice (“MJP Commission”) including revisions to the ABA Model Rules of Professional Conduct (“Model Rules”) regarding unauthorized practice, jurisdiction to discipline out-of-state lawyers, and choice of law rules governing multistate representation. These revisions are currently being examined and awaiting for the implementation. U.S.lawyers, seeking to increase their opportunities to offer their services overseas for liberalization of admission requirements under the General Agreement on Trade in Services (GATS) including both inbound and outbound of trade of U.S In August 2006, the Committee on Professional and Judicial Ethics of the Association of the Bar of the City of New York (“the Committee”) which published a Formal Opinion stating attorneys could ethically contract out legal support services abroad.

American Conference Institute (ACI) announced to hold an LPO Summit at the Grand Hyatt Hotel in New York on January 16 and17, 2008 to develop global legal support strategies, identify negotiating outsourcing contracts, and to optimize ongoing relationship

2.2 Problems and Challenges

Both the risks and exposures an in-house counsel faces are pronouncedly greater in comparison with the other lawyers as the in-house counsels are concurrently encumbered with the task of providing valuable legal advice while ensuring compliance to the law. In-house counsels face this daunting task in a scenario where the activities of the company are inherently interconnected with the legal tasks at hand. To top it all, in-house attorneys were confronted with a myriad of potential exposures. These legal tangles include $307 of SOX; backdating stock options; new Rules of Federal Civil Procedures regarding electronically stored information; the McNulty Memorandum; Federal Rules of Evidence 502; liability to outside third parties; investigating boardroom leaks; and multi-jurisdictional practice and licensing.

2.3 Outside Counsels

Similarly, in-house lawyers are increasingly asking the law firms on hire to submit estimated budgets so they can trim down the costs of legal work especially when defending themselves against lawsuits. Companies have long asked for budgets from their lawyers for business transactions and for more conventional types of legal work. But with pressure mounting on them to report higher earnings, the in-house lawyers must now monitor their legal expenditures and they want their outside counsel to follow the suit as well.

The “2007 ACC/Serengeti managing outside counsel survey report” (www.serengetilaw.com) shows an average increase of 5.3% in the billing rates by outside counsel during the period from 2002 to 2007.

Billing issues have always been a war zone between the in-house and outside counsels. The popular “hourly billing” method comes with its own disadvantages. It often impacts legal costs negatively as it lays more emphasis on the delivery of the work rather than on the qualitative aspect which can eventually have an adverse effect on client relationship.

2.4 Some Key Challenges

The Legal Service Act 2007 of UK, permits legal out sourcing, is a boon t. Indian law graduates who can easily cope with England Legal work. The WTO in July 1998 noted a combined net trade balance for the U.S. and the U.K., the two largest exporters of legal services.

With associate lawyers in the US carrying a price tag of $225 per hour in their first year and $450 an hour in their eighth year. It was only a matter of time before law firms sought to outsource some of their countries like India, where the lawyers need to pay a price of 10 to 15% of that of US lawyers and a turnaround time of 24 hours for outsourced work. Legal Services Off shoring (LSO) which is an in-house legal departments or organizations offshore legal work from areas where it is costly to perform in United States or Europe is decreasing rapidly and on the other end in Indian services on high demand.

Criminal defense specialist and former Assistant United States Attorney Jay Ethington assure that “There is no difference between Indian and American advocates. The quality of work is the same”.

Outsourcing legal work to India is beneficial to western countries due to

3.0 What ails legal costs?

Despite taking all kinds of measures the ailment of over-expenditure continues in a company. Corporate entities, in-house counsels
and outside counsels, all seem to be caught in an escalating web of legal budget.

Budgets are the chief pointers to know whether in-house and outside counsels are thrashing out strategic issues and activity levels in a fruitful manner before litigation starts. They also act as parameters against which progress of the team and the expenses while handling complex legal questions and issues faced by it can be gauzed.

In a study conducted by Inside Counsel in its 17th Annual Survey of General Counsel (Published in the July 2006 issue of InsideCounsel), some 407 in-house counsels and 131 law firms felt that most of the friction between law firms and their in-house counsels can be attributed to the costs. Undeniably, when it comes to fiscal matters, the perceptions of the two groups could hardly be more divergent. 52% of in-house counsels identified ‘reduction of costs’ as the most significant thing law firms could do to develop their rapport with in-house counsel.

3.1 An interesting study

A study carried out by ACCA (now renamed ACC) has shown that despite taking measures, cost controls are failing to cut overall legal spending. The ACC survey shows that in-house counsel relies heavily on outside counsel in key areas such as litigation (69%), intellectual property (45%) and employment (45%). And as salaries for junior law firm associates continue to spiral upward, along with hourly billing rates for associates and partners alike, general counsel must manage with increasing legal fees.

The Way Out!

The only viable and durable solution on the horizon appears to be legal outsourcing which is more beneficial to the US and other western companies not only in the short run but also over a period of time.

4.0 A Few Issues!

Certain issues came up after the legal process outsourcing has begun in India and elsewhere in the world. Certain myths are also doing the rounds and it would be a mistake to attribute them to unbiased minds alone. In the light of newer issues let’s examine them as objectively as we can.

4.1 Outsourcing to India affects US employment

here is no valid data to prove that legal outsourcing to India will affect the employment in the US. According to a study by Forrester Research, the current annual value of legal outsourcing to India is at about US$80 million, but this can rise to US$4 billion, and would provide 79,000 jobs by 2015. This makes the present job absorption in this sphere-which is a mere 12,000-appear minuscule (http://www.blogsource.org/2005/11/india_could_abs.html). A study conducted earlier this year by Robert Half Legal (www.roberthalflegal.com) points that more stress is put on legal expertise in areas of compliance, regulatory issues, litigation, intellectual property and real estate. This increased demand will considerably outpace the rate of the entire legal outsourcing market.

These are mere forecasts. Even if such forecasts are completely believed, the amount of legal work that is off-shored will still remain 2% of that projected total and that too a major chunk of that constitute low-end work. Moreover it is widely reported that the population of the US is aging. At current productivity levels, it will need 5 percent or to put it simply, 15.6 million more workers by 2015 to maintain both its current ratio of workers to the total population and to sustain its present living standards. By 2015, despite current fears about job losses as a result of off-shoring, the US economy will certainly need more workers. Off-shoring is surely one way to meet that need. So all those doubting Johns who hold a pessimistic view on outsourcing legal services will be better off remembering that even after a substantial amount of work is outsourced from the US there is no threat to its economy.

4.2 Competence of Indian lawyers

The competence of the Indian lawyers can be judged not from the fact that quite a number of advocates are being produced annually but from the fact that they are the pillars, strong pillars at that, for the gigantic judicial system prevailing in India matched only by the US in its magnitude and dimensions. There is not a single legislation in the US that is not made in India barring a few that is not subject to intricate and in-depth interpretations by the lawyers and the judges. Many landmark judgments in India were and are possible due to the presence of the highly agile and competent lawyer force. The ease with which they can tackle any legal issue pertaining to any country where common law is prevailing is predictable and natural. The fact that the BPOs in India which are a runaway success are gradually paving way for the LPOs or at least LPOs are increasingly occupying the centre-stage in the outsourcing business in India with growing number of clients from the US and other countries speaks volumes about the ability and competence of the Indian lawyers.

4.3 Quality output

Apart from economical costs another important factor for the US or other western country to outsource their legal work is the quality output they are assured of in India. It is an admitted fact that in most cases quality takes precedence over many other factors like cost-effective services, abundant workforce etc.

4.4 Safety and Confidentiality

Nowhere else does the issue of safety and confidentiality come up so constantly as in the field of law. And, when it comes to the LPOs the task of providing quality services to their global clientele should be matched by stringent safety and confidentially measures in order to earn their confidence and goodwill. There are of course competent and professionally run LPOs in India that adhere to the safety and confidentiality norms.

5.0 Separating the wheat from the chaff!

There are a good number of LPOs in India now and a report says 1800 lawyers are presently engaged in various LPOs catering to the global clientele providing quality services. It becomes quite a task to choose the best from among them. However, with stringent objective criteria the task becomes easier and then it will not be a Herculean task to select the best LPO to whom any legal service can be entrusted in confidence. The parameters can be-

Quality output
Security and confidentiality
Cost-effectiveness
Easy accessibility
Hassle-free and client-friendly billing

Its website (www.acumenlpo.com) can be scanned for further details.