But while employers are shying away from prepaid legal services, they are offering workers an alternative: access to legal counseling and referrals to attorneys as part of simpler, less expensive assistance programs, legal benefits experts say.

One reason for the market shift is that few employees use the benefit when it is offered to them. Paul Kluding, a spokesman for legal insurance provider Arag Group, says 10 percent to 15 percent of employees purchase legal insurance if their employer makes it available.

"The reality of the matter is that not many employers are going to pay for [legal insurance] because the take-up rate is very low," says Adam Gotskind, corporate counsel and manager of legal products at ComPsych, a Chicago-based employee assistance program provider. "What’s the point of dealing with it?"

Though legal troubles are about as likely as health problems--the American Bar Association says seven out of 10 Americans will need a lawyer at some point during the year--the legal insurance industry must also contend with public aversion toward lawyers and the legal system.

"Most people don’t want to say, ‘Probably by September I’m going to declare bankruptcy’ or ‘My wife is going to leave me in six months,’ " Gotskind says.

Kluding argues, however, that the cost of an attorney and the complexity of the justice system will inevitably interfere with a person’s ability to focus on work.

"Work/life issues can be extremely stressful and confusing," he says. "It’s not something they are going to leave at home when they go to work."

Legal insurance plans vary, as do their premiums. Less expensive plans cost employees about $5 a month and offer to reimburse a percentage of a person’s legal fees. More robust plans, which run about $15 a month, offer a network of attorneys as well as legal counseling over the phone. For employers, the cost is usually in having to administer a new benefit.

The University of North Carolina at Wilmington offers its 1,600 employees legal insurance that partially reimburses legal fees, but only 75 people, paying $7.50 a month, have enrolled, says JoAnn McDowell, the university’s benefits manager. McDowell is not convinced legal insurance saves time for the employee or the employer, which must make payroll adjustments and understand the benefit well enough to explain it to employees. Often, she says, the plans can be complex.

"Sometimes people who buy it need legal assistance just interpreting the fine print," McDowell says. "No one has convinced me yet that there is a huge savings for the employer."

Most companies are choosing a less expensive middle ground by including legal counseling and education over the telephone as part of their employee assistance program. Gotskind says three-quarters of companies have a legal program as part of an EAP, which is free to employees and inexpensive for a company. The telephones are staffed by attorneys who help dissect a person’s problem to see if they need a lawyer or have underlying issues, like a need for day care or financial counseling. Referrals to a network of local attorneys often come with a 25 percent discount on attorney fees and 25 to 30 minutes of free first consultation.

Gotskind says the most popular questions to his legal hotline are about divorce, including child support and visitation issues. Landlord-tenant problems are the second most frequent issue raised, followed by bankruptcy and estate planning. ComPsych also includes information about how to prevent identity theft. Identity restoration, however, is a separate product that will cost companies extra.

Kluding agrees that legal counseling programs, unlike legal insurance, are growing. In 2003, the company bought a competitor, ACS Law Phone, to compete in the market and to act as a steppingstone for employers that might one day offer a full-blown insurance product. One legal problem may be all it takes to convince someone that a lawyer is as necessary in our society as a doctor is.

—Jeremy Smerd