Sued? Group legal insurance could pay for your lawyer

The smorgasbord of ''cafeteria benefits'' available to workers at many US companies may soon be getting one item longer.

The new item on the menu is group legal insurance. On top of life, medical, and dental insurance, additional days off, and a number of retirement savings programs, employees could use part of their benefits package to pay for an insurance policy to cover a variety of lawyers' bills. These might include wills , real estate closings, divorces, adoptions, and some civil and criminal work.

If approved by the state insurance commissioner, the newest group legal insurance programs would be sold in Massachusetts by the Prudential Insurance Company and the John Hancock Mutual Life Insurance Company, two of the nation's largest insurance firms.

While Massachusetts is the first state for Hancock, Prudential has been selling legal-insurance policies in a few other states, including California, Pennsylvania, and New Jersey, a spokesman said.

A number of other companies already have group legal-insurance programs, a spokeswoman for the American Bar Association said. One is Chrysler, which has had such an agreement with the United Automobile Workers for several years, she said.

In some cases, the ABA official said, these programs are underwritten by the companies or the unions together or by one of them alone. Blue Cross has also carried some group insurance coverage, she added.

Observers are divided over how popular group legal insurance will be, even if marketed by two such large firms.

''Let me put it this way,'' said Gerald E. Lewinsohn, vice-president with Merrill Lynch, Pierce, Fenner & Smith Inc., ''if you had a choice of spending $ 100 on legal insurance or getting more coverage in some other area, which would you choose? I don't think it will be that popular.

''Also, I think it's bad from a societal point of view. It will encourage more lawsuits. People will say 'What the heck, it's not going to cost me anything. I might as well sue.' ''

''I don't think it will increase litigation,'' disagreed John Biega, senior research consultant at John Hancock. One of the things Hancock's coverage will pay for, he said, is a toll-free telephone service where clients can talk to lawyers and get quick answers to many of their questions. ''By resolving problems early on, it should mitigate the use of lawyers,'' he added.

At Midwest Mutual Insurance Company of Des Moines, Iowa, legal insurance has been offered since the mid-1970s, said Deborah Terry, an administrator of the program. ''It started out slowly, but the enrollment figures have gone up steadily, primarily from word-of-mouth.''

If the programs become popular, said Carl A. Modecki, executive director of the Massachusetts Bar Association, they could negatively affect the legal profession in two ways. First, the simple cases covered by group insurance might lead to more complicated cases. Some of these could be lawsuits in which the lawyer is paid on a contingency basis, or a percentage of any award.

The other possible result, Mr. Modecki said, might be that some lawyers would ''gear up to do high-volume work,'' handling as many cases as they can in a workday. In this case, the quality of the legal work could suffer, he said.

But generally, he added, ''we're very positive about it. For people in the $ 12,000 to $25,000 annual income categories, there are many legal services they're not getting.'' The most obvious of these, he noted, are wills. A simple will usually costs only about $50, yet a small percentage of the people in this category have one.

Group legal insurance could not only make legal services available to people who have never used them before, Mr. Modecki said, it could also help provide work for many lawyers practicing in locations that are saturated with attorneys.

''This is another way of making legal services available to more people, which is something the ABA favors,'' the ABA spokeswoman said.

For now, Mr. Biega said, legal insurance will not be offered to individuals, at least until there has been some experience with it and the companies underwriting it can see exactly how much it will cost them.

Unlike life insurance, where companies have complicated and definite actuarial tables to tell them how long different groups of people are likely to live, there are no similar tables showing how often people are likley to sue and what the awards might be. ''We'll have to wait for a year or so of experience to find that out,'' Mr. Biega said.

At first, Hancock's coverage will only be offered in Massachusetts. But both Hancock and Prudential plan to expand it nationwide as quickly as possible. In some states, like California, the process of going through the insurance commissioner approval process can be done very quickly, Biega added.

''We had several of our (client) companies express an interest in being able to offer this to their employees,'' he said.