Pre-Paid Legal Services, Inc. Announces Litigation Development

18 September 2006

Pre-Paid Legal Services, Inc. (NYSE: PPD) today announced that we reached a settlement agreement with counsel for the more than 400 plaintiffs in numerous pending cases in Mississippi. Upon closing of the settlement for an amount significantly less than our accrued reserves of $2.5 million, all pending litigation against us will be resolved including the Barbara Booth v. Pre-Paid Legal Services, Inc. case in which a verdict had been decided in favor of the plaintiff for punitive damages in the aggregate amount of $9.9 million against us and our chief executive officer. Consummation of the settlement and dismissal of the lawsuits is subject to approval of the individual plaintiffs.

"This resolution eliminates the distraction and costs of litigation and allows us to focus on our core business," said Harland C. Stonecipher, Chief Executive Officer.

About Us

We develop, underwrite and market legal service plans across North America. The plans provide for legal service benefits, including unlimited attorney consultation as well as letter writing, document preparation and review, will preparation, traffic violation defense, automobile-related criminal charges defense and a general trial defense. We also market an identity theft protection plan. More information can be located at our homepage on the worldwide web at http://www.prepaidlegal.com .

Forward-Looking Statements

Statements in this press release, other than purely historical information, regarding our future plans and objectives and expected operating results, dividends and share repurchases and statements of the assumptions underlying such statements, constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. The forward- looking statements contained herein are based on certain assumptions that may not be correct. They are subject to risks and uncertainties incident to our business that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described in the reports and statements filed by us with the Securities and Exchange Commission, including (among others) those listed in our Form 10- K, Form 10-Q and Form 8-K, and include the risks that our membership persistency or renewal rates may decline, that we may not be able to continue to grow our memberships and earnings, that we are dependent on the continued active participation of our principal executive officer, that pending or future litigation may have a material adverse effect on us if resolved unfavorably to us, that we could be adversely affected by regulatory developments, that competition could adversely affect us, that we are substantially dependent on our marketing force, that our stock price may be affected by short sellers, that we have been unable to increase our employee group membership sales and that our active premium in force is not indicative of future revenue as a result of changes in active memberships from cancellations and additional membership sales. Please refer to pages 14 and 15 of our 2005 Form 10-K and pages 7 through 9 of our June 30, 2006 Form 10-Q for a more complete description of these risks. We undertake no duty to update any of the forward-looking statements in this release.

Source: prnewswire

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