UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant [  ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential,  for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12

                          PRE-PAID LEGAL SERVICES, INC.
                (Name of Registrant as Specified in its Charter)

                                 NOT APPLICABLE
      (Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

     (1)  Title of each class of securities to which transaction applies:______.

     (2)  Aggregate number of securities to which transaction applies:_________.

     (3)  Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange Act Rule  0-11(set  forth the amount on which the
          filing fee is calculated and state how it was determined):___________.

     (4)  Proposed maximum aggregate value of transaction:_____________________.

     (5)  Total fee paid: ___________________.

[ ] Fee paid previously with preliminary materials.

[ ]  Check box if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the Form or Schedule and the date of its filing.

     (1)  Amount Previously Paid: __________________.

     (2)  Form, Schedule or Registration Statement No.: _________________.

     (3)  Filing Party: __________________________.

     (4)  Date Filed: ___________________________.





                          PRE-PAID LEGAL SERVICES, INC.
                                One Pre-Paid Way
                               Ada, Oklahoma 74820

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE HOLDERS OF SHARES OF COMMON STOCK:

     Our Annual Meeting of Shareholders  will be held in the Liberty  Auditorium
at our  corporate  offices  located at One  Pre-Paid  Way in Ada,  Oklahoma,  on
Wednesday, May 21, 2008, at 1:00 p.m., local time, for the following purposes:

     (1)  To elect two members to our Board of Directors;

     (2)  To ratify  the  selection  of Grant  Thornton  LLP as our  independent
          registered public accounting firm;

     (3)  To transact such other  business as may properly be brought before the
          Annual Meeting or any adjournment thereof.


     The Annual Meeting may be recessed from time to time and, at any reconvened
meeting,  action  with  respect to the matters  specified  in this notice may be
taken without further notice to shareholders unless required by the bylaws.

     Shareholders of record of Common Stock at the close of business on April 4,
2008 are  entitled  to notice  of,  and to vote on all  matters  at,  the Annual
Meeting.  A list of all  shareholders  will be available  for  inspection at the
Annual Meeting and, during normal business hours the ten days prior thereto,  at
our offices, One Pre-Paid Way, Ada, Oklahoma.

                             BY ORDER OF THE BOARD OF DIRECTORS

                             Kathy Pinson, Secretary

Ada, Oklahoma
April 4, 2008

Please vote by telephone or by using the Internet as  instructed on the enclosed
Proxy  Card or  complete,  sign and date the  enclosed  Proxy Card and return it
promptly in the envelope enclosed for that purpose. You may nevertheless vote in
person if you do attend the meeting.




                                TABLE OF CONTENT
                                ----------------


                                   Description
                                   -----------

QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
     When and where is the Annual Meeting?
     Why am I receiving these materials?
     Who can vote at the Annual Meeting?
     What am I voting on?
     How do I vote?
     How many votes do I have?
     What if I return a proxy card but do not make specific choices?
     Who is paying for this proxy solicitation?
     What does it mean if I receive more than one proxy card?
     Can I change my vote after submitting my proxy?
     How are votes counted?
     How many votes are needed to approve each proposal?
     What is the quorum requirement?
     How can I find out the results of the voting at the Annual Meeting?

PROPOSAL ONE ELECTION OF DIRECTORS
     General
     Corporate Governance Matters
     Compensation Committee Interlocks and Insider Participation
     Corporate Governance Guidelines and Communications with the Board
     Director Compensation

PROPOSAL TWO RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
  ACCOUNTING FIRM
     Audit Committee Report
     Audit and Other Fees

EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
     Executive Officers
     Compensation Discussion and Analysis
     Compensation Committee Report
     Summary Compensation Table
     Plan-Based Awards
     Stock Options
     Outstanding Equity Awards
     Option Exercises
     Equity Compensation Plans
     Nonqualified Deferred Compensation
     Defined Contribution Plan
     Other Potential Post-Employment Payments
     Change of Control

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ANNUAL REPORT TO SHAREHOLDERS

AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

PROPOSALS OF SHAREHOLDERS AND NOMINATIONS

OTHER MATTERS




                                 PROXY STATEMENT
                          PRE-PAID LEGAL SERVICES, INC.
                                One Pre-Paid Way
                               Ada, Oklahoma 74820

                       2008 ANNUAL MEETING OF SHAREHOLDERS


           QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING

When and where is the Annual Meeting?
Our 2008 Annual Meeting of Shareholders  ("Annual  Meeting") will be held in the
Liberty  Auditorium at our corporate offices located at One Pre-Paid Way in Ada,
Oklahoma, on Wednesday, May 21, 2008, at 1:00 p.m., local time.

Why am I receiving these materials?
We sent you this proxy  statement and the enclosed  proxy card because our Board
of Directors is  soliciting  your proxy to vote at the Annual  Meeting.  You are
invited to attend the Annual Meeting to vote on the proposals  described in this
proxy  statement.  However,  you do not need to attend the  meeting to vote your
shares.  Instead,  you may simply  complete,  sign and return the enclosed proxy
card, or follow the  instructions  below to submit your proxy over the telephone
or on the Internet.

We intend to mail this proxy statement and  accompanying  proxy card on or about
April 11,  2008 to all  shareholders  of record  entitled  to vote at the Annual
Meeting.

Who can vote at the Annual Meeting?
The record date for  determining  shareholders  entitled to notice of the Annual
Meeting  and to vote has been  established  as the close of business on April 4,
2008. On that date, we had 12,165,277 shares of Common Stock, par value $.01 per
share, outstanding and eligible to vote, exclusive of treasury stock.

Shareholder of Record: Shares Registered in Your Name
If on April 4, 2008 your shares were  registered  directly in your name with our
transfer agent, Computershare Trust Company, N.A., then you are a shareholder of
record.  As a  shareholder  of record,  you may vote in person at the meeting or
vote by proxy.  Whether  or not you plan to attend the  meeting,  we urge you to
fill out and return the enclosed  proxy card or vote by proxy over the telephone
or on the Internet as instructed below to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on April 4, 2008 your  shares were held,  not in your name,  but rather in an
account at a brokerage firm, bank, dealer, or other similar  organization,  then
you are the  beneficial  owner of shares  held in "street  name" and these proxy
materials  are being  forwarded to you by that  organization.  The  organization
holding your account is considered to be the  shareholder of record for purposes
of voting at the Annual Meeting.  As a beneficial  owner,  you have the right to
direct your broker or other agent on how to vote the shares in your account. You
are also invited to attend the Annual  Meeting.  However,  since you are not the
shareholder  of record,  you may not vote your  shares in person at the  meeting
unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?
There are two matters scheduled for a vote:

     *    Election of two (2) directors; and,

     *    Ratification  of  Grant  Thornton  LLP as our  independent  registered
          public accounting firm.

How do I vote?
You may either vote "For" all the  nominees to the Board of Directors or you may
"Withhold" your vote for any nominee you specify.  For each of the other matters
to be voted on, you may vote "For" or  "Against"  or abstain  from  voting.  The
procedures for voting are as follows:

Shareholder of Record: Shares Registered in Your Name
If you are a  shareholder  of  record,  you may  vote in  person  at the  Annual
Meeting,  vote by proxy using the  enclosed  proxy card,  vote by proxy over the
telephone,  or vote by proxy on the Internet.  Whether or not you plan to attend
the  meeting,  we urge you to vote by proxy to ensure your vote is counted.  You
may still  attend the  meeting and vote in person if you have  already  voted by
proxy.

         To vote in person, come to the Annual Meeting and we will give you a
ballot when you arrive.

     *    To vote  using  the proxy  card,  simply  complete,  sign and date the
          enclosed  proxy card and return it promptly in the envelope  provided.
          If you return your signed proxy card to us before the Annual  Meeting,
          we will vote your shares as you direct.

     *    To vote over the  telephone,  dial  toll-free  1-800-690-6903  using a
          touch-tone  phone and follow the  recorded  instructions.  You will be
          asked to provide  the  company  number  and  control  number  from the
          enclosed  proxy card.  Your vote must be received by 11:59 p.m. on May
          20, 2008 to be counted.

     *    To  vote on the  Internet,  go to  www.proxyvote.com  to  complete  an
          electronic proxy card. You will be asked to provide the company number
          and control  number from the  enclosed  proxy card.  Your vote must be
          received by 11:59 p.m. on May 20, 2008 to be counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial  owner of shares  registered in the name of your broker,
bank,  or other  agent,  you  should  have  received  a proxy  card  and  voting
instructions with these proxy materials from that organization  rather than from
us. Simply complete and mail the proxy card to ensure that your vote is counted.
Alternatively,  you may vote by telephone or over the Internet as  instructed by
your broker or bank. To vote in person at the Annual Meeting,  you must obtain a
valid proxy from your broker, bank, or other agent. Follow the instructions from
your broker or bank included with these proxy materials,  or contact your broker
or bank to request a proxy form.

 -------------------------------------------------------------------------------
|   We provide Internet proxy voting to allow you to vote your shares on-line, |
|   with  procedures  designed  to  ensure the authenticity and correctness of |
|   your  proxy vote instructions. However, please be aware that you must bear |
|   any costs associated with your Internet access, such as usage charges from |
|   Internet access providers and telephone companies.                         |
--------------------------------------------------------------------------------


How many votes do I have?
On each  matter  to be voted  upon,  you have one vote for each  share of common
stock you own as of April 4, 2008.

What if I return a proxy card but do not make specific choices?
If you  return  a signed  and  dated  proxy  card  without  marking  any  voting
selections,  your shares will be voted "For" the  election of the  nominees  for
director,  and "For" the  ratification  of Grant Thornton LLP as our independent
registered public accounting firm. If any other matter is properly  presented at
the meeting,  your proxy (one of the individuals  named on your proxy card) will
vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?
We will pay for the entire  cost of  soliciting  proxies.  In  addition to these
mailed proxy materials,  our directors and employees may also solicit proxies in
person,  by  telephone,  or by  other  means  of  communication.  Directors  and
employees will not be paid any additional  compensation for soliciting  proxies.
We may also reimburse  brokerage  firms,  banks and other agents for the cost of
forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than
one name or are  registered in different  accounts.  Please  complete,  sign and
return each proxy card to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting.
If you are the record  holder of your  shares,  you may revoke your proxy in any
one of three ways:

     *    You may  submit  another  properly  completed  proxy card with a later
          date;

     *    You may send a written  notice  that you are  revoking  your  proxy to
          PRE-PAID LEGAL SERVICES,  INC., One Pre-Paid Way, Ada, Oklahoma 74820,
          Attention: Kathy Pinson, Secretary.

     *    You may attend the Annual Meeting and vote in person. Simply attending
          the meeting will not, by itself, revoke your proxy.

If your shares are held by your broker or bank as a nominee or agent, you should
follow the instructions provided by your broker or bank.

How are votes counted?
Votes will be counted by the  inspector of election  appointed  for the meeting,
who will  separately  count "For" and  "Withhold" for election of directors and,
with respect to proposals other than the election of directors, "Against" votes,
abstentions and broker  non-votes.  Abstentions will be counted towards the vote
total for each  proposal,  and will have the same  effect  as  "Against"  votes.
Broker  non-votes have no effect and will not be counted  towards the vote total
for any proposal.

If your  shares  are held by your  broker as your  nominee  (that is, in "street
name"),  you will need to obtain a proxy  form from the  institution  that holds
your shares and follow the  instructions  included on that form regarding how to
instruct  your broker to vote your shares.  If you do not give  instructions  to
your broker,  your broker can vote your shares with  respect to  "discretionary"
items, but not with respect to  "non-discretionary"  items.  Discretionary items
are proposals  considered routine under the rules of the New York Stock Exchange
("NYSE") on which your broker may vote shares held in street name in the absence
of your voting  instructions.  On  non-discretionary  items for which you do not
give your broker instructions, the shares will be treated as broker non-votes.

Shares represented by proxies which are marked "withhold authority" with respect
to the election of any one or more  nominees  for election as directors  will be
counted for the purpose of determining the number of shares represented by proxy
at the  meeting.  Because  directors  are elected by a  plurality  rather than a
majority of the shares  present in person or  represented by proxy at the Annual
Meeting,  proxies marked  "withhold  authority"  with respect to any one or more
nominee will not affect the outcome of the nominee's election unless the nominee
receives no  affirmative  votes or unless other  candidates  are  nominated  for
election as directors.

Shares  represented  by limited  proxies will be treated as  represented  at the
meeting only as to such matter or matters for which  authority is granted in the
limited  proxy.  Shares  represented  by proxies  returned by brokers  where the
brokers'  discretionary  authority  is limited by stock  exchange  rules will be
treated as  represented  at the Annual Meeting only as to such matter or matters
voted on in the proxies.

How many votes are needed to approve each proposal?
Directors  will be elected by a plurality of the votes of the shares  present in
person or represented by proxy at the Annual Meeting.

For the ratification of Grant Thornton LLP as our independent  registered public
accounting  firm,  Proposal No. 2 must receive a "For" vote from the majority of
shares  present  and  entitled  to vote  either in  person  or by proxy.  If you
"Abstain" from voting, it will have the same effect as an "Against" vote. Broker
non-votes will have no effect.

All other matters  properly brought before the Annual Meeting will be decided by
a majority of the votes cast on the matter,  unless  otherwise  required by law.
What is the quorum requirement?

A quorum of shareholders is necessary to hold a valid meeting.  A quorum will be
present if at least a majority  of the  outstanding  shares are  represented  by
shareholders  present at the meeting or by proxy. On the record date, there were
12,165,277  outstanding  and  entitled  to vote.  Therefore,  6,082,639  must be
represented by shareholders present at the meeting or by proxy to have a quorum.

Your shares will be counted  towards the quorum only if you submit a valid proxy
(or one is submitted on your behalf by your broker, bank or other nominee) or if
you vote in person at the  meeting.  Abstentions  and broker  non-votes  will be
counted towards the quorum requirement. If there is no quorum, a majority of the
votes present at the meeting may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting
results will be published  in our  quarterly  report on Form 10-Q for the second
quarter of 2008.


                                  PROPOSAL ONE

                              ELECTION OF DIRECTORS
General

     Our Board of Directors  currently  consists of seven members and is divided
into three classes as nearly equal in size as possible,  with the term of office
of one class expiring each year. Based on the  recommendation  of the Nominating
Committee,  the Board of Directors  has  nominated  and proposes  that Martin H.
Belsky and Harland C.  Stonecipher,  whose terms as  directors  expire as of the
Annual Meeting of Shareholders  for 2008, be re-elected for three-year  terms as
directors.

     The election of a director  requires the affirmative vote of a plurality of
the shares of Common Stock  voting in person or by proxy at the Annual  Meeting.
All proxies will be voted, in the absence of  instructions to the contrary,  FOR
the  re-election of Martin H. Belsky and Harland C.  Stonecipher to the Board of
Directors.

     Should the  nominees  for  election to the Board of  Directors be unable to
serve for any reason,  the Board of Directors may, unless the Board of Directors
by resolution  provides for a lesser number of directors,  designate  substitute
nominees in which event all proxies received without  instructions will be voted
for the election of such substitute nominees.  However, to the best knowledge of
our Board of Directors, the named nominees will serve if elected.

     The  following  is  certain  information  about each of our  directors  and
nominee for director:



                                                                            Existing
                Name                        Age         Director Since    Term Expires
----------------------------------          ---         --------------    ------------
                                                                     
Martin H. Belsky..................          63               1998             2008
Harland C. Stonecipher............          69               1976             2008
John W. Hail......................          77               1998             2009
Thomas W. Smith...................          79               2004             2009
Orland G. Aldridge................          69               2004             2010
Peter K. Grunebaum................          73               1980             2010
Duke R. Ligon.....................          66               2007             2010






Martin H. Belsky
     Mr.  Belsky is currently  Dean of the  University of Akron School of Law, a
position he has held since January 2008. Previously,  Mr. Belsky was Dean of the
University of Tulsa College of Law from 1995 to 2004.  Subsequent to being Dean,
Mr.  Belsky was a professor of Law at the  University  of Tulsa  College of Law,
teaching courses in constitutional  law, ethics,  international  law, and oceans
policy until becoming accepting his current position at the University of Akron.

Harland C. Stonecipher
     Mr.  Stonecipher  has been the Chairman of our Board of Directors since its
organization in 1976 and served as Chief Executive  Officer until March 1996 and
since  February 1997.  Mr.  Stonecipher  also served as our President at various
times through January 1995 and since December 2002. Mr.  Stonecipher also serves
as an executive  officer of several of our subsidiaries and served as a director
of AMS Health Sciences, Inc. until December 5, 2005.

John W. Hail
     John  W.  Hail  is the  founder  of AMS  Health  Sciences,  Inc.  (formerly
Advantage  Marketing  Systems,  Inc.) ("AMS") and has served as Chief  Executive
Officer and  Chairman of the Board of  Directors  of AMS since its  inception in
June 1988 until  February 12, 2006.  AMS sells more than 60 natural  nutritional
supplements,  weight management  products,  and natural skincare  products.  AMS
filed a voluntary  petition  for relief  under  Chapter 11 of the United  States
Bankruptcy  Code on December 27, 2007. From July 1986 through May 1988, Mr. Hail
served as our Executive Vice  President,  Director and Agency  Director and also
served as Chairman of the Board of Directors of TVC Marketing,  Inc.,  which was
our exclusive  marketing agent from April 1984 through  September 1985. Mr. Hail
also serves as a director of InPlay Technologies,  Inc. (NASDAQ: NPLA) (formerly
Duraswitch Industries, Inc.).

Thomas W. Smith
     Mr.  Smith is the  largest  outside  shareholder  of the Company and is the
managing  partner  of  Prescott  Investors,  Inc, a private  investment  firm he
founded in 1973. He currently  serves as a director of SEI  Investments  Company
(NASDAQ-GS: SEIC) and Copart, Inc. (NASDAQ-GS: CPRT).

Orland G. Aldridge
     Mr.  Aldridge  retired  as a  professor  from  Northeastern  Oklahoma A & M
College in Miami,  Oklahoma in 2002 where he had been an  instructor  since 1999
and has been and  remains an  independent  insurance  agent.  He has served as a
director of our  wholly-owned  subsidiary,  Pre-Paid Legal Casualty,  Inc. since
1991.

Peter K. Grunebaum
     Mr.  Grunebaum,  currently an independent  investment  banker and corporate
consultant,  was the Managing Director of Fortrend International,  an investment
firm headquartered in New York, New York, a position he held from 1989 until the
end of 2003.  Mr.  Grunebaum  also serves as a director of StoneMor  GP, LLC the
general partner of StoneMor Partners LP (NASDAQ-GM: STON) and Lucas Energy, Inc.
(AMEX: LEI).

Duke R. Ligon
     Mr.  Ligon  retired in January  2007 as senior vice  president  and general
counsel for Devon Energy Corporation (NYSE:DVN) and brings more than 35 years of
legal expertise in corporate  securities,  litigation,  governmental affairs and
mergers and acquisitions.  Mr. Ligon is currently serving as executive  director
of the Love's  Entrepreneurial  Center at Oklahoma  City  University  as well as
strategic  advisor to the Oklahoma based Love's Travel Stores.  Prior to joining
Devon in 1997, he practiced law for 12 years and last served as a partner at the
law firm of Mayer,  Brown & Platt in New York City.  In addition,  he was senior
vice president and managing director for investment banking at Bankers Trust Co.
in New York  City for 10  years.  Ligon  received  an  undergraduate  degree  in
chemistry from Westminster College and a law degree from the University of Texas
School of Law. Mr. Ligon also serves as a director of Panhandle Oil & Gas (AMEX:
PHX)  and  Quest  Midstream  Partners  L.P.,  an  affiliate  of  Quest  Resource
Corporation (NASDAQ-GM: QRCP).

Corporate Governance Matters

     The Board of Directors uses the  independence  standards under the New York
Stock Exchange  ("NYSE")  corporate  governance  rules for  determining  whether
directors  are  independent.  The Board  additionally  follows  the rules of the
Securities and Exchange Commission ("SEC") in determining independence for audit
committee  members.  The Board has  determined  that Messrs.  Aldridge,  Belsky,
Grunebaum,  Ligon and Smith are  independent  under these NYSE and SEC rules for
purposes of service on the Board and on the nominating,  compensation  and audit
committees  (except for Mr. Smith as to the audit committee due to his potential
status as an affiliate due to his level of ownership). Members of each committee
are elected  annually by the Board and serve for  one-year  terms or until their
successors are elected and qualified.

     The  Board of  Directors  held  four  meetings  during  2007  and  acted by
unanimous  consent  three  times.  During such year all  directors  listed above
attended at least 75% of the  meetings of the full Board and the  committees  on
which they served.

     We do not have a specific  policy  regarding  board member's  attendance at
annual  meetings of  shareholders,  although,  as a general rule,  all directors
usually  attend such meeting.  At the 2007 annual meeting of  shareholders,  all
directors attended the meeting.

     The  Board has  established  an Audit  Committee  currently  consisting  of
Messrs.  Aldridge,  Belsky  and  Grunebaum.  The Audit  Committee  selects,  and
oversees our relationship  with, our independent  registered  public  accounting
firm and reviews with the  independent  registered  public  accounting  firm the
scope and  results  of the  annual  audit.  The  Audit  Committee  also  reviews
financial  statements and reports  including Forms 10-K and Forms 10-Q,  reviews
all significant  financial  reporting issues and practices and monitors internal
control policies.  The Audit Committee also establishes  procedures for receipt,
retention  and  treatment of  complaints  received by us  regarding  accounting,
internal accounting control or auditing matters, recommends and reviews our code
of ethics and oversees our internal  audit  function.  The Audit  Committee held
eight  meetings  during 2007.  The Committee  chair,  as  representative  of the
Committee,  discussed  the  interim  financial  information  contained  in  each
quarterly earnings  announcement with the CFO and independent  auditors prior to
public  release.  The Board has determined that none of the members of the Audit
Committee  qualify as a  "financial  expert" as defined by the rules of the SEC,
because  none  of  the  members  meet  the  requisite  qualifications  for  such
designation.

     Additionally,  the  Board  has  established  a  Nominating  Committee.  The
nominating  committee currently consists of Messrs.  Belsky, Ligon and Smith and
is responsible for assisting the full Board in selecting individuals for service
on the Board and  evaluating  their  performance.  During 2007,  the  Nominating
Committee met once and acted by unanimous consent one time.

     The  Board  has  also  established  a  Compensation   Committee   currently
consisting of Messrs.  Belsky,  Ligon and Smith.  During 2007, the  Compensation
Committee met once and acted by unanimous consent one time.

     The Board has authorized the Compensation  Committee to annually review and
approve  corporate  goals and  objectives  relevant  to our CEO's  compensation,
evaluate the  performance  of the CEO in light of these goals and objectives and
approve the amounts and individual  elements of total  compensation  for the CEO
based  on  this   evaluation.   In  addition  to  determining  the  CEO's  total
compensation, the Compensation Committee advises the CEO in his establishment of
the compensation of the other executive officers. No other executive officer has
the authority to participate, and has not participated,  in the determination of
executive officer compensation.

         In addition to its role in determining our Chief Executive Officer's
compensation, the Compensation Committee has the authority to:

     o    periodically   evaluate,   in  conjunction  with  the  CEO,  and  make
          recommendations to the Board regarding the terms and administration of
          our  annual  and  long-term  incentive  plans to assure  that they are
          structured  and   administered   in  a  manner   consistent  with  our
          compensation objectives as to participation,  annual incentive awards,
          corporate  financial  goals,  actual  awards  paid  to  our  executive
          officers,  and total funds reserved for payment under the compensation
          plans, if any.

     o    periodically  evaluate,  in conjunction  with the CEO,  equity-related
          executive  compensation  plans and make  recommendations  to the Board
          based on the committee's evaluation.

     o    periodically  evaluate and make recommendations to the Board regarding
          annual  retainer and meeting fees for the Board and the  committees of
          the  Board and the terms  and  awards  of any stock  compensation  for
          members of the Board.

     If the Board so approves, the Compensation Committee has the sole authority
to retain or  terminate  consultants,  including  the  authority  to approve the
consultant's fees and other retention terms. The Compensation  Committee did not
employ any consultants in 2007.


Compensation Committee Interlocks and Insider Participation

     As stated above,  Messrs.  Belsky,  Ligon and Smith were the members of our
Compensation  Committee  in 2007.  None of them  have ever  been an  officer  or
employee of ours or any of our subsidiaries. Additionally, none of our executive
officers serves on the compensation committee of any entity that has one or more
of such entity's executive officers serving on our Board.


Corporate Governance Guidelines and Communications with the Board

     We adopted Corporate  Governance  Guidelines and a Code of Business Conduct
and Ethics in accordance with the rules of the NYSE in January 2004. The Code of
Business  Conduct  and Ethics is  applicable  to all  employees  and  directors,
including  our  principal  executive,  financial  and  accounting  officers.  In
addition,  each of the  committees  of the Board  has a  charter  which has been
approved by the Board. Copies of the Corporate  Governance  Guidelines,  Code of
Business Conduct and Ethics and committee charters are available at our website,
www.prepaidlegal.com.  In addition,  copies of these  documents are available to
any  shareholder  who  requests  them from our  Secretary.  The Audit  Committee
reviewed its charter in March 2007 and adopted an amended and restated  charter.
We intend to  disclose  amendments  to, or waivers  from,  our Code of  Business
Conduct and Ethics by posting to our website.

     Our  Corporate  Governance  Guidelines  requires  that  the  non-management
directors meet in executive  session  immediately  following each meeting of the
Board.  The Guidelines  provide that the Chairman of the  Nominating  Committee,
currently Mr. Belsky, will preside over these meetings.

     Our Corporate Governance Guidelines provide that any person,  including any
shareholder,  desiring to  communicate  with, or make any concerns  known to us,
directors  generally,  non-management  directors or an individual director only,
may do so by submitting them in writing to our Quality Assurance Supervisor, One
Pre-Paid Way,  Ada,  Oklahoma  74820,  with  information  to identify the person
submitting the communication or concern,  including the name, address, telephone
number  and  an  e-mail  address  (if  applicable),  together  with  information
indicating  the  relationship  of  such  person  to us.  Our  Quality  Assurance
Supervisor is responsible for maintaining a record of any such communications or
concerns and  submitting  them to the  appropriate  addressee(s)  for  potential
action or response.  We will establish the authenticity of any  communication or
concern before forwarding. Under the Corporate Governance Guidelines, we are not
obligated to investigate or forward any anonymous  submissions  from persons who
are not our employees.

Director Compensation

         The following table summarizes the compensation of directors in 2007:

                                        Fees Earned
                                        or Paid in
                Name                     Cash (1)
----------------------------------      -----------
Orland G. Aldridge................       $  42,000
Martin H. Belsky..................          44,500
Peter K. Grunebaum................          54,000
John W. Hail......................          34,000
Duke R. Ligon.....................          20,750
Thomas W. Smith (1)...............               -
Harland C. Stonecipher (1)........               -


     (1)  Our 2007 standard compensation for non-employee directors consisted of
          a  retainer  in the amount of $7,500 per  quarter in  addition  to the
          payment of $1,000 per Board and committee meeting attended. The chairs
          of the Compensation and Nominating  Committees  received an additional
          $1,500 per  meeting and the chair of the Audit  Committee  received an
          additional $2,500 per meeting. No form of compensation other than cash
          was provided to any director.  Mr. Smith has waived the receipt of any
          cash compensation in exchange for reimbursement of expenses related to
          charter  aircraft  used for  travel to and from Board  meetings.  Such
          reimbursement paid to third parties was $188,199 for 2007 and does not
          include any costs  related to the use of our aircraft to transport Mr.
          Smith.  Mr.  Stonecipher,  as an  employee  of ours,  does not receive
          additional compensation for Board service.

     As of December 31, 2007, the director listed below held options to purchase
shares of common stock which had been granted in prior years:



                                                          Weighted
                                         Number       Average Exercise
              Director                 of Shares           Price            Expiration Date
----------------------------------     ---------      ----------------      ---------------
                                                                          
Peter K. Grunebaum................         6,000             17.03           March 3, 2008
Peter K. Grunebaum................        10,000             23.93           March 1, 2009



     The Board of  Directors  recommends  that the  shareholders  vote "FOR" the
re-election  of Martin H.  Belsky  and  Harland C.  Stonecipher  to the Board of
Directors.


                                  PROPOSAL TWO

   RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

     The  Audit  Committee  has  directed  us to  submit  the  selection  of our
independent   registered   public   accounting  firm  for  ratification  by  the
shareholders  at the Annual  Meeting.  Neither  our  bylaws nor other  governing
documents  or law require  shareholder  ratification  of the  selection of Grant
Thornton LLP ("Grant Thornton") as our independent  registered public accounting
firm. However, the Audit Committee is submitting the selection of Grant Thornton
to the shareholders for ratification as a matter of good corporate practice.  If
the  shareholders  fail to  ratify  the  selection,  the  Audit  Committee  will
reconsider  whether  or not to  retain  that  firm.  Even  if the  selection  is
ratified,  the Audit Committee may in its discretion direct the appointment of a
different  independent  registered public accounting firm at any time during the
year if it determines  that such a change would be in our best interest and that
of our shareholders.

     The Board of  Directors  recommends  that the  shareholders  vote "FOR" the
ratification of Grant Thornton as our independent  registered  public accounting
firm for the year ending December 31, 2008. Audit Committee Report

     In accordance  with its written  charter  adopted by the Board of Directors
("Board"),  the Audit Committee of the Board ("Committee")  assists the Board in
fulfilling its  responsibility for oversight of the quality and integrity of our
accounting, auditing and financial reporting practices.

     In discharging its oversight  responsibility  as to the audit process,  the
Audit  Committee  obtained  from  the  independent  auditors  a  formal  written
statement  describing all  relationships  between the auditors and us that might
bear on the auditors' independence  consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the  auditors  any   relationships   that  may  impact  their   objectivity  and
independence  and  satisfied  itself  as  to  the  auditors'  independence.  The
Committee  also  discussed  with  management  and the  independent  auditors the
quality and adequacy of our internal  controls.  The Committee reviewed with the
independent auditors their audit plans, audit scope, and identification of audit
risks.

     The  Committee  discussed and reviewed  with the  independent  auditors all
communications  required by generally  accepted  auditing  standards,  including
those  described  in  Statement  on  Auditing  Standards  No.  61,  as  amended,
"Communication  with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent  auditors'  examination of
the financial statements.

     The Committee reviewed and discussed our audited financial statements as of
and for the  fiscal  year ended  December  31,  2007,  with  management  and the
independent  auditors.  Management has the responsibility for the preparation of
our financial  statements and the independent  auditors have the  responsibility
for the examination of those statements.

     Based on the above-mentioned review and discussions with management and the
independent  auditors,  the Committee  recommended to the Board that our audited
financial  statements  be  included  in our  Annual  Report on Form 10-K for the
fiscal year ended December 31, 2007, for filing with the Securities and Exchange
Commission. The Committee has approved reappointment of the independent auditors
for 2008.


                                                                  

       /s/ Peter K. Grunebaum               /s/ Martin H. Belsky              /s/ Orland G. Aldridge
------------------------------------   -------------------------------  --------------------------------
         Peter K. Grunebaum                   Martin H. Belsky                  Orland G. Aldridge
         Committee Chairman                   Committee Member                   Committee Member


Audit and Other Fees

     Grant Thornton served as our independent  registered public accounting firm
during 2007 and 2006.  The aggregate  fees billed by Grant Thornton for 2007 and
2006 for various services are set forth below:

                                          2007          2006
                                       ----------    ---------
Audit Fees........................     $ 469,740     $ 443,585
Audit Related Fees................        21,750        20,000
Tax Fees..........................             -           290
All Other Fees....................             -             -

     Fees for audit services include fees associated with the annual audit of us
and our  subsidiaries  (including  audit  fees  related  to  Section  404 of the
Sarbanes-Oxley  Act),  the  review  of our  quarterly  reports  on Form 10-Q and
required  statutory  audits.  Audit-related  fees principally  include audits in
connection  with our  employee  benefit  plans,  due  diligence  and  accounting
consultations.  Tax fees  include tax  compliance,  tax advice and tax  planning
related to Federal, state and international tax matters.

     The Audit  Committee  has  considered  whether the  provision  of non-audit
services by Grant Thornton is compatible with maintaining  auditor  independence
and  adopted  in 2003 a policy  that  requires  pre-approval  of all  audit  and
non-audit  services.  Such policy requires the Committee to approve services and
fees in advance and requires documentation regarding the specific services to be
performed.  All 2007 audit and non-audit  services fees were approved in advance
in accordance with the Committee's policies.


                  EXECUTIVE COMPENSATION AND OTHER INFORMATION


Executive Officers

     Our current executive officers are named below:


                                       

                     Name                 Age                           Position
        -----------------------------     ---   ---------------------------------------------------
        Harland C. Stonecipher.......     69    Chairman of the Board of Directors, Chief Executive
                                                    Officer and President
        Steve Williamson.............     47    Chief Financial Officer
        Mark Brown...................     54    Senior Vice President and Chief Marketing Officer
        Randy Harp...................     52    Chief Operating Officer
        Kathleen S. Pinson...........     55    Vice President of Regulatory Compliance and Secretary


     For description of the business background and other information concerning
Mr. Stonecipher, see "Election of Directors" above. All executive officers serve
at the discretion of the Board, subject to, in the case of Mr. Stonecipher,  the
terms of his employment agreement described below.

Steve Williamson
         Mr. Williamson was named our Chief Financial Officer in May 2000. From
April 1997 until his employment with us in March 2000, Mr. Williamson served as
     the Chief Financial Officer of Peripheral Enhancements, Inc., an electronic
memory assembly company. Prior to April 1997, Mr. Williamson served as Director
in Charge of Banking Practice for Horne & Company, a public accounting firm. Mr.
Williamson is a Certified Public Accountant.

Mark Brown
     Mr. Brown was named Senior Vice  President and Chief  Marketing  Officer in
October 2006.  Prior to his  appointment to the new position,  Mr. Brown was our
National Sales Director for Group  Marketing and Senior  Regional Vice President
for most of the  State of Texas and has been one of our  independent  associates
for more than eleven years.  Prior to his  association  with us, Mr. Brown owned
his own printing business for 18 years.

Randy Harp
     Mr. Harp was named Chief Financial Officer in March 1990 and served in that
capacity  until May 2000 and has served as Chief  Operating  Officer since March
1996.  Mr. Harp served on the Board of Directors  from March 1990 until May 2004
when he resigned  from the Board of Directors as part of a corporate  governance
initiative  required  by the  rules  of the  NYSE to have  independent,  outside
directors  comprise  the majority of the Board.  Mr. Harp is a Certified  Public
Accountant.

Kathleen S. Pinson
     Ms.  Pinson  was  named  our  Controller  in May  1989  and has been a Vice
President of ours since June 1982.  Ms.  Pinson served on the Board of Directors
from April 1990 until August 2002 when she resigned  from the Board of Directors
together with three other directors as part of a corporate governance initiative
to have outside  directors  comprise the majority of the Board.  Ms.  Pinson has
been  employed  by us since  1979 and  currently  serves  as Vice  President  of
Regulatory   Compliance  and  Secretary.   Ms.  Pinson  is  a  Certified  Public
Accountant.

Significant Employee - Wilburn L. Smith
     Wilburn  Smith has been active in our  marketing  division  since 1980.  He
served as one of our  directors  from March 1993 to October  1995 and from April
1997 to December 2001,  during which time he also served as our  President.  Mr.
Smith currently serves as our National Marketing Director.


Compensation Discussion and Analysis

General

     Our compensation philosophy and the objectives of our compensation programs
are to:

     o    Recognize that membership  revenues and growth in membership  revenues
          are the most significant  factors in our corporate  objectives,  since
          the expense  components  of our business as a percentage of membership
          revenues do not vary materially.  Accordingly,  incentive compensation
          should be based on membership or membership revenue metrics.

     o    Pay  compensation  to our Chief Executive  Officer  primarily based on
          incentive compensation tied to membership revenues, and secondarily as
          required by long-standing written agreements with him.

     o    Pay our Chief Marketing Officer based solely on incentive compensation
          tied to memberships written.

     o    Pay our other home office  named  executive  officers  primarily  with
          annual  salaries  competitive  in the  local  market  and  in  amounts
          recognizing  relative levels of  responsibility,  and secondarily with
          incentive compensation based on growth of in-force membership revenues
          due to their lesser level of influence over marketing efforts.

     o    Eliminate   equity   compensation   as  a   component   of   executive
          compensation, as it is inconsistent with our stock repurchase policy.

     o    Provide a non-qualified deferred compensation program to permit us and
          our CEO to avoid the nondeductibility provisions of Section 162 of the
          Internal Revenue Code for compensation in excess of $1 million, and to
          permit  supplemental  retirement  benefits  for  all  named  executive
          officers in excess of amounts provided under our defined contributions
          plan.

     To  maintain  simplicity  in our  compensation,  we have  not  historically
adopted any equity or long term  compensation  plans  other than stock  options,
which we  discontinued  granting  to  executive  officers  in 2002.  We have not
evaluated gains from historical  option exercises or potential gains from option
exercises in evaluating other executive officer compensation. We do not have any
specific equity ownership  guidelines,  but we strongly  encourage our executive
officers to own our common stock.

     We also do not have term  employment  agreements with anyone other than our
Chief  Executive  Officer,  which was entered into in 1993 and is currently on a
year to year basis.

     The  Compensation  Committee  has not engaged in any  benchmarking  or peer
group  comparisons in connection with any compensation  decisions because of the
unique  characteristics  of the Company and the absence of any true peer groups.
For our  incentive  cash  compensation  plans  that are  based  on the  formulas
described,  there have been no historical discrepancy  adjustments to the amount
of such  compensation,  except as with  respect to Mr.  Stonecipher's  incentive
compensation as described below.

     The  elements  of our  compensation  for  named  executive  officers  vary,
depending on their  position,  and are described  below.  All of these elements,
other than those for which the Company is contractually  obligated,  are subject
to change if the Compensation  Committee  believes a change is appropriate.  The
Compensation  Committee  has reviewed the  relative  compensation  of all of the
named executive officers. The total compensation of the Chief Executive Officer,
which is significantly higher than our other named executive officers,  reflects
his critical role in the founding, development of the Company, ongoing marketing
of the Company's memberships,  and supervision of the marketing force. Likewise,
the  compensation  of our Chief Marketing  Officer at potentially  higher levels
than other named  executive  officers  reflects our philosophy that marketing is
the most important factor in our Company's growth and success.

     Because our compensation  arrangements are relatively  simple and we do not
have  complex  equity  plans,  or  significant  change of control  or  severance
obligations,  the Compensation  Committee does not use tally sheets in analyzing
executive officer compensation,  but does review each element of compensation as
described  in this  Proxy  Statement  in  evaluating  and  approving  our  Chief
Executive  Officer's total  compensation and consulting with the Chief Executive
Officer with respect to the total compensation of other executive officers.


Individual Elements of Compensation

     Chief Executive Officer
     Incentive  Compensation.  The primary element of  compensation  paid to our
Chief Executive Officer is formula incentive  compensation based on the level of
our membership fees (the  "Membership  Fee Plan").  Since 2004, and during 2007,
our Chief  Executive  Officer has been eligible to receive up to one-half of one
percent (.5%) of Membership fees  collected.  Payment of this 0.5% incentive has
been conditioned on our meeting certain monthly and quarterly Membership revenue
thresholds.  Mr. Stonecipher  receives a monthly bonus equal to 0.25% of monthly
Membership  fees  if  the  month's  Membership  fees  are  at  least  85% of the
Membership  fees  for the  same  month  of the  prior  year.  Additionally,  Mr.
Stonecipher  receives  a  quarterly  bonus  equal  to  0.25%  of  the  quarter's
Membership  fees,  if  the  quarter's  Membership  fees  are  greater  than  the
Membership  fees for the  comparable  quarter of the prior year.  The  aggregate
annual amount of these bonuses has been reduced by $500,000 since 2005 by reason
of our now owning and operating corporate aircraft, which aircraft services were
previously  provided through aircraft  partially owned by Mr.  Stonecipher.  The
Membership Fee Plan is subject to annual review by the  Compensation  Committee.
During 2007, Mr. Stonecipher  received $1,690,964 in bonuses under this plan and
it will remain in effect under the same terms in 2008. Mr.  Stonecipher also has
historically   received  and  is  expected  to  continue  to  receive  incentive
compensation  equal  to  2.5%  of  premiums  received  by PPL  Agency,  Inc.,  a
subsidiary  of ours which sells  cancer and dread  disease  insurance  (the "PPL
Agency  Plan").  This  incentive  was  originated  in 1982 when PPL  Agency  was
organized to recognize Mr.  Stonecipher's  efforts in organizing this agency. In
2007, Mr.  Stonecipher  received $57,511 in compensation under this arrangement.
In  2007,  these  incentive  compensation  components  represented  80%  of  Mr.
Stonecipher's total cash compensation.

     Salary and Member  Override.  The base salary of Mr.  Stonecipher  has been
established  pursuant to an employment agreement which commenced in January 1993
and expired in 2003, but automatically  extends for successive  one-year periods
until either party elects to terminate  the  agreement at least 30 days prior to
the  expiration  date. At inception of the  agreement,  Mr.  Stonecipher's  base
salary  was  $157,755  and it has  not  been  adjusted  since  that  time as the
Compensation  Committee  prefers  to  provide  compensation  to Mr.  Stonecipher
primarily in the form of incentive  compensation  described above. Pursuant to a
separate  agreement  with  us  entered  into  in  1986  originally  intended  to
incentivize  growth  in new  memberships,  Mr.  Stonecipher  is  entitled  to an
override  commission,  payable  monthly,  in an amount equal to $.025 per active
Membership,  with a maximum payable of $20,000 per month  (equivalent to 800,000
members) or $240,000 per year (the "Member Override Agreement"). At the time the
agreement was entered into in 1986, the Company had 133,816 members. The payment
of such commissions to Mr.  Stonecipher  continues during his lifetime and after
his death to his designated  beneficiaries  and their  successors so long as the
Company sells legal expense plans.  The Company  intends to continue to abide by
this agreement but it is now considered to be the same as salary given the level
of the Company's  memberships far exceeds the 800,000 members needed to generate
the maximum override commission.

     Post  Employment   Compensation.   Mr.  Stonecipher  is  entitled  to  post
employment compensation under our defined contribution qualified retirement plan
in which he participates on the same basis as all other employees.  He is also a
participant in our non-qualified  deferred  compensation plan which is described
below. He also receives a supplemental  retirement  benefit under his employment
agreement  which is  described  below  under  "Other  Potential  Post-Employment
Payments."  Finally,  as noted above, he will continue to receive payments under
the Member Override Agreement.

     Chief Marketing Officer
     Incentive  Compensation.  Our Chief Marketing  Officer receives solely cash
incentive compensation in various capacities.  As a sales associate, he receives
commissions  from sales of memberships  both  personally,  and by members in his
personal  sales  organization  on the same basis as all other  sales  associates
("Personal  Commissions").  As head of our group  marketing,  he receives a 0.5%
override on group  membership  revenues  received for memberships  written after
April 15, 2002, the date on which this override was created ("Group  Override").
As a regional  vice  president  for Texas,  he receives a 0.2% override on Texas
membership  revenues  received for memberships  written after July 10, 1996, the
date on which the override was created  ("RVP  Override").  All of the foregoing
was in place  before he  became  Chief  Marketing  Officer.  As Chief  Marketing
Officer,  he receives a 0.13% override on membership  revenues that are received
on memberships  written after November 22, 2006, the date on which this override
was created ("Membership Fee Override").

     Post Employment  Compensation.  Mr. Brown, like all other sales associates,
will continue to receive Personal Commissions after separation for employment so
long as he remains a vested associate, which requires him to maintain a personal
membership  or sell at least  three  memberships  per  quarter  and abide by the
applicable policies and procedures for our associates. He will also receive post
employment compensation under our defined contribution plan on the same basis as
all other employees.

     Other Named Executive Officers
     Salary. The other named executive officers receive salaries  established by
our Chief Executive Officer in consultation with the Compensation Committee that
are based on their relative seniority, level of responsibility, an assessment of
each executive officer's performance and potential contribution to our financial
and  operational  objectives.  In 2007,  the base  salaries  of the other  named
executive  officers were increased by 18% to 25%, the first increase since 2001.
Salary is the more  significant  portion of the other named executive  officers'
compensation which represented 88% of their total compensation in 2007.

     Incentive  Compensation.  We have a non-equity incentive plan for the other
named  executive  officers  under which they are entitled to  quarterly  bonuses
equal to a percentage  of their  salaries  equal to the  percentage  increase in
active  membership  fee revenue in force as of the end of each  quarter from the
end of the same quarter in the  preceding  year subject to such  increase  being
more than 2% (the "In Force Premium Bonus Plan").

     Post Employment Compensation.  Our other executive officers are entitled to
post employment compensation under our defined contribution qualified retirement
plan in which they  participate on the same basis as all other  employees.  They
are also participants in our non-qualified  deferred  compensation plan which is
described below.


Personal Benefits and Perquisites

     We own two  corporate  airplanes  that  are  used  almost  exclusively  for
business  purposes by our executive  officers and other  employees.  On business
travel, Mrs. Stonecipher routinely accompanies Mr. Stonecipher.  We believe this
practice is  consistent  with the family image we desire to present to our sales
force and employees.  There is no incremental cost to us for Mrs. Stonecipher to
accompany  Mr.  Stonecipher  on  these  trips.   Occasionally,   we  permit  Mr.
Stonecipher  to  use  one  of  the  planes  for  personal  purposes.   In  these
circumstances, Mr. Stonecipher reimburses us at an hourly rate intended to fully
offset  both our fixed and  incremental  cost of this  travel,  including  fuel,
maintenance,  personnel,  insurance,  etc. and any  miscellaneous  trip expense.
During 2007, Mr.  Stonecipher used the corporate  aircraft for personal purposes
4.1 hours  (approximately  1.1% of the total  aircraft  usage) and reimbursed us
$3,732.  We also provide  automobiles  (including fuel and  maintenance) for Mr.
Stonecipher  and Mr. Harp. The cost  attributable to their personal use based on
the estimated  lease value of the  automobiles,  plus fuel and  maintenance,  is
included  in their  taxable  wages and unless the  aggregate  amount of personal
benefits is less than $10,000,  is reflected in the summary  compensation  table
below.  We also have a split dollar life insurance plan for Mr.  Stonecipher and
his wife that was entered into in 1984 and is described below.


Impact of Regulatory Requirements on Executive Compensation Decisions

     Section 162(m) of the Internal Revenue Code provides that we may be limited
in  deducting  annual  compensation  in excess  of $1  million  paid to  certain
executive  officers.  The  Compensation  Committee has  considered the effect of
Section  162(m) on our  compensation  program.  The deferred  compensation  plan
described  below was adopted in 2002 in part to be responsive to the limitations
of Section 162, to permit the deferral of compensation  that would not otherwise
be  deductible  under  Section  162. In certain  circumstances  it may be in our
shareholders'  best interests to retain the flexibility to pay compensation that
may not be deductible  under Section 162. In 2007,  $3.6 million and $814,000 of
potential tax deductions related to the exercise of non-qualified  stock options
by the Chief Executive Officer and Chief Operating Officer,  respectively,  were
not  deductible  due to Section  162  limitations.  The  Compensation  Committee
reviewed this amount from a cost/benefit  perspective  and concluded that it was
acceptable.

Compensation Committee Report

     In accordance  with its written  charter  adopted by the Board of Directors
("Board"),   the  Compensation   Committee  of  the  Board  is  responsible  for
establishing  the compensation of our CEO, Mr.  Stonecipher,  and overseeing the
compensation  process as it relates to our other  executive  officers  to assure
they are  compensated in a manner  consistent with our overall  objectives.  The
Compensation   Committee  is  also  obligated  to  communicate  to  shareholders
information  regarding  the  Company's  compensation  policies and the reasoning
behind such policies.

     The  Compensation  Committee has reviewed and  discussed  the  Compensation
Discussion  and  Analysis  ("CD&A")  with  management.  Based on this review and
discussions,  the Compensation  Committee recommended to the Board that the CD&A
be included in this proxy statement.

     The  preceding  report is  presented  by the  members  of the  Compensation
Committee.


                                                                         

         /s/ Thomas W. Smith                  /s/ Martin H. Belsky                   /s/ Duke R. Ligon
  -----------------------------------  -------------------------------------  ---------------------------------
           Thomas W. Smith                      Martin H. Belsky                       Duke R. Ligon
         Committee Chairman                     Committee Member                     Committee Member



Summary Compensation Table

     The  following  table sets forth the  compensation  paid by us for services
rendered  during the years ended  December 31, 2007 and December 31, 2006 to the
individuals  identified  below,  who are  referred  to as our  "named  executive
officers."



                                                                   Non-Equity             All
          Name and Principal                                     Incentive Plan          Other
               Position                   Year     Salary(1)    Compensation(2)     Compensation(3)     Total(4)
--------------------------------------    ----    -----------   ----------------    ---------------   ------------
                                                                                       
Harland C. Stonecipher................    2007    $  397,747     $   1,748,475         $  36,112      $  2,182,334
  Chairman, Chief Executive Officer       2006       397,755         1,694,315            31,361         2,123,431
    and President

Steve Williamson......................    2007       146,411            12,047             8,550           167,008
  Chief Financial Officer                 2006       129,352            30,902            14,500           174,754

Mark Brown............................    2007             -           758,092             5,200           763,292
  Chief Marketing Officer                 2006             -           699,072             5,200           704,272

Randy Harp............................    2007       250,394            21,841            13,200           285,435
Chief Operating Officer                   2006       229,428            57,941            12,058           299,427

Kathleen S. Pinson....................    2007       151,861            12,392             7,500           171,753
  Vice President of Regulatory            2006       134,692            32,190             6,250           173,132
    Compliance and Secretary
--------------------


     (1)  The salary amount for Mr.  Stonecipher  includes  salary payable under
          his employment agreement and amounts payable under the Member Override
          Agreement.

     (2)  Non-equity   incentive  plan  compensation  paid  to  Mr.  Stonecipher
          consists  of:  (i)  $1,690,964  and  $1,636,056,  in  2007  and  2006,
          respectively,  payable under the Membership Fee Plan; and (ii) $57,511
          and $58,259,  in 2007 and 2006,  respectively,  payable  under the PPL
          Agency Plan.

          For Mr. Brown, non-equity incentive compensation includes (i) $303,364
          and  $358,191,  in 2007 and 2006,  respectively,  payable as  Personal
          Commissions;   (ii)   $258,045  and   $241,113,   in  2007  and  2006,
          respectively, payable as Group Override; (iii) $88,622 and $73,694, in
          2007 and  2006,  respectively,  payable  as State  Override;  and (iv)
          $108,061  and  $26,074,  in 2007 and 2006,  respectively,  payable  as
          Membership Override.

          For  the  other  named  executive   officers,   non-equity   incentive
          compensation  consists of amounts  payable  under the In Force Premium
          Plan.

          For a  description  of these  various  incentives,  see  "Compensation
          Discussion  and  Analysis  -  Individual   Elements  of  Compensation"
          beginning on page 11.

     (3)  All Other Compensation of Mr. Stonecipher  includes $1,721 and $2,100,
          in 2007 and 2006, respectively, relating to the time value of premiums
          paid pursuant to a certain split dollar life insurance  agreement that
          provides for such premiums to be refunded to us upon Mr. Stonecipher's
          death, $21,191 and $21,191, in 2007 and 2006, respectively, automobile
          related cost attributable to personal use based on the estimated lease
          value of the automobile and also includes $13,200 and $8,070,  in 2007
          and 2006, respectively, representing vested contributions by us to the
          Employee Stock  Ownership and Thrift Plan and Trust (the "ESOP").  All
          Other  Compensation  of  Messrs.  Williamson,  Brown  and Harp and Ms.
          Pinson consists of vested contributions by us to the ESOP.

     (4)  Annual  compensation  amounts include amounts deferred at the election
          of the named executive  officers pursuant to a non-qualified  deferred
          compensation  plan which we adopted in 2002, as described  below under
          "Nonqualified Deferred Compensation."


Plan-Based Awards
     Under  various   incentive  plans  described  above  in  the   Compensation
Discussion  and  Analysis,  our  executive  officers will be entitled to receive
incentive  compensation  in 2008 (and  potentially  future  years if such  plans
continue)  based on the level of membership  fees or annual in force  membership
fees at the end of each  quarter.  The following  table  estimates the amount of
such payments based on the various assumptions  contained in the table. There is
no assurance  that any of such payments will be made if the criteria for payment
under such incentive plans are not achieved.  In addition,  there are no maximum
amounts payable under the plans listed,  so if the performance  criteria exceeds
the assumed  maximum level  reflected in the table,  the amount of  compensation
would also be greater.



                                                                           Actual or Estimated Future Payouts Under
                                                                               Non Equity Incentive Plan Awards
     Name and Principal Position                      Plan                   Threshold      Target        Maximum
------------------------------------  ---------------------------------   -------------- ------------- -------------
                                                                                           
Harland C. Stonecipher,.............  Membership Fee Plan-Monthly (1)      $     932,878 $   1,152,379 $   1,262,130
  Chairman, Chief Executive Officer   Membership Fee Plan-Quarterly (2)        1,093,460     1,148,133     1,257,479
  and President                       PPL Agency Commission (3)                   43,133        57,511        71,889


Steve Williamson,...................  In Force Premium Bonus Plan (8)             18,002        30,004        60,008
  Chief Financial Officer

Mark Brown,.........................  Personal Commission (4)                    257,860       318,533       348,869
  Chief Marketing Officer             Group Override (5)                         219,338       270,947       296,752
                                      State Override (6)                          75,328        93,053       101,915
                                      Membership Fee Override (7)                 91,852       113,464       124,270

Randy Harp,.........................  In Force Premium Bonus Plan (8)             31,947        53,245       106,490
  Chief Operating Officer

Kathleen Pinson,....................  In Force Premium Bonus Plan (8)             18,601        31,002        62,005
  Vice President of Regulatory
  Compliance and Secretary
--------------------


     (1)  The Membership Fee Plan - Monthly estimated payouts for 2008 are based
          on the  following  level of  membership  fees  for each  month of 2008
          compared to the comparable  month of 2007:  Threshold 85%; Target 105%
          and Maximum 115%

     (2)  The  Membership  Fee Plan - Quarterly  estimated  payouts for 2008 are
          based on the following  level of  membership  fees for each quarter of
          2008  compared  to the  comparable  quarter of 2007:  Threshold  100%;
          Target 105% and Maximum 115%

     (3)  The PPL Agency Commission  estimated payouts for 2008 are based on the
          following  levels of PPL Agency  commission  income  compared to 2007:
          Threshold 75%; Target 100% and Maximum 125%

     (4)  The Personal  Commission  estimated  payouts for 2008 are based on the
          following  levels of personal  commissions  for 2008 compared to 2007:
          Threshold 85%; Target 105%; Maximum 115%.

     (5)  The  Group  Override  estimated  payouts  for  2008  are  based on the
          following  levels of group  membership fees for 2008 compared to 2007:
          Threshold 85%; Target 105%; Maximum 115%.

     (6)  The  State  Override  estimated  payouts  for  2008  are  based on the
          following  levels as Texas membership fee revenue for 2008 compared to
          2007: Threshold 85%; Target 105%; Maximum 115%.

     (7)  The  Membership Fee Override  estimated  payouts for 2008 are based on
          the  following  levels of  membership  fees in 2008  compared to 2007:
          Threshold 85%; Target 105%; Maximum 115%.

     (8)  The In-Force  Premium Bonus Plan estimated  payouts for 2008 are based
          on the  following  levels of increases in annual in force  premiums at
          the end of each quarter of 2008 compared to the comparable  quarter of
          the prior year:  Threshold 3%; Target 5% and Maximum 10%. There are no
          payments  made under this Plan  unless the annual in force  premium at
          the end of each  quarter  of 2008 is more than 2% above the  annual in
          force premium as of the end of the comparable quarter of 2007.


Stock Options

     There have been no grants of stock  options  under our Stock Option Plan to
any of the named executive officers since May 2002.


Outstanding Equity Awards

     The  following  table  reflects  outstanding  stock  options  held  by  our
executive officers as of December 31, 2007:



                                                                 Option Awards
                                     ----------------------------------------------------------
                                                Number of
                                          Securities Underlying
                                          Unexercised Option           Option         Option
                                     -----------------------------    Exercise      Expiration
               Name                  Exercisable     Unexercisable      Price         Date
--------------------------------     ------------    -------------    --------    -------------
                         
Harland C. Stonecipher..........              -            -              N/A          N/A
Steve Williamson (1)............         10,000            -            19.20     March 1, 2011
Mark Brown......................              -            -              N/A          N/A
Randy Harp (1)..................         30,000            -            19.20     March 1, 2011
Kathleen S. Pinson..............              -            -              N/A          N/A
(1) Option vesting date is May 23, 2005




Option Exercises

     The following table reflects  information  concerning  options exercised by
our named executive officers during 2007:



                                                       Option Awards
                                                Number of            Value
                                             Shares Acquired      Realized on
                       Name                    on Exercise          Exercise
         ------------------------------      ---------------     ---------------
                                                        
         Harland C. Stonecipher(1).....           110,000        $   3,773,500
         Steve Williamson..............                 -                    -
         Mark Brown....................                 -                    -
         Randy Harp....................            50,000            1,799,000
         Kathleen S. Pinson............             5,000              179,900


     (1)  Includes  10,000  options,   $175,500  value,   exercised  by  Shirley
          Stonecipher, Harland C. Stonecipher's wife.



Equity Compensation Plans

     The  following  table  provides  information  with  respect  to our  equity
compensation  plans as of  December  31,  2007,  (other  than our tax  qualified
Employee Stock Ownership Plan designed to provide retirement benefits).



                                                                                            Number of securities
                                                                                           remaining available for
                                          Number of securities                              future issuance under
                                            to be issued upon        Weighted average        equity compensation
                                               exercise of          exercise price of         plans (excluding
                                          outstanding options,     outstanding options,    securities reflected in
                                           warrants and rights     warrants and rights           column (a))
             Plan Category                        (a)                    (b)                         (c)
---------------------------------------  -----------------------   ---------------------   -------------------------
                                                                                          
Equity compensation plans approved by
  security holders (1).................           58,500                  $  20.08                 1,346,252
Equity compensation plans not approved
  by security holders..................                -                      -                            -
                                         -----------------------   ---------------------   -------------------------
Total..................................           58,500                  $  20.08                 1,346,252
                                         -----------------------   ---------------------   -------------------------


----------

(1)  These  stock  options  have been issued  pursuant to our Stock  Option Plan
     which has been approved by security holders.  We do not expect to grant any
     additional options under this plan.


Nonqualified Deferred Compensation

     In 2002, we adopted, as part of our post-employment compensation policy for
executive  officers and certain  managers,  an unfunded,  nonqualified  deferred
compensation  plan, which permits our executive officers and other key employees
to defer  receipt of a portion of their annual  compensation.  Deferred  amounts
accrue  hypothetical  returns  based  on  investment  options  selected  by  the
participant.  We amended the deferred  compensation  plan,  effective January 1,
2005,  to comply with new  provisions  of Section 409A of the  Internal  Revenue
Code.  Deferred  amounts  are paid in cash based on the value of the  investment
option and are generally payable  following  termination of employment in a lump
sum or in installments as elected by the participant,  but the plan provides for
distributions in the event of total disability or death and distributions upon a
change in control. The plan also provides a death benefit of $500,000 payable to
the beneficiary of each named executive officer  participant in the plan if such
officer dies before he is entitled to receive the benefits  offered  pursuant to
such plan.  Although the plan is unfunded and represents an unsecured  liability
of ours to the participants,  we have purchased variable life insurance policies
owned by us to insure the lives of the group of participants  and to finance our
obligations under the plan.

     A participant  in the plan may elect to defer receipt of up to 75% of their
base salary and up to 100% of their bonus compensation.  Amounts deferred accrue
hypothetical  returns based upon investment options selected by the participant.
These investment  options  generally include mutual funds  representing  various
asset classes and each executive may change investment elections daily. Earnings
on these mutual  funds ranged from (2.02)% to 22.92%  during the 12 months ended
December 31, 2007.  Under the plan, we promise to pay our executives the amounts
of their  compensation  that the  executives  elected to defer plus the  accrued
returns.

     The  participants  in the plan are entitled to payments  from the plan upon
the earlier of: (i) reaching  the age of 65, or in the case of Mr.  Stonecipher,
on November  6, 2012.  (which was 10 years  after  adoption  of the plan);  (ii)
disability;  (iii)  death;  (iv) a change  in  control;  or (v)  termination  of
employment. Amounts payable to plan participants are payable in a lump sum or in
annual installments (5, 10 or 15) as elected by the executive,  although we may,
at our  discretion,  pay the executive  the lump sum to which such  executive is
entitled.

     We consider our nonqualified  compensation  plan as an important element of
compensation  payable to our executive  officers.  Because the plan is voluntary
and  funded  only by  participant  individual  deferrals,  we do not  take  into
consideration  amounts  payable to a participating  executive  officer under the
plan when making compensation  decisions regarding such officer.  The purpose of
the deferred  compensation  plan is to provide our officers  with an  additional
investment  vehicle in which to achieve  their  long-term  investment  and other
income  tax  planning  goals  in  recognition  of  certain  limitations  on such
individuals'  participation in our defined contribution plan pursuant to federal
income tax rules and regulations  applicable to highly compensated  individuals.
Additionally,  the plan was  adopted to allow us to address the  limitations  on
executive compensation imposed by Section 162(m) of the Internal Revenue Code.

The following table sets forth activity under the plan in 2007:



                                  Executive         Registrant       Aggregate                         Aggregate
                                Contributions     Contributions     Earnings in      Aggregate        Balance at
                                in Last Fiscal    in Last Fiscal    Last Fiscal     Withdrawals/      Last Fiscal
            Name                   Year (1)            Year           Year(3)      Distributions       Year-End
----------------------------    ---------------   --------------   -------------   --------------   -----------------
                                                                                      
Harland C. Stonecipher......     $   853,274       $     -           $  202,091     $     -          $   4,634,021
Steve Williamson............           4,293             -                2,150           -                 45,037
Mark Brown (2)..............               -             -                    -           -                      -
Randy Harp..................          87,516             -               13,384           -                329,054
Kathleen S. Pinson..........          13,994             -                3,591           -                 76,695


     (1)  Amounts deferred at the election of the named individuals  pursuant to
          our  nonqualified  deferred  compensation  plan  are  included  in the
          Summary Compensation Table above.

     (2)  Mr. Brown is not eligible to participate in the plan.

     (3)  Earnings are based on the hypothetical  investment options selected by
          each participant.

     As of  December  31,  2007,  we  had  an  aggregate  deferred  compensation
liability of $6.5 million,  which is included in other non-current  liabilities.
At December 31, 2007, the cash value of the underlying  insurance policies owned
by us was $5.7 million and was included in other assets.


Defined Contribution Plan

     We offer a tax  qualified  defined  contribution  "401K" plan to all of our
employees,  including our executive officers, to provide a benefit payable to an
employee or his heirs upon retirement,  total  disability,  or death.  Under the
terms of the  plan and  subject  to  limitations  of  federal  law,  each of our
employees  can elect to defer a portion  of his  compensation  and  direct  such
deferrals to the  investments  offered under the plan,  generally  consisting of
mutual funds in various asset  classes as well as our common  stock.  Subject to
the terms of the plan, we make discretionary  matching cash contributions to the
plan on behalf of the participant employees. Participants are immediately vested
in their deferred  contributions,  but our  contributions are subject to certain
vesting  requirements.  By permitting  employee  deferrals to be invested in our
common  stock,  we believe the  interests  of  employees  are  aligned  with the
interest  of  shareholders.  The  Plan  permits  employees  to  diversify  their
investment in our common stock made with our  contributions  in accordance  with
federal law. Executive officers participate in the plan on the same basis as all
other employees. Our 2007 contributions to the plan for the account of the named
executive  officers  are  included in the Summary  Compensation  Table set forth
above.


Other Potential Post-Employment Payments

     In addition to the other  post-employment  payments  described  above,  our
Chief Executive  Officer is entitled to certain  additional  compensation  under
separate contractual arrangements as described below.

     Under  the  terms of his 1993  employment  agreement,  Mr.  Stonecipher  is
entitled to a supplemental  retirement benefit of $26,000 per year for ten years
or until the date of his death,  if earlier.  In order to receive such payments,
Mr.  Stonecipher  has agreed to make himself  available  to render  advisory and
consulting services to us and not to compete with us.

     In July 1984,  we entered  into a split dollar life  insurance  arrangement
with Shirley A. Stonecipher,  Mr.  Stonecipher's  wife, whereby we agreed to pay
premiums on a life insurance policy covering Mr. Stonecipher. The face amount of
the policy is $600,000 and Mrs.  Stonecipher is the owner and beneficiary.  Mrs.
Stonecipher has an agreement with us whereby upon Mr.  Stonecipher's  death, the
proceeds of the policy will be paid to us in an amount  sufficient  to reimburse
premiums paid to date by us in addition to any supplemental  retirement payments
made pursuant to Mr. Stonecipher's  employment  contract.  Our obligation to pay
the  supplemental   retirement   benefit  described  above  is  subject  to  the
continuation  of split  dollar  life  insurance  agreement  between  us and Mrs.
Stonecipher. If this agreement is terminated for any reason by either party, our
obligation to pay the supplemental retirement benefit also terminates.

     Mr.  Stonecipher's  employment  contract  provides that if we terminate his
employment for any reason (other than for Mr. Stonecipher's death or disability)
or Mr. Stonecipher terminates his employment after a change of control of us (as
defined in the agreement) or due to an uncured  material breach of the agreement
by us, we are required to pay Mr.  Stonecipher  a lump sum payment  equal to the
present  value,  using a 3% discount rate, of the total salary for the remaining
term plus the  supplemental  retirement  benefits,  which are  described in more
detail  above.  If Mr.  Stonecipher's  employment is terminated by us due to his
disability,  we are required to pay the full amount of Mr.  Stonecipher's salary
to him for twelve  weeks and 75% of the  amount of his salary for the  remaining
term of the agreement subsequent to the initial twelve weeks.  Additionally,  if
Mr.  Stonecipher dies during his employment,  we are obligated to pay his estate
$5,000  plus the full  amount  of Mr.  Stonecipher's  salary  for 26  weeks.  As
described  above,  Mr.  Stonecipher's  salary under the employment  agreement is
$157,755  and the maximum  remaining  term is one-year  since the  agreement  is
annually renewable on a year by year basis.


Change of Control

     There are no special  benefits  payable to the named executive  officers by
reason of a change  in  control  other  than  such an event  entitles  the named
executive  officers who are  participants in the deferred  compensation  plan to
commence  to  receive  payments  as  described  under   "Nonqualified   Deferred
Compensation."


              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     John W. Hail, one of our directors, served as our Executive Vice President,
Director and Agency  Director from July 1986 through May 1988 and also served as
Chairman  of the  Board of  Directors  of TVC  Marketing,  Inc.,  which  was our
exclusive  marketing agent from April 1984 through  September 1985.  Pursuant to
agreements  between Mr. Hail and us entered  into during the period in which Mr.
Hail was one of our executive officers,  Mr. Hail receives override  commissions
from renewals of certain  Memberships  initially  sold by us during such period.
During 2007, such override  commissions on renewals  totaled  $68,000.  Mr. Hail
also owns  interests  ranging  from 12% to 100% in  corporations  not  currently
affiliated with us, including TVC Marketing, Inc., but which were engaged in the
marketing of our legal service  Memberships  and which earn renewal  commissions
from Memberships  previously sold. These entities earned renewal  commissions of
$515,000  during 2007 of which  $274,000 was passed  through as  commissions  to
their sales  agents.  We expect  these  arrangements  will  continue in 2008 and
thereafter.

     Our new office building contains two apartments,  one for use by certain of
our  visitors  and  one  for  use by Mr.  Stonecipher  and  his  wife,  for  his
convenience as well as to entertain  visitors using the visitor  apartment.  The
full Board, with Mr. Stonecipher  abstaining,  has approved the arrangements for
the use of this apartment  which require Mr.  Stonecipher to pay rent to us at a
rate of $1,000 per month,  which exceeds the estimated  fair market rental value
based on an outside appraisal.  Additionally, the full Board, with the exception
of Mr. Stonecipher,  has approved that Shirley  Stonecipher,  Mr.  Stonecipher's
wife, can continue to rent and use the apartment subsequent to Mr. Stonecipher's
death.

     We require that any situation,  transaction or relationship that gives rise
to an actual or potential  conflict of interest for our executive  officers must
be disclosed to the Board in writing.  We may permit the conflicted  transaction
only if full  disclosure  is made and our  interests  are  fully  protected.  We
consider  conflicted  transactions  to consist of any  transaction  in which the
executive  (1) causes us to engage in business  transactions  with  relatives or
friends or companies  controlled or owned by our executives;  (2) uses nonpublic
information  for personal  gain by the  executive,  his relatives or his friends
(including securities transactions based on such information); (3) has more than
a nominal  financial  interest  any entity with which we do business or compete;
(4) receives a loan, or guarantee of obligations,  from us or a third party as a
result of his position  with us; (5) competes,  or prepares to compete,  with us
while still  employed by us; or (6) has a financial  interest or  potential  for
gain in any transaction  with us (other than  compensation  arrangements we have
approved).

     The preceding  policy and examples of conflicted  transactions are provided
in our written  Code of  Business  Conduct  and Ethics and is  available  on our
website at www.prepaidlegal.com.



                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

     The  following  table  sets  forth  certain   information   concerning  the
beneficial  ownership of our shares of Common  Stock by each person  (other than
our directors and executive  officers) known by us to be the beneficial owner of
more than five  percent of the  issued  and  outstanding  Common  Stock.  Unless
otherwise  noted,  the information is based on Schedules 13D or 13G filed by the
applicable  beneficial owner with the SEC or other information provided to us by
the beneficial  owner as of December 31, 2007, which is the date such beneficial
owners were required to report their ownership to the SEC.




                 Security Ownership of Certain Beneficial Owners

                                                                 Beneficial Ownership
                                                                 ---------------------
                                                                  Number      Percent
                                                                    of           of
             Name and Address of Beneficial Owner                 Shares       Class
             ------------------------------------                ---------- ----------
                                                                       
Thomas W. Smith (1).........................................      3,249,967     26.7
Scott Vassalluzzo (1).......................................      2,182,537     17.9
Idoya Partners (1)..........................................      1,041,456      8.6
Prescott Associates (1).....................................      1,014,675      8.3
Goldman Sachs Asset Management, L.P. (2)....................        852,842      7.0
Renaissance Technologies LLC and James H. Simons(3).........        955,800      7.9
Barclays Global Investors AG et al (4)......................        745,840      6.1
---------------------


(1)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Thomas  W.  Smith  ("Smith")  and  Scott  Vassalluzzo  ("Vassalluzzo")  are
     2,162,437 shares as to which they have shared voting and shared dispositive
     power.  In addition,  Smith  beneficially  owns 1,098,530  shares of Common
     Stock as to which he has sole voting and dispositive  power and Vassalluzzo
     beneficially  owns  20,100  shares of Common  Stock as to which he has sole
     voting and dispositive power. Of the shares indicated as beneficially owned
     by Smith and Vassalluzzo,  2,453,467 and 2,173,437 shares in the aggregate,
     respectively,  are  beneficially  owned in their  capacities  as investment
     managers for certain managed  accounts,  which include the shares indicated
     as  beneficially  owned by Idoya  Partners  and  Prescott  Associates.  The
     address of Smith,  Vassalluzzo,  Idoya and Prescott is 323 Railroad Avenue,
     Greenwich CT 06830. Information is as of April 4, 2008.

(2)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Goldman  Sachs Asset  Management,  L.P.  ("Goldman")  in its capacity as an
     investment  advisor  are  649,996  shares as to which they have sole voting
     power,  41,000 shares as to which they have shared  voting  power,  810,242
     shares as to which they have sole dispositive power and 42,600 shares as to
     which they have shared  dispositive power. The address of Goldman is 32 Old
     Slip, New York, NY 10005.

(3)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Renaissance  Technologies LLC  ("Renaissance")  and its controlling person,
     James H. Simons  ("Simons")  in  Renaissance's  capacity  as an  investment
     advisor  are  851,400  shares as to which they have sole  voting  power and
     955,800 shares as to which they have sole dispositive power. The address of
     Renaissance and Simons is 800 Third Avenue, New York, NY 10022. Information
     is as of July 6, 2007.

(4)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Barclays Global Investors  (Deutschland) AG ("Barclays") are 482,173 shares
     beneficially  owned by Barclays Global Investors,  NA as to which they have
     sole  dispositive  power of which they have sole  voting  power for 437,806
     shares.  Also included are 253,784  shares  beneficially  owned by Barclays
     Global Fund Advisors as to which they have sole dispositive  power of which
     they have sole voting  power for 180,646  shares.  The address of these two
     entities is 45 Freemont Street, San Francisco,  CA 94105. Also included are
     9,883 shares  beneficially  owned by Barclays Global  Investors,  LTD as to
     which they have sole dispositive power of which they have sole voting power
     for 900 shares.  The address of this entity is 1 Royal Mint Court,  London,
     EC3N 4HH.


     The  following  table  sets  forth  certain   information   concerning  the
beneficial  ownership  of our shares of Common  Stock as of April 4, 2008 by (a)
each of our  directors or nominee for  director (b) each of the named  executive
officers, and (c) all of our directors,  nominee and named executive officers as
a group.



          Security Ownership of Directors and Named Executive Officers


                                                                            Beneficial Ownership (1)
                                                                            ---------------------------
                                                                                Number         Percent
                                                                                  of             of
               Name of Director or Named Executive Officer                      Shares          Class
               -------------------------------------------                  -----------------  --------
                                                                                          
Harland C. Stonecipher, One Pre-Paid Way, Ada, Oklahoma 74820...........        899,660  (2)      7.4
Steve Williamson........................................................         12,590  (3)       *
Mark Brown..............................................................          1,769  (4)       *
Randy Harp..............................................................         70,795  (5)       *
Kathleen S. Pinson......................................................         48,237  (6)       *
Orland G. Aldridge......................................................              -            -
Martin H. Belsky........................................................            350            *
Peter K. Grunebaum......................................................         15,200  (7)       *
John W. Hail............................................................            512  (8)       *
Duke R. Ligon...........................................................              -            -
Thomas W. Smith.........................................................      3,249,967  (9)     26.7
All directors, nominees and executive officers as a group (11 persons)..      4,299,080 (10)     35.2
-----------------


* Less than 1%.

(1)  Unless  otherwise  indicated  in the  footnotes to the table and subject to
     community property laws where applicable, each of the shareholders named in
     this table has sole voting and investment  power with respect to the shares
     indicated as  beneficially  owned.  The  percentage  of ownership  for each
     person is calculated in accordance  with rules of the SEC without regard to
     shares of Common Stock issuable upon exercise of outstanding stock options,
     except  that any  shares a person  is  deemed  to own by  having a right to
     acquire by  exercise  of an option are  considered  outstanding  solely for
     purposes of calculating such person's percentage ownership.

(2)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Mr.  Stonecipher  are 877,377  shares as to which he has shared  voting and
     shared  dispositive  power with his wife and 22,283  shares owned under the
     ESOP as to  which  Mr.  Stonecipher  has  sole  voting  power,  but  shared
     dispositive power.

(3)  Includes  2,218 shares owned under the ESOP as to which Mr.  Williamson has
     sole voting  power,  but shared  dispositive  power,  372 shares held in an
     individual  retirement  account and 10,000 shares issuable upon exercise of
     outstanding options.

(4)  Includes  1,769  shares owned under the ESOP as to which Mr. Brown has sole
     voting power, but shared dispositive power.

(5)  Includes  19,450  shares owned under the ESOP as to which Mr. Harp has sole
     voting power, but shared dispositive power, and 30,000 shares issuable upon
     exercise of outstanding options.

(6)  Includes 20,697 shares owned under the ESOP as to which Ms. Pinson has sole
     voting power, but shared  dispositive  power.  Also,  includes 4,319 shares
     owned under the ESOP by Ms. Pinson's husband, also one of our employees, as
     to which he has sole voting power, but shared dispositive power. Ms. Pinson
     disclaims beneficial ownership of shares that are owned by her husband.

(7)  Includes 10,000 shares issuable upon exercise of outstanding options.

(8)  Includes 500 shares owned by a corporation that Mr. Hail controls.

(9)  See "Security Ownership of Certain Beneficial Owners" above.

(10) Includes  50,000 shares  issuable upon exercise of outstanding  options and
     70,736  shares  owned under the ESOP as to which the  respective  executive
     officers  and  directors  have sole voting  power,  but shared  dispositive
     power.


                COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS

     Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and  executive  officers and persons who  beneficially  own more than 10% of our
Common Stock to file reports of ownership and changes in ownership of our Common
Stock with the SEC. We are required to disclose delinquent filings of reports by
such persons  during  2007.  Based on a review of the copies of such reports and
amendments  thereto received by us, or written  representations  that no filings
were required, we believe that during 2007 all Section 16(a) filing requirements
applicable to our executive officers, directors and 10% shareholders were met.


                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     Grant Thornton served as our independent  registered public accounting firm
for the  year  ended  December  31,  2007  and has been  selected  by our  Audit
Committee to continue in 2008. Representatives of Grant Thornton are expected to
be present at the Annual  Meeting,  with the  opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.


                          ANNUAL REPORT TO SHAREHOLDERS

     Our Annual  Report to  Shareholders  for the year ended  December 31, 2007,
including audited financial  statements,  accompanies this Proxy Statement.  The
Annual  Report is not  incorporated  by reference  into this Proxy  Statement or
deemed to be a part of the materials for the solicitation of proxies.


                   AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

     A copy of our Annual  Report on Form 10-K for the year ended  December  31,
2007 filed with the SEC is available  without charge to any of our  shareholders
who request a copy in writing from us, Attn. Janice Stinson, Investor Relations,
One Pre-Paid Way, Ada, Oklahoma 74820.


                    PROPOSALS OF SHAREHOLDERS AND NOMINATIONS

     The Board of  Directors  will  consider  properly  presented  proposals  of
shareholders  intended  to be  presented  for  action at the  Annual  Meeting of
Shareholders. Such proposals must comply with the applicable requirements of the
SEC and our bylaws.  Under our bylaws,  a notice of intent of a  shareholder  to
bring any matter  before a meeting  shall be made in writing and received by our
Secretary  not more  than 150 days and not less than 90 days in  advance  of the
annual  meeting  or, in the event of a special  meeting  of  shareholders,  such
notice  shall be  received  by our  Secretary  not  later  than the close of the
fifteenth  day  following the day on which notice of the meeting is first mailed
to  shareholders.  Every such notice by a shareholder  shall set forth:  (a) the
name and address of the  shareholder  who intends to bring up any matter;  (b) a
representation  that the shareholder is a registered  holder of our voting stock
and  intends  to appear in  person  or by proxy at the  meeting  to bring up the
matter specified in the notice;  (c) with respect to notice of an intent to make
a nomination, a description of all understandings among the shareholder and each
nominee and any other person  (naming such person or persons)  pursuant to which
the nomination or nominations  are to be made by the  shareholder and such other
information  regarding  each nominee  proposed by the  shareholder as would have
been required to be included in a proxy  statement  filed  pursuant to the proxy
rules of the SEC had each nominee been nominated by our Board of Directors;  and
(d) with  respect  to  notice  of an  intent  to bring up any  other  matter,  a
description of the matter,  and any material  interest of the shareholder in the
matter.  Notice of  intent  to make a  nomination  shall be  accompanied  by the
written  consent of each nominee to serve as one of our  directors,  if elected.
All shareholder  proposals  should be sent to our Secretary at One Pre-Paid Way,
Ada, Oklahoma 74820.

     A  shareholder   proposal  submitted  pursuant  to  Rule  14a-8  under  the
Securities  Exchange  Act of 1934  and  intended  to be  included  in our  proxy
statement  relating  to the 2009 Annual  Meeting  must be received no later than
December 13, 2008. To be considered for presentation at the 2009 Annual Meeting,
although not included in the Proxy  Statement for such meeting,  a proposal must
be received  within the time period set forth in our bylaws as described  above.
In addition,  the proxy  solicited by the Board of Directors for the 2009 Annual
Meeting  will confer  discretionary  authority  to vote on any such  shareholder
proposal presented at the 2009 Annual Meeting unless we are provided with notice
of such  proposal no later than ninety days prior to the date of the 2009 annual
meeting.

     The  nominating  committee  has a charter which is posted on our website at
www.prepaidlegal.com. The nominating committee has not adopted a separate policy
relating to  nomination of directors by  shareholders  because the procedure for
nomination  is  governed  by  our  bylaws  described  above.  The  criteria  for
nomination of directors are set forth in the  nominating  committee  charter and
the charter does not address  specific minimum  qualifications  or skills that a
nominee or board member must have. The process used by the nominating  committee
for  identifying  and  evaluating  nominees for our board  consists of reviewing
qualifications  of candidates  suggested by  management,  other board members or
shareholders,  including  personal  interviews  of the  candidate.  The specific
requirements  for nominees from  shareholders  provided by our bylaws  described
above are required to be followed. We have not previously received nominees from
shareholders and,  accordingly,  are unable to determine whether the process for
evaluation of  shareholder  nominees  differs from the process for evaluation of
other nominees.


                                  OTHER MATTERS

     Our Board of Directors  does not know of any other  matters to be presented
for  action at the  Annual  Meeting  other  than  those  listed in the Notice of
Meeting and referred to herein.  If any other  matters  properly come before the
Annual  Meeting  or any  adjournment  thereof,  it is  intended  that the  proxy
solicited  hereby  be  voted  as to any  such  matter  in  accordance  with  the
recommendations of our Board of Directors.




                                 




                                   VOTE BY INTERNET - www.proxyvote.com
                                   Use  the  Internet to  transmit  your  voting instructions and for electronic delivery of infor-
PRE-PAID LEGAL SERVICES, INC.      mation up until 11:59 P.M. Eastern Time the day before  the  cut-off date or meeting date.  Have
ONE PRE-PAID WAY                   your poxy card in hand when you access the web site and  follow the instructions to obtain your
ADA, OKLAHOMA  74821-5812          records and to create an electronic voting instruction form.

                                   ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
                                   If you would like to reduce the costs incurred by Pre-Paid Legal Services, Inc. in mailing proxy
                                   materials, you can consent to  receiving  all future  proxy  statements, proxy cards  and annual
                                   reports electronically via e-mail or the Internet.  To sign  up for electronic  delivery, please
                                   follow the instructions above to vote using the  Internet and, when prompted,  indicate that you
                                   agree to receive or access shareholder communications electronically in future years.

                                   VOTE BY PHONE - 1-800-690-6903
                                   Use any touch-tone telephone to transmit your voting  instructions  up until 11:59 P.M.  Eastern
                                   Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call
                                   and then follow the instructions.

                                   VOTE BY MAIL
                                   Mark, sign and date your proxy card and return it in the postage-paid envelope we have  provided
                                   or return to Pre-Paid Legal Services, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.









TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:                                     KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                DETACH AND RETURN THIS PORTION ONLY
               THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
 ----------------------------------------------------------------------------------------------------------------------------------
|  PRE-PAID LEGAL SERVICES, INC.                                                                                                   |
|                                                                                                                                  |
|  THE DIRECTORS RECOMMEND A VOTE "For"                                                                                            |
|  ITEMS 1 AND 2                                                                                                                   |
|                                                                                                                                  |
|                                       FOR             WITHOLD          FOR ALL   To withhold authority to vote for any individual|
|  Vote on Directors                    ALL               ALL            EXCEPT    nominee(s), mark "For All Except" and write the |
|                                                                                  Number(s) of the nominee(s) on the line below.  |
|  1.  Election of directors:          ____             ____             ____      _______________________________________________ |
|      (01) Martin H. Belsky                                                                                                       |
|      (02) Harland C. Stonecipher                                                                                                 |
|                                                                                                                                  |
|                                                                                                                                  |
|                                                                                                                                  |
|  Vote on Proposal                                                                                     For    Against    Abstain  |
|                                                                                                                                  |
|  2.  Ratify the selection of Grant Thornton LLP as our independent registered public accounting firm  ____      ____       ____  |
|                                                                                                                                  |
|                                                                                                                                  |
|                                                                                                                                  |
|  In their discretion, upoin such matters as may properly come before the meeting or any adjournment or adjournments thereof.     |
|                                                                                                                                  |
|  The  shares  represented  by  this  proxy  when properly executed will be voted in the manner directed herein by the undersigned|
|  Shareholder(s).  If no direction is made, this proxy will be voted FOR items 1 and 2.  If any other matters properly come before|
|  the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion.                 |
|                                                                                                                                  |
|                                                                                                                                  |
|   -----------------------------------------------------------      ----------------------------------------------------------    |
|  |                                                  |       |      |                                                  |      |   |
|  |                                                  |       |      |                                                  |      |   |
|  ------------------------------------------------------------      ----------------------------------------------------------    |
|     Signature (PLEASE SIGN WITHIN BOX)                 Date               Signature (PLEASE SIGN WITHIN BOX)            Date     |
|                                                                                                                                  |
|                                                                                                                                  |
 ----------------------------------------------------------------------------------------------------------------------------------


 ----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                  |
|                                                                                                                                  |
|                                                                                                                                  |
|                                                    PRE-PAID LEGAL SERVICES, INC.                                                 |
|                                                                                                                                  |
|                                      This Proxy Solicited on Behalf of the Board of Directors                                    |
|                                                                                                                                  |
|                                                   Annual Meeting of the Shareholders                                             |
|                                                                                                                                  |
|                                                         Wednesday, May 21, 2008                                                  |
|                                                                                                                                  |
|       The shareholder of Pre-Paid Legal Services, Inc., an Oklahoma corporation, hereby acknowledges receipt of  the  Notice of  |
|  Annual Meeting of Shareholders and Proxy Statement, each dated April 4, 2008, and hereby appoints Randy Harp  and  Kathleen S.  |
|  Pinson, or either of them, as proxies and attorneys-in-fact, with full power to each of substition, on behalf  and in the name  |
|  of the undersigned, to represent the undersigned at our 2008 Annual  Meeting  of  Shareholders,  to  be  held  in the  Liberty  |
|  at our corporate offices located at One Pre-Paid Way in Ada, Oklahoma,  on  Wednesday, May 21, 2008, at 1:00 p.m., local time,  |
|  and at any adjournment thereof, and to vote all shares of our Common Stock which the  undersigned would be entitled to vote if  |
|  then and there personally present, on the matters set forth on the reverse side.                                                |
|                                                                                                                                  |
|  THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED "FOR"  THE  NOMINEES  LISTED  IN  |
|  ITEM 1 AND "FOR" THE PROPOSAL IN ITEM 2.  IF ANY OTHER MATTERS ARE BROUGHT BEFORE THE MEETING OR  IF THE NOMINEES FOR ELECTION  |
|  AS DIRECTORS NAMED IN THE PROXY STATEMENT FOR ELECTION AS DIRECTORS ARE UNABLE TO SERVE OR FOR  GOOD CAUSE WILL NOT SERVE, THE  |
|  PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEES AS THE  |
|  BOARD MAY RECOMMEND.                                                                                                            |
|                                                                                                                                  |
|                         PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.                            |
|                                                                                                                                  |
------------------------------------------------------------------------------------------------------------------------------------


          APPENDIX TO PROXY STATEMENT OF PRE-PAID LEGAL SERVICES, INC.
               CONTAINING SUPPLEMENTAL INFORMATION REQUIRED TO BE
               PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION

     The following is information  required to be provided to the Securities and
Exchange  Commission  in  connection  with our  Definitive  Proxy  Materials  in
connection with our 2008 Annual Meeting of Shareholders. This information is not
deemed  to be a part  of the  Proxy  Statement  and  will  not  be  provided  to
shareholders in connection with the Proxy Statement.

     1.   We plan to mail the definitive  Proxy Materials to our shareholders on
          or about April 11, 2008.