================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------

                                    FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

For The Quarterly Period Ended June 30, 2009

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For The Transition Period From _____ to _____

                                 ---------------

                        Commission File Number: 001-09293

                          PRE-PAID LEGAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

                  Oklahoma                                   73-1016728
      (State or other jurisdiction of                    (I.R.S. Employer
       incorporation or organization)                   Identification No.)

       One Pre-Paid Way, Ada, Oklahoma                      74820-5813
  (Address of principal executive offices)                  (Zip Code)

      (Registrants' telephone number, including area code): (580) 436-1234

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes  |X|   No  | |

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).

Yes  |X|   No  | |

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | |   Accelerated filer |X|   Non-accelerated filer | |
                                                      (do not check if a smaller
                                                       reporting company)
Smaller reporting Company | |


Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes | | No |X|

The number of shares  outstanding of the  registrant's  common stock  (excluding
4,852,179 shares held in treasury) as of July 22, 2009 was 10,965,299.
================================================================================






                          PRE-PAID LEGAL SERVICES, INC.

                                    FORM 10-Q

                       For the Quarter Ended June 30, 2009


                                    CONTENTS

Part I. Financial Information

     Item 1. Financial Statements:


          a) Consolidated Balance Sheets
             as of June 30, 2009 (Unaudited) and December 31, 2008

          b) Consolidated Statements of Income (Unaudited)
             for the three month and six month periods ended
             June 30, 2009 and 2008

          c) Consolidated Statements of Comprehensive Income
             (Unaudited) for the three month six month periods ended
             June 30, 2009 and 2008

          d) Consolidated Statements of Cash Flows (Unaudited) for
             the three month and six month periods ended
             June 30, 2009 and 2008

          e) Notes to Consolidated Financial Statements (Unaudited)

     Item 2. Management's  Discussion  and Analysis of Financial  Condition And
             Results of Operations

     Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Item 4. Controls and Procedures

Part II. Other Information

     Item 1. Legal Proceedings

     Item 1A. Risk Factors

     Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Item 4. Submission of matters to a vote of security holders

     Item 6. Exhibits

Signatures


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ITEM 1. FINANCIAL STATEMENTS
----------------------------



                          PRE-PAID LEGAL SERVICES, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (Amounts in 000's, except par values)

                                     ASSETS
                                                                                             June 30,        December 31,
                                                                                               2009              2008
                                                                                          --------------    --------------
Current assets:                                                                             (Unaudited)
                                                                                                      
  Cash and cash equivalents............................................................   $     29,064      $     26,528
  Available-for-sale investments, at fair value........................................         10,201            12,812
  Membership fees receivable...........................................................          5,948             6,639
  Inventories..........................................................................          1,300             1,285
  Refundable income taxes..............................................................          1,817               687
  Deferred member and associate service costs..........................................         14,756            15,737
  Deferred income taxes................................................................          5,618             5,151
  Other assets.........................................................................          6,644             6,200
                                                                                          --------------    --------------
      Total current assets.............................................................         75,348            75,039
Available-for-sale investments, at fair value..........................................         27,688            20,637
Investments pledged....................................................................          4,191             4,039
Property and equipment, net............................................................         51,040            53,445
Deferred member and associate service costs............................................          1,811             2,003
Other assets...........................................................................          9,055             7,680
                                                                                          --------------    --------------
        Total assets...................................................................   $    169,133      $    162,843
                                                                                          --------------    --------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Membership benefits payable..........................................................   $     11,556      $     12,013
  Deferred revenue and fees............................................................         27,259            26,556
  Current portion of capital leases payable............................................            250                24
  Current portion of notes payable.....................................................         18,241            22,408
  Accounts payable and accrued expenses................................................         15,353            16,327
                                                                                          --------------    --------------
    Total current liabilities..........................................................         72,659            77,328
                                                                                          --------------    --------------
  Capital leases payable...............................................................          1,119               910
  Notes payable........................................................................         28,130            37,251
  Deferred revenue and fees............................................................          1,811             2,003
  Deferred income taxes................................................................          5,466             5,646
  Other non-current liabilities........................................................          8,555             7,898
                                                                                          --------------    --------------
      Total liabilities................................................................        117,740           131,036
                                                                                          --------------    --------------
Stockholders' equity:
  Common stock, $.01 par value; 100,000 shares authorized; 15,823 and
    16,254 issued at June 30, 2009 and December 31, 2008, respectively.................            158               163
  Retained earnings....................................................................        149,788           130,832
  Accumulated other comprehensive income (loss)........................................            475              (160)
  Treasury stock, at cost; 4,852 shares held at June 30, 2009 and
    December 31, 2008, respectively....................................................        (99,028)          (99,028)
                                                                                          --------------    --------------
      Total stockholders' equity.......................................................         51,393            31,807
                                                                                          --------------    --------------
        Total liabilities and stockholders' equity.....................................   $    169,133      $    162,843
                                                                                          --------------    --------------

   The accompanying notes are an integral part of these financial statements.




                          PRE-PAID LEGAL SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Amounts in 000's, except per share amounts)
                                   (Unaudited)
                                                                     Three Months Ended        Six Months Ended
                                                                          June 30,                 June 30,
                                                                   ----------------------   -----------------------
                                                                     2009         2008         2009         2008
                                                                   ----------  ----------   ----------   ----------
Revenues:
                                                                                             
  Membership fees.............................................     $ 105,516   $ 109,456    $ 212,421    $ 218,516
  Associate services..........................................         5,908       6,303       11,190       12,346
  Other.......................................................           969       1,096        1,902        2,196
                                                                   ----------  ----------   ----------   ----------
                                                                     112,393     116,855      225,513      233,058
                                                                   ----------  ----------   ----------   ----------
Costs and expenses:
  Membership benefits.........................................        36,013      37,850       72,218       75,112
  Commissions.................................................        29,335      31,196       56,347       62,020
  Associate services and direct marketing.....................         6,502       7,029       13,305       12,633
  General and administrative..................................        12,922      13,761       26,305       26,335
  Other, net..................................................         1,845       2,927        4,134        7,093
                                                                   ----------  ----------   ----------   ----------
                                                                      86,617      92,763      172,309      183,193
                                                                   ----------  ----------   ----------   ----------

Income before income taxes....................................        25,776      24,092       53,204       49,865
Provision for income taxes....................................         9,985       9,036       20,312       18,867
                                                                   ----------  ----------   ----------   ----------
Net income....................................................     $  15,791   $  15,056    $  32,892    $  30,998
                                                                   ----------  ----------   ----------   ----------

Basic earnings per common share...............................     $    1.44   $    1.25    $    2.97    $    2.54
                                                                   ----------  ----------   ----------   ----------

Diluted earnings per common share.............................     $    1.44   $    1.25    $    2.96    $    2.54
                                                                   ----------  ----------   ----------   ----------


   The accompanying notes are an integral part of these financial statements.





                          PRE-PAID LEGAL SERVICES, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                               (Amounts in 000's)
                                   (Unaudited)


                                                                     Three Months Ended        Six Months Ended
                                                                          June 30,                 June 30,
                                                                   ----------------------   -----------------------
                                                                      2009        2008         2009         2008
                                                                   ----------  ----------   ----------   ----------
                                                                                             
Net income.....................................................    $  15,791   $  15,056    $  32,892    $  30,998
                                                                   ----------  ----------   ----------   ----------

Other comprehensive income (loss), net of tax:
  Foreign currency translation adjustment......................          720         111          503         (264)
                                                                   ----------  ----------   ----------   ----------
  Unrealized (losses) gains on investments:
    Unrealized holding (losses) gains arising during period....           19        (270)         217         (365)
    Reclassification adjustment for realized losses (gains)
      included in net income...................................          (37)         11          (85)          52
                                                                   ----------  ----------   ----------   ----------
                                                                         (18)       (259)         132         (313)
                                                                   ----------  ----------   ----------   ----------
Other comprehensive income (loss), net of income taxes of
  $(10) and $(166) for the three months and $71 and $(200)
  for the six months ended June 30, 2009 and 2008,
  respectively.................................................          702        (148)         635         (577)
                                                                   ----------  ----------   ----------   ----------

Comprehensive income...........................................    $  16,493   $  14,908    $  33,527    $  30,421
                                                                   ----------  ----------   ----------   ----------




   The accompanying notes are an integral part of these financial statements.




                          PRE-PAID LEGAL SERVICES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Amounts in 000's)
                                   (Unaudited)

                                                                                              Six Months Ended
                                                                                                  June 30,
                                                                                          ---------------------------
                                                                                             2009          2008
                                                                                          ------------  -------------

Cash flows from operating activities:
                                                                                                  
Net income.............................................................................   $    32,892   $    30,998
Adjustments to reconcile net income to net cash provided
  by operating activities:
  Benefit for deferred income taxes....................................................          (647)         (644)
  Depreciation and amortization........................................................         4,131         4,377
  Decrease in Membership income receivable.............................................           691            91
  (Increase) decrease in inventories...................................................           (15)          180
  Increase in income tax receivable....................................................        (1,130)       (2,838)
  Decrease in deferred member and associate service costs..............................         1,173         1,219
  Increase in other assets.............................................................        (1,819)         (585)
  Decrease in accrued Membership benefits..............................................          (457)           (2)
  Increase in deferred revenue and fees................................................           511           741
  Increase in other non-current liabilities............................................           657           699
  Decrease in income tax payable.......................................................             -        (5,590)
  Decrease in accounts payable and accrued expenses and other..........................          (471)         (988)
                                                                                          ------------  -------------
    Net cash provided by operating activities..........................................        35,516       27,658
                                                                                          ------------  -------------
Cash flows from investing activities:
  Additions to property and equipment..................................................        (1,280)       (3,190)
  Purchases of investments - available for sale........................................       (27,879)      (34,740)
  Maturities and sales of investments - available for sale.............................        23,419        36,048
                                                                                          ------------  -------------
    Net cash used in investing activities..............................................        (5,740)       (1,882)
                                                                                          ------------  -------------
Cash flows from financing activities:
  Proceeds from exercise of stock options and related tax withholding payments.........           108           102
  Tax benefit on exercise of stock options.............................................            14            79
  Proceeds from issuance of debt.......................................................             -        10,000
  Decrease in capital lease obligations................................................           (11)          (10)
  Repayments of debt...................................................................       (13,288)       (9,954)
  Purchases of treasury stock..........................................................       (14,063)      (27,763)
                                                                                          ------------  -------------
    Net cash used in financing activities .............................................       (27,240)      (27,546)
                                                                                          ------------  -------------

Net increase (decrease) in cash and cash equivalents...................................         2,536        (1,770)
Cash and cash equivalents at beginning of period.......................................        26,528        24,941
                                                                                          ------------  -------------
Cash and cash equivalents at end of period.............................................   $    29,064   $    23,171
                                                                                          ------------  -------------
Supplemental disclosure of cash flow information:
  Cash paid for interest...............................................................   $       714   $     2,310
                                                                                          ------------  -------------
  Cash paid for income taxes...........................................................   $    23,509   $    27,878
                                                                                          ------------  -------------
  Non-cash activities - capital lease obligations incurred.............................   $       446   $         -
                                                                                          ------------  -------------




   The accompanying notes are an integral part of these financial statements.

                          PRE-PAID LEGAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Except for per share amounts, dollar amounts in tables are in thousands
                          unless otherwise indicated)
                                   (Unaudited)

Note 1 - Basis of Presentation

     The accompanying  consolidated  financial statements and notes thereto have
been  prepared  pursuant  to the rules and  regulations  of the  Securities  and
Exchange  Commission.  Accordingly,  certain  disclosures  normally  included in
financial statements prepared in accordance with accounting principles generally
accepted  in the  United  States of  America  ("GAAP")  have been  omitted.  The
accompanying  consolidated financial statements and notes thereto should be read
in  conjunction  with the  consolidated  financial  statements and notes thereto
included in our 2008 Annual Report on Form 10-K.  Terms such as "we",  "our" and
"us" are sometimes  used as abbreviated  references to Pre-Paid Legal  Services,
Inc.

     In our opinion, the accompanying  unaudited financial statements as of June
30, 2009,  and for the three month and six month periods ended June 30, 2009 and
2008,  reflect  adjustments  (which were  normal and  recurring)  which,  in our
opinion,  are  necessary  for a fair  statement  of our  financial  position and
results of operations of the interim  periods  presented.  Results for the three
month and six month periods ended June 30, 2009 are not  necessarily  indicative
of results expected for the full year.

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally  accepted in the United  States of America  requires us to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Note 2 - Contingencies

     On March 27, 2006 we received a complaint filed by Blackburn & McCune PLLC,
a former  provider  attorney law firm,  in the Second  Circuit Court of Davidson
County,  Tennessee  seeking  compensatory  and punitive  damages on the basis of
allegations  of breach of  contract  and fraud.  On May 15, 2006 the trial court
dismissed plaintiff's complaint in its entirety. Plaintiff amended the complaint
to allege fraud and breach of fiduciary duty on June 12, 2006 and filed a notice
of appeal on June 13, 2006. On August 24, 2007 the Court of Appeals reversed the
ruling of the trial court and  remanded  the suit to the trial court for further
proceedings.  On June 24, 2009,  the trial court  granted our motion for summary
judgment and dismissed plaintiff's action against us in its entirety.  Plaintiff
has  appealed  this  order.   The  ultimate   outcome  of  this  matter  is  not
determinable.

     On March 23, 2007 we received a Civil Investigative Demand ("CID") from the
Federal Trade Commission ("FTC") requesting information relating to our Identity
Theft Shield and ADRS  Program.  On April 20, 2009 we received a letter from the
FTC alleging  misrepresentations  in sales  materials used in our Identity Theft
Shield and ADRS program such that we made false and misleading  claims about the
effectiveness  of ADRS for helping  organizations  comply with  government  data
security requirements.  Revisions to the marketing materials originally provided
to the FTC have been made subsequent to the initial  communication with the FTC.
The FTC could decide to commence administrative or federal court proceedings for
purposes of  determining  whether  there has been a  violation  and might seek a
variety of remedies, including injunctive relief. We are working with the FTC to
reach a mutually  acceptable  resolution.  The ultimate outcome of the matter is
not determinable but we will vigorously defend our interests in this matter.

     We are a defendant in various other legal  proceedings that are routine and
incidental  to our  business.  We will  vigorously  defend our  interests in all
proceedings  in which we are  named as a  defendant.  We also  receive  periodic
complaints or requests for information  from various state and federal  agencies
relating to our business or the activities of our marketing  force.  We promptly
respond to any such  matters and provide any  information  requested.  While the
ultimate outcome of these proceedings is not  determinable,  we do not currently
anticipate that these  contingencies  will result in any material adverse effect
to our financial condition or results of operation,  unless an unexpected result
occurs in one of the cases.  The costs of the defense of these  various  matters
are  reflected as a part of general and  administrative  expense,  or Membership
benefits if fees relate to Membership issues, in the consolidated  statements of
income. We have established an accrued liability,  we believe will be sufficient
to cover  estimated  damages in  connection  with various  cases  (exclusive  of
ongoing  defense costs which are expensed as  incurred),  which at June 30, 2009
was $50,000.  We believe that we have meritorious  defenses in all pending cases
and will vigorously defend against the claims.  However,  it is possible that an
adverse  outcome in certain  cases or increased  litigation  costs could have an
adverse effect upon our financial condition,  operating results or cash flows in
particular quarterly or annual periods.

     Canadian taxing authorities are challenging  portions of our commission and
general  and  administrative  deductions  for tax years 1999 - 2002 and have tax
assessments  which  aggregate  $5.7  million.  The Canadian  taxing  authorities
contend  commission  deductions should be matched with the membership revenue as
received,  we contend these commissions are deductible when paid. Under Canadian
tax laws, our commission  payments are treated as a prepaid  expense and we base
our  deduction of  commission on the fact that all the services (the sale of the
membership)  have  been  performed  by the sales  associate  at the time of sale
therefore  this prepaid  expense (the  commission  payments) is deductible  when
paid.  Also, the commission  payment is taxable to the sales associate when paid
and each year we issue a T4 (Canadian 1099  equivalent) to sales  associates for
the total  commission  payments  made during that year.  In  addition,  Canadian
taxing  authorities  challenged  our  allocation  of general and  administrative
expenses to Canadian  operations.  We contended  the  allocation  of general and
administrative  expenses,  based on the  percentage of Canadian new  memberships
written and the Canadian percentage memberships in force, was reasonable. During
July 2007 we received and later  accepted a  settlement  offer from the Canadian
taxing  authorities  regarding the general and  administrative  deductions which
would allow us to claim a deduction  on the  Canadian tax return for over 70% of
these items.  This  settlement  offer  allowed us to amend our U.S.  federal tax
returns  and  deduct the  remaining  30% of these  items.  The  Canadian  taxing
authorities  amended  Canadian tax returns to reflect the changes in our general
and administrative  expense and issued credits for the associated taxes, penalty
and interest.  We did not prevail on the  commission  issue on our appeal to the
Canadian taxing  authorities and on December 19, 2008 filed our Notice of Appeal
with the Tax Court of Canada.  We have paid all the  assessed  tax,  penalty and
interest relating to the commission issue and at June 30, 2009 have $3.3 million
recorded  in Other  Assets,  Current  which  represents  the amount of refund we
expect to  ultimately  receive.  We have  established  an accrued  liability  we
believe  will be  sufficient  to cover  any  additional  estimated  penalty  and
interest  assessment in connection with these items,  which at June 30, 2009 was
$500,000.  We believe it is more-likely than not that we will prevail on our tax
position  relative  to these  items,  however,  it is  possible  that an adverse
outcome  could have an adverse  effect upon our financial  condition,  operating
results or cash flows in particular quarterly or annual periods.

Note 3 - Treasury Stock Purchases

     We  announced  on  April  6,  1999,  a  treasury  stock  purchase   program
authorizing  management to acquire up to 500,000 shares of our common stock. The
Board of Directors has increased  such  authorization  from 500,000 shares to 15
million  shares  through  subsequent  board  actions.  At June  30,  2009 we had
purchased 14.2 million  treasury shares under these  authorizations  for a total
consideration  of $421.2  million,  an average  price of $29.70  per  share.  We
purchased and formally retired 13,315 shares of our common stock during the 2009
second quarter for $525,000,  or an average price of $39.42 per share,  reducing
our common  stock by $133 and our  retained  earnings  by  $525,000.  See Note 6
below.  Given  the  current  interest  rate  environment,  the  nature  of other
investments  available and our expected cash flows,  we believe that  purchasing
treasury shares enhances  shareholder value and may seek alternative  sources of
financing to continue or accelerate the program.  Any additional  treasury stock
purchases  will be made at prices that we consider  attractive and at such times
that we believe will not unduly impact our liquidity.


Note 4 - Earnings Per Share

     Basic  earnings per common share are computed by dividing net income by the
weighted  average  number  of  shares of common  stock  outstanding  during  the
respective  period.  Diluted  earnings per common share are computed by dividing
net income by the weighted average number of shares of common stock and dilutive
potential common shares  outstanding  during the respective period. The weighted
average number of common shares is increased by the number of dilutive potential
common  shares  issuable on the  exercise  of options  less the number of common
shares assumed to have been purchased with the proceeds from the exercise of the
options  pursuant to the treasury stock method;  those  purchases are assumed to
have been made at the average  price of the common stock  during the  respective
period.



                                                                            Three Months          Six Months
                                                                           Ended June 30,       Ended June 30,
                                                                         -------------------  -------------------
Basic Earnings Per Share:                                                 2009       2008      2009       2008
                                                                         --------- ---------  --------- ---------
Earnings:
                                                                                            
Net income...........................................................    $ 15,791  $ 15,056   $ 32,892  $ 30,998
                                                                         --------- ---------  --------- ---------
Shares:
Weighted average shares outstanding..................................      10,980    12,016     11,091    12,189
                                                                         --------- ---------  --------- ---------
Diluted Earnings Per Share:
Earnings:
Net income...........................................................    $ 15,791  $ 15,056   $ 32,892  $ 30,998
                                                                         --------- ---------  --------- ---------
Shares:
-------
Weighted average shares outstanding..................................      10,980    12,016     11,091    12,189
Assumed exercise of options..........................................          13        19         13        20
                                                                         --------- ---------  --------- ---------
Weighted average number of shares, as adjusted.......................      10,993    12,035     11,104    12,209
                                                                         --------- ---------  --------- ---------
Shares issued pursuant to option exercises...........................           -         -          5         6
                                                                         --------- ---------  --------- ---------



     Options  to  purchase   shares  of  common  stock  are  excluded  from  the
calculation  of diluted  earnings per share when their  inclusion  would have an
anti-dilutive effect on the calculation.  No options were excluded for the three
month and six month periods ended June 30, 2009 and 2008.

Note 5 - Recently Issued Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 157,  "Fair Value
Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements.
We adopted SFAS 157 on January 1, 2008, as required for our financial assets and
financial liabilities. However, the FASB deferred the effective date of SFAS 157
for  one  year  as  it  relates  to  fair  value  measurement  requirements  for
nonfinancial  assets and  nonfinancial  liabilities  that are not  recognized or
disclosed at fair value on a recurring  basis.  The adoption of SFAS 157 for our
financial assets and financial liabilities did not have a material impact on our
consolidated financial statements. The adoption of SFAS 157 for our nonfinancial
assets and nonfinancial  liabilities had no impact on our consolidated financial
statements.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial  Liabilities".  SFAS No. 159 permits an entity to
choose, at specified election dates, to measure eligible  financial  instruments
and  certain  other  items at fair value that are not  currently  required to be
measured at fair value. An entity reports  unrealized  gains and losses on items
for which the fair value option has been elected in earnings at each  subsequent
reporting date. Upfront costs and fees related to items for which the fair value
option is elected are recognized in earnings as incurred and not deferred.  SFAS
159 also  established  presentation  and  disclosure  requirements  designed  to
facilitate  comparisons  between  entities  that  choose  different  measurement
attributes for similar types of assets and  liabilities.  SFAS 159 was effective
for financial  statements  issued for fiscal years  beginning after November 15,
2007 and interim  periods within those fiscal years.  At the effective  date, an
entity could elect the fair value option for eligible items that existed at that
date. We did not elect the fair value option for eligible  items that existed as
of January 1, 2008. As such, the adoption of SFAS 159 did not have any impact on
our consolidated financial position, results of operations or cash flows.

     In December  2007,  the FASB issued SFAS No. 141 (revised  2007),  Business
Combinations  ("SFAS 141R").  SFAS 141R establishes  principles and requirements
for how an acquirer  recognizes  and measures in its  financial  statements  the
identifiable  assets  acquired,  the  liabilities  assumed,  any  noncontrolling
interest in the acquiree and the goodwill  acquired.  SFAS 141R also establishes
disclosure  requirements  to enable the  evaluation  of the nature and financial
effects  of  the  business  combination.  This  statement  is  effective  for us
beginning January 1, 2009.

     In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial  Statements--an amendment of Accounting Research Bulletin
No. 51 ("SFAS 160"). SFAS 160 establishes accounting and reporting standards for
ownership  interests in subsidiaries held by parties other than the parent,  the
amount  of  consolidated  net  income  attributable  to  the  parent  and to the
noncontrolling  interest,  changes in a  parent's  ownership  interest,  and the
valuation of retained  noncontrolling  equity  investments  when a subsidiary is
deconsolidated.  SFAS 160 also establishes disclosure  requirements that clearly
identify and  distinguish  between the interests of the parent and the interests
of the  noncontrolling  owners.  This  statement is  effective  for us beginning
January  1, 2009.  The  adoption  of SFAS 160 had no impact on our  consolidated
financial position, results of operations or cash flows.

     In May 2008,  the FASB issued SFAS No. 162,  "The  Hierarchy  of  Generally
Accepted  Accounting  Principles"  (SFAS 162).  This  statement  identifies  the
sources of accounting  principles and the framework for selecting the principles
used in the preparation of financial statements of nongovernmental entities that
are presented in accordance with GAAP. With the issuance of this statement,  the
FASB concluded that the GAAP hierarchy  should be directed toward the entity and
not its auditor, and reside in the accounting literature established by the FASB
as opposed to the American  Institute of Certified  Public  Accountants  (AICPA)
Statement  on  Auditing  Standards  No. 69,  "The  Meaning of Present  Fairly in
Conformity With Generally  Accepted  Accounting  Principles."  This statement is
effective 60 days following the SEC's approval of the Public Company  Accounting
Oversight Board  amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles." The implementation of
this  standard  did  not  have a  significant  impact  on the  determination  or
reporting of our financial results.

     In  October  2008,   the  FASB  issued  FASB  Staff   Position  FAS  157-3,
"Determining  the Fair Value of a Financial Asset When the Market for That Asset
Is Not Active" ("FSP 157-3").  FSP 157-3  clarified the  application of FAS 157.
FSP 157-3  demonstrated  how the fair value of a financial  asset is  determined
when the market for that  financial  asset is inactive.  FSP 157-3 was effective
upon issuance,  including prior periods for which  financial  statements had not
been issued.  The  implementation of this standard did not have an impact on our
consolidated financial position, results of operations or cash flows.

     In January 2009,  the FASB issued FASB Staff Position No.  Emerging  Issues
Task Force 99-20-1,  "Amendments  to the  Impairment  Guidance of EITF Issue No.
99-20"  (FSP No. EITF  99-20-1).  This FSP  provided  additional  guidance  with
respect to how entities determine whether an  "other-than-temporary  impairment"
(OTTI) exists for certain  beneficial  interests in a  securitized  transaction,
such as asset-backed securities and mortgage-backed  securities, that (1) do not
have a high  quality  rating or (2) can be  contractually  prepaid or  otherwise
settled  such  that  the  holder  would  not  recover  substantially  all of its
investment.  FSP No. EITF  99-20-1  amended EITF Issue No. 99-20 to more closely
align its OTTI  guidance  with that of SFAS No.  115,  "Accounting  for  Certain
Investment  in Debt  and  Equity  Securities."  This  FSP was  effective  for us
prospectively  beginning  October 1, 2008. We considered  this FSP's  additional
interpretation  of EITF Issue No. 99-20 when classifying  respective  additional
impairments as "temporary" or  "other-than-temporary"  beginning with the fourth
quarter  of  2008.  This  FSP  had no  impact  on  such  classifications  on our
consolidated financial position, results of operations or cash flows.

     In May 2009, the FASB issued statement No. 165,  "Subsequent  Events" (SFAS
165).  SFAS 165  modifies  the  definition  of what  qualifies  as a  subsequent
event--those events or transactions that occur following the balance sheet date,
but  before  the  financial  statements  are  issued,  or  are  available  to be
issued--and  requires  companies  to  disclose  the  date  through  which it has
evaluated  subsequent events and the basis for determining that date. We adopted
the  provisions of SFAS 165 for second  quarter  2009,  in  accordance  with the
effective date and evaluated subsequent events through July 24, 2009..

     In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting  Standards
Codification(TM)  ("Codification")  and  the  Hierarchy  of  Generally  Accepted
Accounting  Principles - a  replacement  of FASB  Statement  No. 162" ("SFAS No.
168").  SFAS No. 168 establishes the  Codification as the single official source
of  authoritative  United  States  accounting  and  reporting  standards for all
non-governmental   entities  (other  than  guidance  issued  by  the  SEC).  The
Codification changes the referencing and organization on financial standards and
is effective  for interim and annual  periods  ending on or after  September 15,
2009. We will apply the Codification to our disclosures beginning with our third
quarter of fiscal 2009. As  Codification  is not intended to change the existing
accounting  guidance,  its  adoption  will not have an impact  on our  financial
statements.

     On April 9, 2009, the Financial  Accounting  Standards  Board (FASB) issued
Staff  Position  SFAS 107-1 and  Accounting  Principles  Board (APB) Opinion No.
28-1, "Interim Disclosures about Fair Value of Financial Instruments" (FSP 107-1
and APB 28-1). FSP 107-1 amends FASB Statement No. 107,  "Disclosures about Fair
Values of Financial  Instruments,"  to require  disclosures  about fair value of
financial  instruments  in  interim  financial  statements  as well as in annual
financial  statements.  APB 28-1 amends APB Opinion No. 28,  "Interim  Financial
Reporting," to require those  disclosures in all interim  financial  statements.
FSP 107-1 and APB 28-1 are effective for interim  periods  ending after June 15,
2009 and we adopted them in second quarter 2009. See Note 8.

Note 6 - Notes Payable

     During 2006,  we received  $80 million of senior,  secured  financing  (the
"Senior Loan") from Wells Fargo Foothill,  Inc. ("Wells Fargo")  consisting of a
$75 million five year term loan facility (the "Term  Facility") and a $5 million
five year revolving  credit  facility (the  "Revolving  Facility").  At June 30,
2009, we had the full  Revolving  Facility  available to us. After payment of an
origination  fee of 1%, lender costs and retirement of $15.3 million of existing
bank indebtedness,  the net proceeds of the Term Facility we received were $58.8
million and used to purchase treasury stock.

     The Term  Facility  provides  for a five-year  maturity  and  amortizes  in
monthly  installments of $1.25 million  commencing August 1, 2006, with interest
on the outstanding  balances under the Term Facility and the Revolving  Facility
payable,  at our  option,  at a rate equal to Wells Fargo base rate or at the 30
day LIBOR rate plus 150 basis  points.  The  interest  rate at June 30, 2009 was
1.81%. We are also obligated to make additional  quarterly payments equal to 50%
of our  "excess  cash flow" (as  defined in the Senior  Loan  agreement)  if our
Leverage  Ratio is greater than or equal to 1 to 1 at the end of a quarter.  Our
Leverage Ratio was 0.43 to 1 at June 30, 2009. We expect to be able to repay the
facilities with cash flow from operations.  We have the right to prepay the Term
Facility in whole or in part without penalty.

     The  Senior  Loan  is   guaranteed  by  our   non-regulated   wholly  owned
subsidiaries  and is  secured by all of our  tangible  and  intangible  personal
property  (other  than   aircraft),   including  stock  in  all  of  our  direct
subsidiaries,  and a mortgage  on a building  we  recently  acquired  in Duncan,
Oklahoma and  remodeled to relocate  and expand our  existing  customer  service
facility in Duncan.

         In addition to customary covenants for loans of a similar type, the
      principal covenants for the Senior Loan are:
     *    a limitation on incurring any  indebtedness in excess of the remaining
          existing bank  indebtedness  outstanding and $2.3 million in permitted
          capitalized leases or purchase money debt;
     *    a limitation on our ability to pay dividends or make stock  purchases,
          other  than with the net  proceeds  of the Term  Loan,  unless we meet
          certain cash flow tests;
     *    a prohibition on prepayment of other debt;
     *    a  requirement  to  maintain   consolidated  EBITDA  (Earnings  before
          Interest,  Taxes,  Depreciation and Amortization) for the twelve month
          period  ending  December  31, 2006 and each quarter  thereafter  of at
          least  $80  million  ($75  million  for us and  our  top  tier  direct
          subsidiaries);
     *    a  requirement  to maintain a quarterly  fixed charge  coverage  ratio
          (EBITDA  (with  certain  adjustments)  divided by the sum of  interest
          expense,  income taxes and scheduled  principal  payments) of at least
          1.1 to 1;
     *    a requirement to maintain at least 1.3 million members;
     *    a requirement to maintain a Leverage Ratio (funded  indebtedness as of
          the end of each  quarter  divided  by EBITDA for the  trailing  twelve
          months) of no more than 1.5 to 1;
     *    we must have availability  (unused portion of the Revolving  Facility)
          plus  Qualified  Cash  (the  amount  of  unrestricted  cash  and  cash
          equivalents) greater than or equal to $12,500,000; and,
     *    an event of  default  occurs if Harland  Stonecipher  ceases to be our
          Chairman and Chief  Executive  Officer for a period of 120 days unless
          replaced with a person approved by Wells Fargo.

     We were in compliance with these covenants at June 30, 2009.

     Our $20 million  real  estate loan was fully  funded in 2002 to finance our
new  headquarters  building in Ada,  Oklahoma and has a final maturity of August
2011.  This loan,  with  interest at the 30 day LIBOR rate plus 150 basis points
adjusted  monthly,  is secured by a mortgage on our  headquarters.  The interest
rate at June 30, 2009 was 1.81%,  with  monthly  principal  payments of $191,000
plus  interest with the balance of  approximately  $2.3 million due at maturity.
The real estate loan's financial covenants conform to those of the Senior Loan.

     During  2007,  we  entered  into a term loan  agreement  with  Wells  Fargo
Equipment Finance,  Inc. to refinance $9.6 million  indebtedness  related to our
aircraft. This loan, with interest at the 30 day LIBOR rate plus 89 basis points
adjusted  monthly,  is secured by a mortgage on the aircraft  and  engines.  The
interest  rate at June 30, 2009 was 1.20%,  with monthly  principal  payments of
$80,000 plus interest.

     During June 2008 we received additional  financing from Bank of Oklahoma in
the form of an unsecured  stock  repurchase loan for $10 million on an unsecured
basis repayable in 12 equal monthly payments  beginning June 30, 2008,  together
with interest at LIBOR plus 162.5 basis points.  This loan was completely repaid
pursuant to its terms.

     A schedule of outstanding balances as of June 30, 2009 is as follows:

                       Senior loan................................   $ 31,250
                       Real estate loan...........................      7,238
                       Aircraft loan..............................      7,883
                                                                     ---------
                       Total notes payable........................     46,371
                       Less: Current portion of notes payable.....    (18,241)
                                                                     ---------
                       Long term portion..........................   $ 28,130
                                                                     ---------

     A schedule of future maturities as of June 30, 2009 is as follows:

                       Repayment Schedule commencing
                       April 2009:
                       --------------------------------------------
                       Year 1.....................................   $ 18,241
                       Year 2.....................................     18,241
                       Year 3.....................................      4,872
                       Year 4.....................................        956
                       Year 5.....................................        956
                       Thereafter.................................      3,105
                                                                     ---------
                       Total notes payable........................   $ 46,371
                                                                     ---------


Note 7 - Share-based Compensation

     During the six months ended June 30, 2009, the stock option  activity under
our stock option plans was as follows:




                                                                                   Weighted
                                                                                   Average
                                                                                  Remaining
                                                      Weighted                   Contractual     Aggregate
                                                      Average      Number of         Term        Intrinsic
                                                       Price         Shares       (In Years)       Value
                                                    ------------  ------------   ------------   ----------
                                                                                     
Outstanding, January 1, 2009....................      $  19.70        42,500
  Granted.......................................          -                -
  Cancelled.....................................          -                -
  Exercised.....................................         23.93        (4,500)
                                                    ------------  -----------
Outstanding, June 30, 2009......................      $  19.20        38,000         1.67        $     927
                                                    ------------  ------------   ------------   ----------
Options exercisable as of June 30, 2009.........      $  19.20        38,000         1.67        $     927
                                                    ------------  ------------   ------------   ----------


     Other information pertaining to option activity during the six months ended
June 30, 2009 and 2008 was as follows:



                                                                           June 30, 2009        June 30, 2008
                                                                           --------------       --------------

                                                                                          
Weighted average grant-date fair value of stock options granted......      Not applicable       Not applicable
Total fair value of stock options vested.............................      Not applicable       Not applicable
Total intrinsic value of stock options exercised.....................          $     40             $    201



     Under our stock  option  plan,  1,346,252  shares of our  Common  Stock are
available for issuance.  Options  outstanding and exercisable  were granted at a
stock  option  price which was not less than the fair market value of our Common
Stock on the date the option was  granted  and no option has a term in excess of
ten years.  Additionally,  options vested and became  exercisable  either on the
grant date or up to five years from the option grant date.

Note 8 - Fair Value Measurement

     On January 1, 2008,  we adopted  SFAS No. 157,  "Fair Value  Measurements,"
which  defines  fair  value,  establishes  a  framework  for using fair value to
measure  assets  and  liabilities,  and  expands  disclosures  about  fair value
measurements.  The Statement applies whenever other statements require or permit
assets or liabilities  to be measured at fair value.  SFAS 157  established  the
following fair value hierarchy that  prioritizes the inputs used to measure fair
value:

 Level 1: Quoted prices are available in active markets for identical  assets or
          liabilities  as of the  reporting  date.  Active  markets are those in
          which  transactions  for the asset or  liability  occur in  sufficient
          frequency  and volume to  provide  pricing  information  on an ongoing
          basis.  Level 1 primarily  consists of financial  instruments  such as
          exchange-traded  derivatives,  listed  equities  and  U.S.  government
          treasury securities.

 Level 2: Pricing inputs are other than quoted prices in active markets included
          in Level 1, which are either  directly or indirectly  observable as of
          the reporting date. Level 2 includes those financial  instruments that
          are valued using models or other valuation methodologies. These models
          are  primarily   industry-standard   models  that   consider   various
          assumptions,  including  quoted forward prices for  commodities,  time
          value,  volatility factors,  and current market and contractual prices
          for the underlying  instruments,  as well as other  relevant  economic
          measures. Substantially all of these assumptions are observable in the
          marketplace throughout the full term of the instrument, can be derived
          from  observable  data or are supported by observable  levels at which
          transactions  are  executed in the  marketplace.  Instruments  in this
          category  include  obligations  of state and  political  subdivisions,
          government   guaranteed  bank  debt,  auction  rate  certificates  and
          corporate obligations.

 Level 3: Pricing  inputs  include  significant  inputs that are generally  less
          observable  from  objective  sources.  These  inputs  may be used with
          internally  developed  methodologies  that result in management's best
          estimate  of fair value.  At each  balance  sheet date,  we perform an
          analysis  of all  instruments  subject to SFAS No. 157 and  include in
          Level  3 all of  those  whose  fair  value  is  based  on  significant
          unobservable inputs.

     The following table presents our financial assets and liabilities that were
accounted  for at fair value on a  recurring  basis as of June 30, 2009 by level
within the fair value hierarchy (in thousands):



                                                            Fair Value Measurements Using
                                                         -------------------------------------
                    June 30, 2009                          Level 1       Level 2       Level 3
                    -------------                        ----------    ----------    ---------
                                                                            
Available for sale investments.....................      $       -     $  42,080     $       -

                    June 30, 2008
                    -------------
Available for sale investments.....................      $       -     $  36,663     $       -



     For securities without a readily  ascertainable  market value (Level 2), we
utilize pricing services and broker quotes.  Our pricing  service's  evaluations
are based on market data. Our pricing service utilizes  evaluated pricing models
that vary by asset class and incorporate  available  trade, bid and other market
information. Because many fixed income securities do not trade on a daily basis,
our pricing service's evaluated pricing applications apply available information
as applicable  through processes such as benchmark curves,  benchmarking of like
securities,  sector groupings, and matrix pricing, to prepare evaluations.  Such
estimated  fair values do not  necessarily  represent the values for which these
securities could have been sold at the dates of the balance sheets.

     Our  financial  instruments  consist  primarily  of cash,  certificates  of
deposit,  short-term  investments,  debt and equity securities,  Membership fees
receivable,  Membership benefits payable, notes payable and accounts payable and
accrued  expenses.  Fair  value  estimates  have been  determined  by us,  using
available  market  information and  appropriate  valuation  methodologies.  Fair
values of inactively traded debt securities are based on quoted market prices of
identical or similar  securities  or based on  observable  inputs like  interest
rates.  The carrying value of cash,  certificates  of deposit,  Membership  fees
receivable,  Membership  benefits  payable  and  accounts  payable  and  accrued
expenses are considered to be representative of their respective fair value, due
to the short  term  nature of these  instruments.  The  carrying  value of notes
payable is considered to be representative of their respective fair values,  due
to the variable  interest rate feature of such notes. The fair value disclosures
relating to debt and equity securities are presented above.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

     The  following   discussion   should  be  read  in  conjunction   with  the
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  in our  Form  10-K for the  year  ended  December  31,  2008,  which
describes,  among other things,  our basic business model,  critical  accounting
policies,  measures of Membership retention, and basic cash flow characteristics
of our  business.  The  following  tables  set forth  changes  in the  principal
categories of revenues and expenses and Membership  and recruiting  activity for
the second  quarter of 2009 compared to the second quarter of 2008 and the first
quarter of 2009  (Table  amounts in 000's).  The sum of the  percentages  in the
tables may not total due to rounding.



    Three Months Ended June 30, 2009      Three                %          %       Three              Three
              compared to                 Months             Change    Change     Months             Months
    Three Months Ended June 30, 2008      Ended     % of     from       from      Ended      % of     Ended    % of
            and compared to              June 30,   Total    Prior    Sequential June 30,   Total     March    Total
   Three Months Ended March 31, 2009       2009    Revenue    Year     Period      2008    Revenue  31, 2009  Revenue
------------------------------------    ---------- ------- -------- ---------- --------- --------- --------- ---------
Revenues:
                                                                                         
  Membership fees....................    $105,516     93.9     (3.6)    (1.3)   $109,456      93.7  $106,905     94.5
  Associate services.................       5,908      5.2     (6.3)    11.9       6,303       5.4     5,282      4.7
  Other..............................         969      0.9    (11.6)     3.9       1,096       0.9       933      0.8
                                        ---------- -------  -------- ---------- --------- --------- --------- ---------
                                          112,393    100.0     (3.8)    (0.6)    116,855     100.0   113,120    100.0
Costs and expenses:
  Membership benefits................      36,013     32.0     (4.9)    (0.5)     37,850      32.4    36,205     32.0
  Commissions........................      29,335     26.1     (6.0)     8.6      31,196      26.7    27,012     23.9
  Associate services and direct
    marketing........................       6,502      5.8     (7.5)    (4.4)      7,029       6.0     6,803      6.0
  General and administrative.........      12,922     11.5     (6.1)    (3.4)     13,761      11.8    13,383     11.8
  Other, net.........................       1,845      1.6    (37.0)   (19.4)      2,927       2.5     2,289      2.0
                                        ---------- -------  -------- ---------- --------- --------- --------- ---------
                                           86,617     77.0     (6.6)     1.1      92,763      79.4    85,692     75.7

Income before income taxes...........      25,776     22.9      7.0     (6.0)     24,092      20.6    27,428     24.2
Provision for income taxes...........       9,985      8.9     10.5     (3.3)      9,036       7.7    10,327      9.1
                                        ---------- -------  -------- ---------- --------- --------- --------- ---------
Net income...........................     $15,791     14.0      4.9     (7.7)    $15,056      12.9   $17,101     15.1
                                        ---------- -------  -------- ---------- --------- --------- --------- ---------





                                                                                            Three Months Ended
New Memberships:                                                                  6/30/2009      6/30/2008      3/31/2009
----------------                                                                  ---------      ---------      ---------
                                                                                                         
New legal service membership sales..........................................        118,050        127,804        117,635
New "stand-alone" IDT membership sales......................................          4,180          6,642          4,960
                                                                                  ---------      ---------      ---------
         Total new membership sales.........................................        122,230        134,446        122,595
                                                                                  ---------      ---------      ---------

New "add-on" IDT membership sales...........................................         78,009         82,623         72,850
Average Annual Membership fee...............................................        $328.79        $329.44        $319.86

Active Memberships:
Active legal service memberships at end of period...........................      1,419,092      1,481,051      1,438,519
Active "stand-alone" IDT memberships at end of period.......................         86,779         85,588         88,544
                                                                                  ---------      ---------      ---------
         Total active memberships at end of period..........................      1,505,871      1,566,639      1,527,063
                                                                                  ---------      ---------      ---------
Active "add-on" IDT memberships at end of period............................        670,769        658,365        671,850

New Sales Associates:
New sales associates recruited..............................................         25,172         26,102         23,871
Average enrollment fee paid by new sales associates.........................        $120.98         $98.93        $119.17

Average Membership fee in force:
Average Annual Membership fee...............................................        $301.37        $300.46        $300.81



     Identity Theft Shield  ("IDT")  memberships  sold in  conjunction  with new
legal plan memberships or "added-on" to existing legal plan memberships sell for
$9.95 per month and are not counted as "new"  memberships  but do  increase  the
average   premium  and  related  direct   expenses   (membership   benefits  and
commissions) of our membership  base,  while "stand alone" Identity Theft Shield
memberships  are not attached to a legal plan membership and sell for $12.95 per
month.

     Recently Issued Accounting Pronouncements
     See Note 5 - Recently Issued Accounting Pronouncements in Item 1 above.

Results of Operations - Second Quarter of 2009 compared to Second Quarter
-------------------------------------------------------------------------
of 2008
-------
     Net income  increased  5% for the second  quarter of 2009 to $15.8  million
from $15.1  million  for the prior  year's  second  quarter  primarily  due to a
decrease  in  commission  expense  of $1.9  million,  a decrease  in other,  net
expenses of $1.1 million and a decrease in Membership  benefits of $1.8 million,
a decrease in associate services and direct marketing expenses of $527,000 and a
decrease in general and administrative  expenses of $839,000,  partially reduced
by a decrease in  membership  fees of $3.9  million and a decrease in  associate
services revenue of $395,000.  Diluted earnings per share increased 15% to $1.44
per share from $1.25 per share for the prior  year's  comparable  quarter due to
the 5% increase in net income and a 9% decrease in the weighted  average  number
of diluted shares outstanding.

     Membership  fees  totaled  $105.5  million  during the 2009 second  quarter
compared to $109.5 million for 2008, a decrease of 4%. Membership fees and their
impact on total revenues in any period are determined  directly by the number of
active  Memberships  in force  during any such period and the monthly  amount of
such  Memberships.  The active  Memberships  in force are determined by both the
number of new  Memberships  sold in any period together with the renewal rate of
existing Memberships.  New Membership sales decreased 9% during the three months
ended June 30, 2009 to 122,230  from  134,446  during the  comparable  period of
2008.  At June 30,  2009,  there  were  1,505,871  active  Memberships  in force
compared to 1,566,639 at June 30, 2008, a decrease of 4%. The average annual fee
per Membership has increased from $300 for all  Memberships in force at June 30,
2008 to $301 for all  Memberships  in force at June  30,  2009,  primarily  as a
result of a larger number of Identity Theft Shield memberships.

     Associate  services  revenue  decreased by  approximately  $395,000 to $5.9
million during the second quarter of 2009 when compared to the 2008 quarter. New
associates  enrolled  decreased 4% to 25,172 during the 2009 period  compared to
26,102 for the same  period of 2008.  The  average  enrollment  fees paid by new
sales associates were $121 and $99 for the respective periods. The eService fees
decreased  to $2.4  million  for the  second  quarter of 2009  compared  to $3.1
million for the 2008  quarter.  Future  revenues  from  associate  services will
depend primarily on the number of new associates enrolled, the price charged for
new associates and the number who choose to participate in our eService program,
but we expect that such  revenues  will  continue to be offset by the direct and
indirect cost to us of training,  providing  associate services and other direct
marketing expenses.

     Other  revenue  declined  12% from  $1.1  million  for the 2008  period  to
$969,000 for the 2009 period.

     Total  revenues  decreased 4% to $112.4  million for the three months ended
June 30, 2009 from $116.9 million during the comparable  period of 2008 due to a
$3.9 million  decrease in Membership  fees and a $395,000  decrease in associate
services revenue.

     Membership  benefits,  which primarily  represent  payments to provider law
firms and Kroll Background America,  Inc., a subsidiary of Kroll Inc. ("Kroll"),
totaled $36.0 million for the three months ended June 30, 2009 compared to $37.9
million  for the  comparable  period  of  2008,  and  represented  34% and  35%,
respectively,  of Membership fees for the two periods.  This Membership  benefit
ratio (Membership benefits as a percentage of Membership fees) should be reduced
going forward as substantially  all active  Memberships  provide for a capitated
cost and we have reduced the capitated  cost of the Identity Theft plan benefits
effective April 1, 2007, with an additional reduction on January 1, 2010.

     Commissions  to  associates  decreased  6% to $29.3  million  for the three
months ended June 30, 2009 compared to $31.2 million for the  comparable  period
of 2008,  and  represented  28% and 29% of  Membership  fees for the  respective
periods.  Commissions to associates are primarily dependent on the number of new
Memberships sold during a period and the average fee of those  Memberships.  New
Memberships  sold  during  the  second  quarter of 2009  totaled  122,230,  a 9%
decrease from the 134,446 for 2008, and the "add-on" IDT Membership  sales which
are not included in these totals  decreased 6% to 78,009 for the second  quarter
of 2009 from 82,623 for 2008. Our average  Annual  Membership fee written during
the quarter of 2009 had a slight  increase to $301.37  from  $300.46  during the
2008 period.  Our new Membership  fees written during the second quarter of 2009
decreased 4% from 2008.  Average  commission per new Membership was unchanged at
$200 for the 2009 second quarter.  The 4% decline in new Membership fees written
resulted in an approximate 6% decline in  commissions.  Should we add additional
commissions  to our  compensation  plan or  reduce  the  amount  of  chargebacks
collected from our associates as we have from time to time, the commission  cost
per new Membership will increase accordingly.

     Associate  services and direct marketing expenses decreased to $6.5 million
for the three months  ended June 30, 2009 from $7.0  million for the  comparable
period of 2008.  The  decrease  was  primarily a result of  decreased  costs for
bonuses,  decreased  costs of conventions  and decreased costs for materials and
related freight sent to new associates due to the reduction in the number of new
associates  enrolled  during the quarter.  We offer the Player's Club  incentive
program to  provide  additional  incentives  to our  associates  as a reward for
consistent,   quality  business.  Associates  can  earn  the  right  to  receive
additional monthly bonuses by meeting monthly  qualification  requirements for a
12 month  period  and  maintaining  certain  personal  retention  rates  for the
Memberships  sold during the 12 month  period.  These  expenses also include the
costs of providing associate services and marketing expenses.

     General and administrative  expenses during the three months ended June 30,
2009  and  2008  were  $12.9  million  and  $13.8  million,   respectively,  and
represented 12% and 13%, respectively,  of Membership fees for both periods. The
$839,000 decrease in general and  administrative  expenses included decreases in
employee  costs,  bank service  charges,  advertising and other taxes which were
partially  offset by increases in consulting  fees  associated with Payment Card
Industry compliance and legal fees.

     Other  expenses,   net,  which  include   depreciation  and   amortization,
litigation  accruals,  interest  expense and premium  taxes  reduced by interest
income,  were $1.8 million for the three months ended June 30, 2009  compared to
$2.9  million  for the 2008  comparable  period.  Depreciation  expense was $2.0
million for the three  months  ended June 30, 2009 and $2.2 million for the 2008
comparable period. Interest expense decreased to $302,000 during the 2009 period
from $807,000 during the comparable  period of 2008 as a result of the reduction
in debt and lower interest rates.  Premium taxes decreased from $478,000 for the
three months ended June 30, 2008 to $442,000 for the comparable  period of 2009.
Interest income decreased from $507,000 for the three months ended June 30, 2008
to  $492,000  for the three  months  ended June 30,  2009,  due to a decrease in
interest  rates.  The  litigation  reserve was reduced by $450,000 for the three
months ended June 30, 2009 compared to a reduction of $37,000 for the comparable
period of 2008.

     We have recorded a provision  for income taxes of $10.0  million  (38.7% of
pretax  income) and $9.0 million  (37.5% of pretax  income) for the three months
ended June 30, 2009 and 2008, respectively.

Results of Operations - Second Quarter of 2009 compared to First Quarter of 2009
--------------------------------------------------------------------------------

     Second  quarter  2009  membership  fees  decreased  $1.4  million to $105.5
million from $106.9  million for the first quarter of 2009.  Associate  services
revenues  increased during the 2009 second quarter by approximately  $626,000 to
$5.9 million from $5.3 million for the 2009 first quarter and associate services
and direct  marketing  expenses  decreased  by $301,000  during the same period.
Membership benefits totaled $36.0 million in the second quarter of 2009 compared
to $36.2  million for the 2009 first quarter and  represented  34% of membership
fees for both periods.  Commissions  to associates  totaled $29.3 million in the
2009 second  quarter  compared to $27.0  million for the 2009 first  quarter and
represented 28% and 25%,  respectively,  of membership fees for the two periods.
General and  administrative  expenses  decreased $461,000 during the 2009 second
quarter to $12.9  million  compared to $13.4  million for the 2009 first quarter
and  represented  12% and  13%,  respectively,  of  membership  fees for the two
periods.  The $461,000 decrease in general and administrative  expenses included
decreases  in employee  cost,  accounting  and bank service  charges  which were
partially offset by increases in postage,  legal expenses and telecommunications
fees.

Results of Operations - First Six Months of 2009 compared to First Six Months
-----------------------------------------------------------------------------
of 2008
-------

     Membership  revenues decreased 3% in the first six months of 2009 to $212.4
million  compared to $218.5 million for the first six months of 2008. Net income
increased  6% for the  first  six  months of 2009 to $32.9  million  from  $31.0
million for the prior year's  comparable period primarily due to the decrease of
$5.7 million in commissions,  a $3.0 million decrease in other, net expenses and
a $2.9 million  decrease in  Membership  benefits  expense  partially  offset by
decreases in  Membership  fees of $6.1 million,  decrease in associate  services
revenue of $1.2 million and a $1.4 million  increase in the provision for income
taxes.  Diluted  earnings per share  increased 17% to $2.96 per share from $2.54
per  share for the  prior  year's  comparable  six  month  period  due to the 6%
increase in net income and an  approximate  9% decrease in the weighted  average
number of diluted shares outstanding.

     Membership  fees and  their  impact on total  revenues  in any  period  are
determined directly by the number of active Memberships in force during any such
period. The active Memberships in force are determined by both the number of new
Memberships  sold in any  period  together  with the  renewal  rate of  existing
Memberships. New Membership sales decreased 11% during the six months ended June
30, 2009 to 244,825 from 274,645 during the  comparable  period of 2008. At June
30, 2009, there were 1,505,871 active Memberships in force compared to 1,566,639
at June 30, 2008, a decrease of 4%. The average  annual fee per  Membership  has
increased  from $300 for all  Memberships  in force at June 30, 2008 to $301 for
all Memberships in force at June 30, 2009.

     Associate  services  revenue  decreased 9% from $12.3 million for the first
six months of 2008 to $11.2 million during the comparable  period of 2009 due to
a decrease in associate  enrollment fees and eService fees. Total new associates
enrolled  decreased 6% during the first six months of 2009 to 49,043 compared to
51,902 for the same period of 2008 and average enrollment fees paid by new sales
associates increased from $99 during the 2008 period to $120 during the 2009 six
months due to a higher average  enrollment fee available during the 2009 period.
The eService fees  decreased to $5.0 million during the first six months of 2009
compared to $6.2 million for the comparable period of 2008. Future revenues from
associate  services  will  depend  primarily  on the  number  of new  associates
enrolled,  the price  charged  and the number who choose to  participate  in the
Company's  eService  program,  but the Company  expects that such  revenues will
continue to be offset by the direct and indirect cost to the Company of training
(including training bonuses paid), providing associate services and other direct
marketing expenses.

     Other revenue decreased $294,000 from $2.2 million for the six month period
ending June 30, 2008 to $1.9 million for the same period of 2009.

     Primarily as a result of the decrease in Membership  fees,  total  revenues
decreased  to $225.5  million for the six months ended June 30, 2009 from $233.1
million during the comparable period of 2008, a decrease of 3%.

     Membership benefits totaled $72.2 million for the six months ended June 30,
2009  compared  to  $75.1  million  for  the  comparable  period  of  2008,  and
represented  34% of Membership fees for both periods.  This  Membership  benefit
ratio (Membership benefits as a percentage of Membership fees) should be reduced
going forward as substantially  all active  Memberships  provide for a capitated
cost and we have reduced the capitated  cost of the Identity Theft plan benefits
effective  April 1, 2007 with  subsequent  additional  reductions  on January 1,
2010.

     Commissions to associates  decreased 9% to $56.3 million for the six months
ended June 30, 2009 compared to $62.0 million for the comparable period of 2008,
and represented 27% and 28% of Membership fees for such periods.  Commissions to
associates are primarily  dependent on the number of new Memberships sold during
a period and the average fee of those  Memberships.  New Memberships sold during
the first six months of 2009 totaled  244,825 an 11%  decrease  from the 274,645
for 2008, and the "add-on" IDT Membership  sales which are not included in these
totals  decreased 8% to 150,859 for the second  quarter of 2009 from 163,886 for
2008. Our average  Annual  Membership fee written during the first six months of
2009 decreased less than 1% to $324.32 from $325.46 for 2008. Our new Membership
fees written during the first six months of 2009 decreased 11% from 2008. Should
we add additional  commissions to our compensation  plan or reduce the amount of
chargebacks  collected  from its  associates  as it has from  time to time,  the
commission cost per new Membership will increase accordingly.

     Associate services and direct marketing expenses increased to $13.3 million
for the six months  ended June 30, 2009 from $12.6  million  for the  comparable
period of 2008.  The  increase  was  primarily  a result of  increased  cost for
incentive  trips  Fast  Start  bonuses  partially  offset by a decline in direct
marketing  expenses.  We offer the Player's  Club  incentive  program to provide
additional  incentives  to our  associates as a reward for  consistent,  quality
business. Associates can earn the right to receive additional monthly bonuses by
meeting  monthly  qualification  requirements  for the entire  calendar year and
maintaining certain personal retention rates for the Memberships sold during the
calendar  year.  These  expenses  also include the costs of providing  associate
services and marketing expenses.

     General and  administrative  expenses  during the six months ended June 30,
2009 and 2008 were  unchanged at $26.3 million for both periods and  represented
12% of Membership fees for both periods.

     Other  expenses,   net,  which  include   depreciation  and   amortization,
litigation  accruals,  interest  expense and premium  taxes  reduced by interest
income, was $4.1 million for the six months ended June 30, 2009 compared to $7.1
million for the 2008 comparable period.  Depreciation  decreased to $4.1 million
for the first six months of 2009 from $4.4 million for the comparable  period of
2008.  Litigation accruals decreased by $1.3 million for the first six months of
2009  from  $888,000  in the 2008  period  including  a  $450,000  reduction  in
previously  accrued  amounts for the six months  ended June 30,  2009.  Interest
expense  decreased to $664,000  during the 2009 period from $2.1 million  during
the  comparable  period  of 2008 as a result  of lower  indebtedness  and  lower
interest  rates.  Premium  taxes were $902,000 for the six months ended June 30,
2009 and $900,000 for the comparable  period of 2008.  Interest income decreased
$106,000  to $1.1  million  for the six  months  ended  June 30,  2009 from $1.2
million for the comparable period of 2008, due to lower interest rates.

     We have recorded a provision  for income taxes of $20.3  million  (38.2% of
pretax  income)  and $18.9  million  (37.8% of pretax  income) for the first six
months ended June 30, 2009 and 2008, respectively.

Liquidity and Capital Resources
-------------------------------
     General
     Net cash flow  provided by operating  activities  was $35.5 million for the
six months ended June 30, 2009  compared to $27.7 million for the same period in
2008.  This $7.8  million  increase was  primarily  the result of a $4.4 million
decrease in income tax  payments,  a $4.6  million  decrease in cash paid to our
associates  for  commissions,  a $2.8  million  decrease  in  cash  paid  to our
providers for the delivery of benefits and a $1.6 million  decrease in cash paid
for  interest  reduced by a $7.1  million  decrease  in cash  receipts  from our
members.

     Consolidated net cash used by investing activities was $5.7 million for the
first six  months of 2009  compared  to net cash  used of $1.9  million  for the
comparable  period of 2008.  This $3.8 million  change in  investing  activities
resulted from a $1.9 million decrease in additions to property and equipment and
a $12.6 million  decrease in the maturities  and sales of investments  partially
offset by a $6.8 million decrease in investment purchases.

     Net cash used in financing  activities  during the first six months of 2009
was $27.2 million  compared to $27.5 million for the comparable  period of 2008.
This  $300,000  change was primarily  comprised of a $10.0  million  decrease in
proceeds  from issuance of debt and a $3.3 million  increase in debt  repayments
offset by $13.7 million decreased treasury stock purchases.

     We purchased and formally retired 435,820 shares of our common stock during
the first six months of 2009 for $14.1  million,  or an average  price of $32.27
per share,  reducing  our common  stock by $4,358 and our  retained  earnings by
$14.1  million.  We had working  capital of $2.7  million at June 30,  2009,  an
increase  of $5.0  million  compared  to our  negative  working  capital of $2.3
million at December 31, 2008.  The increase was  primarily due to a $2.5 million
increase in cash and cash  equivalents,  a $1.1 million  increase in  refundable
income taxes, a $1.0 million  decrease in accounts  payable and accrued expenses
and a $4.2 million  decrease in the current  portion of notes payable  partially
offset by a $2.6 million  decrease in the current portion of  available-for-sale
investments  and a $691,000  decrease in Membership  fees  receivable.  The $2.7
million  working  capital at June 30,  2009  would have been a $15.2  million in
working capital  excluding the current  portion of deferred  revenue and fees in
excess of the current  portion of deferred  member and associate  service costs.
These amounts will be eliminated by the passage of time without the  utilization
of other current  assets or us incurring  other current  liabilities.  We do not
expect  any  difficulty  in meeting  our  financial  obligations  in the next 12
months.

     At June 30, 2009 we reported $67.0 million in cash and cash equivalents and
unpledged  investments  compared to $60.0  million at  December  31,  2008.  Our
investments  typically  consist of  certificates  of deposit,  investment  grade
(rated Baa or higher)  bonds  primarily  issued by  corporations  and the United
States Treasury and state and municipal tax-exempt bonds.

     We generally  advance  significant  commissions at the time a Membership is
sold. During the six months ended June 30, 2009, we advanced commissions, net of
chargebacks,  of $53.7 million on new Membership sales compared to $58.6 million
for the same period of 2008.  Since  approximately  95% of  Membership  fees are
collected on a monthly  basis,  a significant  cash flow deficit is created on a
per  Membership  basis at the time a  Membership  is sold.  Since  there  are no
further commissions paid on a Membership during the advance period, we typically
derive  significant  positive cash flow from the  Membership  over its remaining
life.

     We expense advance  commissions ratably over the first month of the related
Membership.  As a result of this accounting policy, our commission  expenses are
all  recognized  over the first month of a Membership and there is no commission
expense  recognized for the same Membership  during the remainder of the advance
period. We track our unearned advance commission  balances  outstanding in order
to ensure the advance  commissions are recovered before any renewal  commissions
are paid and for internal purposes of analyzing our commission  advance program.
While not  recorded  as an asset,  unearned  advance  commission  balances  from
associates  as of June 30, 2009,  and related  activity for the six month period
then ended, were:




                                                                                  (Amounts in 000's)
                                                                                  ------------------
                                                                                  
Beginning unearned advance commission payments (1)...............................    $  174,371
Advance commission payments, net.................................................        53,679
Earned commissions applied.......................................................       (57,504)
Advance commission payment write-offs............................................        (2,000)
                                                                                     ------------
Ending unearned advance commission payments before
  estimated unrecoverable payments (1)...........................................       168,546
Estimated unrecoverable advance commission payments (1)..........................       (45,579)
                                                                                     ------------
Ending unearned advance commission payments, net (1).............................    $  122,967
                                                                                     ------------



     (1) These  amounts do not  represent  fair value,  as they do not take into
consideration timing of estimated recoveries.

     The ending unearned advance  commission  payments,  net, above includes net
unearned advance commission payments to non-vested  associates of $65.3 million.
As such, at June 30, 2009 future commission  payments and related expense should
be reduced as unearned advance commission payments of $58 million are recovered.
Commissions are earned by the associate as Membership premiums are earned by us,
usually  on  a  monthly  basis.  For  additional  information  concerning  these
commission  advances,  see our  Annual  report  on Form 10-K  under the  heading
Commissions  to Associates in Item 7 -  Management's  Discussion and Analysis of
Financial Condition and Results of Operations.

     We believe that we have significant ability to finance any future growth in
Membership  sales based on our recurring  cash flow and existing  amount of cash
and  cash  equivalents  and  unpledged  investments  at June  30,  2009 of $67.0
million. We expect to maintain cash and investment  balances,  including pledged
investments,  on an on-going basis of approximately  $20 to $30 million in order
to meet expected working capital needs and regulatory capital requirements. Cash
balances in excess of this amount would be used for discretionary  purposes such
as  additional  treasury  stock  purchases  subject to  limitations  in the Term
Facility.

     Notes Payable
     See Note 6 - Notes Payable in Item 1 above.

     Parent Company Funding and Dividends
     Although  we  are  the  operating   entity  in  many   jurisdictions,   our
subsidiaries  serve as  operating  companies  in various  states  that  regulate
Memberships  as  insurance  or  specialized  legal  expense  products.  The most
significant of these wholly owned subsidiaries are Pre-Paid Legal Casualty, Inc.
("PPLCI"),  Pre-Paid Legal Services Inc. of Florida ("PPLSIF") and Legal Service
Plans of Virginia, Inc. ("LSPV"). The ability of these entities to provide funds
to us is subject to a number of restrictions under various insurance laws in the
jurisdictions  in which they  conduct  business,  including  limitations  on the
amount of dividends and  management  fees that may be paid and  requirements  to
maintain  specified  levels of capital and reserves.  In addition  PPLCI will be
required to maintain its  stockholders'  equity at levels  sufficient to satisfy
various state or provincial  regulatory  requirements,  the most  restrictive of
which  is  currently  $3  million.  Additional  capital  requirements  of  these
entities, or any of our regulated subsidiaries, will be funded by us in the form
of capital  contributions or surplus  debentures.  During 2008, we received $4.1
million in dividends from LSPV and $14.9 million in dividends from PPLCI.

     Contractual Obligations
     There  have been no  material  changes  outside of the  ordinary  course of
business  in our  contractual  obligations  from those  disclosed  in our Annual
Report on Form 10-K for the year ended December 31, 2008.

Critical Accounting Policies
----------------------------
     Preparing  financial  statements  requires management to make estimates and
assumptions  that affect the reported amounts of assets,  liabilities,  revenues
and expenses.  These  estimates  and  assumptions  are affected by  management's
application  of  accounting  policies.  If these  estimates or  assumptions  are
incorrect,  there  could be a  material  change in our  financial  condition  or
operating results.  Many of these "critical  accounting  policies" are common in
the  insurance  and financial  services  industries;  others are specific to our
business and operations.  Our critical  accounting  policies  include  estimates
relating  to revenue  recognition  related to  Membership  and  associate  fees,
deferral of Membership and associate related costs,  expense recognition related
to commissions to associates, accrual of incentive awards payable and accounting
for legal  contingencies.  Each of these accounting policies and the application
of critical accounting policies and estimates was discussed in our Annual Report
on Form 10-K for the year ended  December  31, 2008.  There were no  significant
changes in the application of critical  accounting  policies or estimates during
the first six months of 2009. We are not aware of any  reasonably  likely events
or  circumstances  which would result in different  amounts being  reported that
would materially affect our financial condition or results of operations.

Capital and Dividend Plans
--------------------------
     We continue to evaluate the  desirability of additional  share  repurchases
and additional cash dividends.  We declared  dividends of $0.50 per share during
2004 and $0.60 per share during 2005 and have previously  announced that we will
continue share repurchases,  pay a dividend, or both, depending on our financial
condition, available resources and market conditions, as well as compliance with
our various loan covenants  which limit our ability to repurchase  shares or pay
cash dividends. We expect to continue our open market repurchase program when we
can  acquire  shares at prices we believe  are  attractive  as we have  existing
authorization  from the Board to purchase an additional  818,440 shares. We also
continue  to  evaluate  additional  sources of  financing  that may enable us to
accelerate the repurchase program at prices we believe are attractive.

Forward-Looking Statements
--------------------------
     All  statements  in this report other than purely  historical  information,
including  but not  limited  to,  statements  relating  to our future  plans and
objectives,  expected  operating  results  and the  assumptions  on  which  such
forward-looking  statements are based, constitute  "Forward-Looking  Statements"
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 and are based on our historical operating
trends  and  financial  condition  as of June  30,  2009 and  other  information
currently   available  to  management.   We  caution  that  the  Forward-Looking
Statements  are  subject  to all the risks  and  uncertainties  incident  to our
business,  including but not limited to risks described in Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2008. Moreover,  we may make
acquisitions or  dispositions of assets or businesses,  enter into new marketing
arrangements  or  enter  into  financing  transactions.  None  of  these  can be
predicted with certainty and,  accordingly,  are not taken into consideration in
any of the  Forward-Looking  Statements  made herein.  For all of the  foregoing
reasons, actual results may vary materially from the Forward-Looking Statements.
We assume no  obligation  to update the  Forward-Looking  Statements  to reflect
events or circumstances occurring after the date of the statement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------------------------------------------------------------------

     Disclosures About Market Risk
     Our  consolidated  balance  sheets  include a certain  amount of assets and
liabilities whose fair values are subject to market risk. Due to our significant
investment in  fixed-maturity  investments,  interest rate risk  represents  the
largest  market risk  factor  affecting  our  consolidated  financial  position.
Increases and decreases in prevailing  interest rates  generally  translate into
decreases and increases in fair values of those instruments.  Additionally, fair
values  of  interest  rate  sensitive   instruments   may  be  affected  by  the
creditworthiness  of  the  issuer,   prepayment  options,   relative  values  of
alternative  investments,  liquidity of the  instrument and other general market
conditions.

As of June 30, 2009, our investments consisted of the following:

                              Description                        Fair Value
-----------------------------------------------                -------------
Obligations of state and political subdivisions..........      $     31,029
Certificates of deposit..................................             7,627
Government guaranteed bank debt..........................             1,590
U. S. Government obligations.............................             1,426
Auction Rate Securities..................................               375
Corporate obligations....................................                33
Total investments........................................    ---------------
                                                               $     42,080
                                                             ---------------

         We do not hold any investments classified as trading account assets or
derivative financial instruments.

     The table below summarizes the estimated effects of hypothetical  increases
and decreases in interest rates on our fixed-maturity  investment portfolio.  It
is assumed that the changes  occur  immediately  and  uniformly,  with no effect
given  to  any  steps  that  we  might  take  to  counteract  that  change.  The
hypothetical  changes in market interest rates reflect what could be deemed best
and worst case scenarios. The fair values shown in the following table are based
on contractual maturities. Significant variations in market interest rates could
produce changes in the timing of repayments due to prepayment options available.
The fair value of such  instruments  could be affected  and,  therefore,  actual
results might differ from those reflected in the following table:





                                                                          Hypothetical change      Estimated fair value
                                                            (In 000's)     in interest rate        after hypothetical
                                                            Fair value    (bp = basis points)     change in interest rate
                                                            ----------    -------------------     -----------------------
                                                                                             
Fixed-maturity investments at June 30, 2009 (1)........      $  34,078     100 bp increase            $  31,884
                                                                           200 bp increase               30,427
                                                                            50 bp decrease               34,745
                                                                           100 bp decrease               35,595

Fixed-maturity investments at December 31, 2008 (1)....      $  31,360     100 bp increase            $  29,831
                                                                           200 bp increase               28,457
                                                                            50 bp decrease               32,134
                                                                           100 bp decrease               32,907
-------------------


(1)  Excluding short-term investments (certificates of deposits and auction rate
     certificates)  with a fair value of $8.0  million at June 30, 2009 and $6.1
     million at December 31, 2008.

     The table above illustrates,  for example,  that an instantaneous 200 basis
     point  increase in market  interest rates at June 30, 2009 would reduce the
     estimated fair value of our  fixed-maturity  investments  by  approximately
     $3.7 million at that date. At December 31, 2008, an instantaneous 200 basis
     point  increase in market  interest  rates would have reduced the estimated
     fair value of our fixed-maturity  investments by approximately $2.9 million
     at that  date.  The  definitive  extent  of the  interest  rate risk is not
     quantifiable  or  predictable  due to the  variability  of future  interest
     rates, but we do not believe such risk is material.

     We  primarily  manage our  exposure  to  investment  interest  rate risk by
purchasing  investments that can be readily  liquidated should the interest rate
environment begin to significantly change.

     Interest Rate Risk
     As of June 30, 2009, we had $46.4 million in notes payable  outstanding  at
interest  rates  indexed to the 30 day LIBOR rate that exposes us to the risk of
increased  interest  costs if interest  rates  rise.  Assuming a 100 basis point
increase in interest rates on the floating rate debt,  annual  interest  expense
would  increase  by  approximately  $464,000.  As of June 30,  2009,  we had not
entered into any interest rate swap agreements with respect to the term loans or
our floating rate municipal bonds.

     Foreign Currency Exchange Rate Risk
     Although we are exposed to foreign currency  exchange rate risk inherent in
revenues, net income and assets and liabilities denominated in Canadian dollars,
the potential  change in foreign  currency  exchange  rates is not a substantial
risk,  as  approximately  1% of our revenues  are derived  outside of the United
States.  As reflected in the attached  Consolidated  Statements of Comprehensive
Income,  we have recorded positive foreign currency  translation  adjustments of
$503,000 for the six months  ended June 30, 2009 and have a cumulative  positive
foreign  currency  translation  adjustment  balance of $78,000 at June 30, 2009.
These amounts are subject to change dynamically in conjunction with the relative
values of the Canadian and U.S. dollars.

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------

     Under  the  supervision  and  with  the  participation  of our  management,
including  our Chief  Executive  Officer and Chief  Financial  Officer,  we have
evaluated  the  effectiveness  of the design  and  operation  of our  disclosure
controls  and  procedures  (as defined in Rule  13a-15(e)  under the  Securities
Exchange Act of 1934). Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that, as of June 30, 2009, our disclosure
controls and procedures were effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Securities  Exchange
Act of 1934 is recorded,  processed,  summarized  and  reported  within the time
periods specified in Securities and Exchange Commission rules and forms.

     There were no changes in our internal control over financial  reporting (as
defined in Rule 13a-15(f) under the Securities  Exchange Act of 1934) during the
quarter ended June 30, 2009 that have  materially  affected,  or are  reasonably
likely to materially affect, our internal control over financial reporting.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.
---------------------------

     See Note 2 of the Notes to Consolidated  Financial  Statements  included in
Part I, Item 1 of this report for information with respect to legal proceedings.


ITEM 1A.  RISK FACTORS
----------------------

     There  are a  number  of risk  factors  that  could  affect  our  financial
condition  or results  of  operations.  See Note 2 of the Notes to  Consolidated
Financial  Statements  included in Part I, Item 1 of this report for information
with  respect to legal  proceedings.  Please  refer to pages 15 - 17 of our 2008
Annual  Report on Form 10-K for a description  of other risk factors.  There has
not been any  material  changes  in the risk  factors  disclosed  in the  Annual
Report.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
---------------------------------------------------------------------

     Issuer Purchases of Equity Securities

     The following  table provides  information  about our purchases of stock in
the open market during the first quarter of 2009.



                                                             Total Number of       Maximum Number of
                                                           Shares Purchased as    Shares that May Yet
                         Total Number                        Part of Publicly     Be Purchased Under
                           of Shares      Average Price     Announced Plans or       the Plans or
        Period             Purchased      Paid per Share         Programs            Programs (1)
----------------------  -------------     ---------------  --------------------   --------------------
                                                                             
April 2009............         3,834         $  32.41                3,834               827,921
May 2009..............         4,421            41.27                4,421               823,500
June 2009.............         5,060            43.10                5,060               818,440
                         ------------     ---------------  --------------------
Total.................        13,315         $  39.42               13,315
                         ------------     ---------------  --------------------
-----------


(1)  We  announced  on  April  6,  1999,  a  treasury  stock  purchase   program
     authorizing  management to acquire up to 500,000 shares of our common stock
     in the open market.  The Board of Directors has  subsequently  from time to
     time increased such authorization from 500,000 shares to 15 million shares.
     The most  recent  authorization  was for 1  million  additional  shares  on
     February  18, 2009 and there has been no time limit set for  completion  of
     the repurchase program.

     See Part I, Item 2,  "Management's  Discussion  and  Analysis of  Financial
Condition  and  Results of  Operation-Liquidity  and  Capital  Resources"  for a
description of loan  covenants  that limit our ability to repurchase  shares and
pay dividends.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
-------------------------------------------------------------

     The 2009  Annual  Meeting  of  Shareholders  of the  Company  (the  "Annual
Meeting") was held on May 22, 2009.  The following  matters were  submitted to a
vote of the Company's shareholders at the Annual Meeting.

Proposal 1 - Election of Directors.
-----------------------------------

     The results of the election for the director were as follows:

                                                                Abstentions and
                                         Votes For               Votes Withheld
                                         ---------              ---------------
John W. Hail                             9,500,067                 618,739
Thomas W. Smith                          9,472,213                 646,593

     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.  The new terms of service of Messrs.  Hail and
Smith will expire in 2012.  The terms of the other five directors of the Company
did not expire at the Annual Meeting.  The names of such other directors and the
year of expiration of their respective terms are as follows:  Orland G. Aldridge
- 2010, Peter K. Grunebaum - 2010 and Duke R. Ligon. - 2010;  Martin H. Belsky -
2011 and Harland C. Stonecipher - 2011.

     Proposal 2 - Ratify the selection of Grant Thornton LLP as our independent
--------------------------------------------------------------------------------
registered public accounting firm.
----------------------------------

         Votes For                Votes Against              Abstentions
     ---------------            ------------------          -------------
        10,096,624                    15,541                    6,640

ITEM 6.  EXHIBITS.
------------------

(a) Exhibits:



                                INDEX TO EXHIBITS

  Exhibit No.                                   Description
  -----------                                   -----------
             
3.1             Amended and Restated  Certificate  of  Incorporation  of the Company,  as amended  (Incorporated  by
                reference to Exhibit 3.1 of the Company's Report on Form 8-K dated June 27, 2005)

3.2             Amended  and  Restated  Bylaws of the  Company  (Incorporated  by  reference  to Exhibit  3.1 of the
                Company's Report on Form 10-Q for the period ended June 30, 2003)

*10.1           Employment Agreement effective January 1, 1993 between the  Company  and Harland C. Stonecipher (In-
                corporated by reference to Exhibit 10.1 of the Company's Annual Report on  Form  10-KSB for the year
                ended December 31, 1992)

*10.2           Agreements between Shirley Stonecipher, New York Life  Insurance  Company  and the Company regarding
                life insurance policy covering Harland C. Stonecipher (Incorporated by reference to Exhibit 10.21 of
                the Company's Annual Report on Form 10-K for the year ended December 31, 1985)

*10.3           Amendment  dated  January 1,  1993 to Split Dollar Agreement  between  Shirley  Stonecipher  and the
                Company regarding life insurance policy covering Harland C. Stonecipher (Incorporated  by  reference
                to Exhibit 10.3 of the Company's Annual Report on Form 10-KSB for the year ended  December 31, 1992)
*10.4           Form of New Business Generation Agreement Between the Company and  Harland C. Stonecipher (Incorpor-
                ated by reference to Exhibit 10.22 of the Company's Annual Report on Form  10-K for  the year  ended
                December 31, 1986)

*10.5           Amendment  to New  Business  Generation  Agreement  between the  Company and Harland C.  Stonecipher
                effective  January,  1990 (Incorporated by reference to Exhibit 10.12 of the Company's Annual Report
                on Form 10-KSB for the year ended December 31, 1992)

*10.6           Amendment No. 2 to New Business Generation  Agreement between the Company and Harland C. Stonecipher
                effective  January,  1990 (Incorporated by reference to Exhibit 10.13 of the Company's Annual Report
                on Form 10-K for the year ended December 31, 2002)

*10.7           Stock Option Plan, as amended  effective May 2003  (Incorporated by reference to Exhibit 10.7 of the
                Company's Annual Report on Form 10-K for the year ended December 31, 2004)

10.8            Loan agreement dated June 11, 2002 between Bank of Oklahoma,  N.A. and the Company  (Incorporated by
                reference to Exhibit 10.1 of the Company's  Quarterly  Report on Form 10-Q for the six-months  ended
                June 30, 2002)

10.9            Form of Mortgage  dated July 23, 2002 between Bank of Oklahoma,  N.A. and the Company  (Incorporated
                by  reference  to Exhibit  10.3 of the  Company's  Quarterly  Report on Form 10-Q for the six months
                ended June 30, 2002)

*10.10          Deferred  compensation plan effective  November 6, 2002  (Incorporated by reference to Exhibit 10.14
                of the Company's Annual Report on Form 10-K for the year ended December 31, 2002)

*10.11          Amended Deferred  Compensation  Plan effective  January  1,  2005   (Incorporated  by  reference  to
                Exhibit 10.16 of the Company's Report on Form 10-K for the year ended December 31, 2004)

10.12           Credit  Agreement  dated June 23, 2006 among Pre-Paid  Legal  Services,  Inc, the lenders  signatory
                thereto and Wells Fargo Foothill,  Inc. as Arranger and  Administrative  Agent and Bank of Oklahoma,
                N.A.  (Incorporated  by reference to Exhibit 10.1 of the Company's  Current Report on Form 8-K filed
                June 27, 2006)

10.13           Security  Agreement  dated June 23, 2006 between  Pre-Paid  Legal  Services,  Inc and certain of its
                subsidiaries and Wells Fargo Foothill,  Inc., as Agent (Incorporated by reference to Exhibit 10.2 of
                the Company's Current Report on Form 8-K filed June 26, 2006)

10.14           Guaranty  Agreement  dated June 23, 2006 between  certain  subsidiaries  of Pre-Paid Legal Services,
                Inc. and Wells Fargo  Foothill,  Inc.,  as Agent  (Incorporated  by reference to Exhibit 10.3 of the
                Company's Current Report on Form 8-K filed June 27, 2006)

10.15           Mortgage,  Assignment of Rents and Leases and Security Agreement by Pre-Paid Legal Services, Inc. in
                favor of Wells Fargo  Foothill,  Inc as Agent  (Incorporated  by  reference  to Exhibit  10.4 of the
                Company's Current Report on Form 8-K filed June 26, 2006)

10.16           First  Amendment to Loan Agreement  dated June 23, 2006 between  Pre-Paid Legal  Services,  Inc. and
                Bank of Oklahoma,  N.A. (Incorporated by reference to Exhibit 10.5 of the Company's of the Company's
                Current Report on Form 8-K filed June 26, 2006)

10.17           First Amendment to Credit Agreement dated September 10, 2007 between  Pre-Paid Legal Services,  Inc.
                and the lenders named therein and Wells Fargo Foothill,  Inc. as administrative  agent (Incorporated
                by reference to Exhibit 10.1 of the  Company's  of the  Company's  Current  Report on Form 8-K filed
                September 10, 2007)

10.18           Term Loan Agreement dated September 28, 2007 between  Pre-Paid Legal Services,  Inc. and Wells Fargo
                Equipment Finance,  LLC (Incorporated by reference to Exhibit 10.1 of the Company's of the Company's
                Current Report on Form 8-K filed October 2, 2007)

10.19           Form of Aircraft  Mortgage and Security  Agreement  between Pre-Paid Legal Services,  Inc. and Wells
                Fargo  Equipment  Finance,  LLC  (Incorporated  by reference to Exhibit 10.2 of the Company's of the
                Company's Current Report on Form 8-K filed October 2, 2007)

10.20           Second Amendment to Credit  Agreement dated February 22, 2008 between Pre-Paid Legal Services,  Inc.
                and the lenders named therein and Wells Fargo Foothill,  Inc. as administrative  agent (Incorporated
                by  reference  to Exhibit  10.20 of our Annual  Report on Form 10-K for the year ended  December 31,
                2007)

10.21           Third  Amendment to Credit  Agreement dated June 5, 2008 between  Pre-Paid Legal Services,  Inc. and
                the lenders named therein and Wells Fargo Foothill,  Inc. as administrative  agent  (Incorporated by
                reference to Exhibit 10.21 of the Company's  Quarterly  Report on Form 10-Q for the six-months ended
                June 30, 2008)

10.22           Second  Amendment to Loan Agreement  dated June 6, 2008 between  Pre-Paid Legal  Services,  Inc. and
                Bank of  Oklahoma,  N.A.  (Incorporated  by reference to Exhibit  10.22 of the  Company's  Quarterly
                Report on Form 10-Q for the six-months ended June 30, 2008)

21.1            List of Subsidiaries of the Company

23.1            Consent of Grant Thornton LLP

31.1            Certification of Harland C. Stonecipher,  Chairman, Chief Executive Officer and President,  Pursuant
                to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2            Certification of Steve Williamson,  Chief Financial  Officer,  Pursuant to Rule 13a-14(a)  under the
                Securities Exchange Act of 1934

32.1            Certification of Harland C. Stonecipher,  Chairman, Chief Executive Officer and President,  Pursuant
                to 18 U.S.C. Section 1350

32.2            Certification of Steve Williamson, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350
--------------------


* Constitutes a management contract or compensatory plan or arrangement required
to be filed as an exhibit to this report.


                            SIGNATURES

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
     the  registrant  has duly  caused this report to be signed on its behalf by
     the undersigned thereunto duly authorized.

                            PRE-PAID LEGAL SERVICES, INC.
                            -----------------------------
                                  (Registrant)
Date: July 27, 2009         /s/ Harland C. Stonecipher
                            -------------------------------------
                            Harland C. Stonecipher
                            Chairman, Chief Executive
                            Officer and President
                            (Principal Executive Officer)

Date: July 27, 2009         /s/ Randy Harp
                            -------------------------------------
                            Randy Harp
                            Chief Operating Officer
                            (Duly Authorized Officer)

Date: July 27, 2009         /s/ Steve Williamson
                            -------------------------------------
                            Steve Williamson
                            Chief Financial Officer
                            (Principal Financial and
                            Accounting Officer)







                                  Exhibit 31.1

                                  CERTIFICATION
                                  -------------

I, Harland C. Stonecipher, certify that:

(1)  I have  reviewed  this  quarterly  report  on Form 10-Q of  Pre-Paid  Legal
     Services, Inc.;

(2)  Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

(3)  Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

(4)  The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange  Act Rules  13a-15(e))  and  internal  control  over  financial
     reporting (as defined in Exchange Act Rule 13 (a)-15(f)) for the registrant
     and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

(5)  The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


Date: July 27, 2009         /s/ Harland C. Stonecipher
                            -------------------------------------
                            Harland C. Stonecipher
                            Chairman, Chief Executive
                            Officer and President



                                  Exhibit 31.2

                                  CERTIFICATION

I, Steve Williamson, certify that:

(1)  I have  reviewed  this  quarterly  report  on Form 10-Q of  Pre-Paid  Legal
     Services, Inc.;

(2)  Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

(3)  Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

(4)  The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange  Act Rules  13a-15(e))  and  internal  control  over  financial
     reporting (as defined in Exchange Act Rule 13 (a)-15(f)) for the registrant
     and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

(5)  The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


Date: July 27, 2009         /s/ Steve Williamson
                            -------------------------------------
                            Steve Williamson
                            Chief Financial Officer




                                  Exhibit 32.1

                Certification Pursuant to 18 U.S.C. Section 1350


     Pursuant to 18 U.S.C.  ss. 1350, the undersigned  officer of Pre-Paid Legal
Services,  Inc. (the "Company"),  hereby certifies that the Company's  Quarterly
Report on Form 10-Q for the  quarter  ended June 30, 2009 (the  "Report")  fully
complies with the requirements of Section 13(a) or 15(d), as applicable,  of the
Securities Exchange Act of 1934 and that the information contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.

Date: July 27, 2009         /s/ Harland C. Stonecipher
                            -------------------------------------
                            Harland C. Stonecipher
                            Chairman, Chief Executive
                            Officer and President




                                  Exhibit 32.2

                Certification Pursuant to 18 U.S.C. Section 1350


     Pursuant to 18 U.S.C.  ss. 1350, the undersigned  officer of Pre-Paid Legal
Services,  Inc. (the "Company"),  hereby certifies that the Company's  Quarterly
Report on Form 10-Q for the  quarter  ended June 30, 2009 (the  "Report")  fully
complies with the requirements of Section 13(a) or 15(d), as applicable,  of the
Securities Exchange Act of 1934 and that the information contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.

Date: July 27, 2009         /s/ Steve Williamson
                            -------------------------------------
                            Steve Williamson
                            Chief Financial Officer