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                                  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, 2006


| | 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 is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Check one:

Large accelerated filer | |    Accelerated filer |X|    Non-accelerated file | |

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 21, 2006 was 14,515,909.

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                          PRE-PAID LEGAL SERVICES, INC.

                                    FORM 10-Q

                       For the Quarter Ended June 30, 2006


                                    CONTENTS



Part I.  Financial Information

     Item 1. Financial Statements:

          a) Consolidated Balance Sheets
             as of June 30, 2006 (Unaudited) and December 31, 2005

          b) Consolidated Statements of Income (Unaudited)
             for the three months and six months ended June 30, 2006 and 2005

          c) Consolidated Statements of Comprehensive Income (Unaudited)
             for the three months and six months ended June 30, 2006 and 2005

          d) Consolidated Statements of Cash Flows (Unaudited)
             for the six months ended June 30, 2006 and 2005

          e) Notes to Consolidated Financial Statements (Unaudited)

     Item 1A. Risk Factors

     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 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



ITEM 1.  FINANCIAL STATEMENTS



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


                                     ASSETS

                                                                                              June 30,        December 31,
                                                                                               2006              2005
                                                                                            -------------     ------------
Current assets:                                                                             (Unaudited)
                                                                                                        
  Cash and cash equivalents............................................................     $    76,805       $    33,957
  Available-for-sale investments, at fair value........................................             427             6,742
  Membership fees receivable...........................................................           5,020             5,395
  Inventories..........................................................................           1,279             1,717
   Refundable income taxes.............................................................             175                 -
  Deferred member and associate service costs..........................................          16,321            16,210
  Deferred income taxes................................................................           5,237             4,894
  Other assets.........................................................................           6,320             5,236
                                                                                            -------------     ------------
      Total current assets.............................................................         111,584            74,151
Available-for-sale investments, at fair value..........................................          23,138            19,213
Investments pledged....................................................................           4,327             4,307
Property and equipment, net............................................................          60,815            58,947
Deferred member and associate service costs............................................           2,907             3,003
Other assets...........................................................................           6,379             5,244
                                                                                            -------------     ------------
        Total assets...................................................................     $   209,150       $   164,865
                                                                                            -------------     ------------


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Membership benefits..................................................................     $    11,912       $    11,638
  Deferred revenue and fees............................................................          27,278            26,287
  Current portion of capital leases payable............................................             321               321
  Current portion of notes payable.....................................................          17,187            15,250
  Common stock dividends payable.......................................................               -             4,643
  Income taxes payable.................................................................               -             1,738
  Accounts payable and accrued expenses................................................          17,395            17,357
                                                                                            -------------     ------------
    Total current liabilities..........................................................          74,093            77,234
  Capital leases payable...............................................................             986             1,296
  Notes payable........................................................................          82,751            23,220
  Deferred revenue and fees............................................................           2,907             3,007
  Deferred income taxes................................................................           4,505             4,782
  Other non-current liabilities........................................................           4,226             3,932
                                                                                            -------------     ------------
      Total liabilities................................................................         169,468           113,471
                                                                                            -------------     ------------
Stockholders' equity:
  Common stock, $.01 par value; 100,000 shares authorized; 19,368 and
    20,326 issued at June 30, 2006 and December 31, 2005, respectively.................             194               203
  Retained earnings....................................................................         138,291           149,832
  Accumulated other comprehensive income...............................................             225               387
  Treasury stock, at cost; 4,852 shares held at June 30, 2006 and
    December 31, 2005, respectively....................................................         (99,028)          (99,028)
                                                                                            -------------     ------------
      Total stockholders' equity.......................................................          39,682            51,394
                                                                                            -------------     ------------
        Total liabilities and stockholders' equity.....................................     $   209,150       $   164,865
                                                                                            -------------     ------------


   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,
                                                                   ---------------------   -----------------------
                                                                     2006         2005         2006         2005
                                                                   ----------  ---------   ----------   ----------
Revenues:
                                                                                             
  Membership fees.............................................     $ 103,111   $  97,093    $ 204,851    $ 189,597
  Associate services..........................................         6,820       7,175       13,783       14,217
  Other.......................................................         1,267       1,351        2,524        2,700
                                                                   ----------  ---------   ----------   ----------
                                                                     111,198     105,619      221,158      206,514
                                                                   ----------  ---------   ----------   ----------
Costs and expenses:
  Membership benefits.........................................        36,490      33,710       72,118       66,431
  Commissions.................................................        32,745      38,820       64,630       70,497
  Associate services and direct marketing.....................         7,584       7,963       14,886       17,059
  General and administrative..................................        13,020      12,337       25,487       23,436
  Other, net..................................................         2,900       2,326        5,623        4,967
                                                                   ----------  ---------   ----------   ----------
                                                                      92,739      95,156      182,744      182,390
                                                                   ----------  ---------   ----------   ----------

Income before income taxes....................................        18,459      10,463       38,414       24,124
Provision for income taxes....................................         6,369       3,610       13,253        8,323
                                                                   ----------  ---------   ----------   ----------
Net income....................................................     $  12,090   $   6,853    $  25,161    $  15,801
                                                                   ----------  ---------   ----------   ----------

Basic earnings per common share...............................     $    .81    $    .45     $   1.66     $   1.02
                                                                   ----------  ---------   ----------   ----------

Diluted earnings per common share.............................     $    .81    $    .44     $   1.65     $   1.00
                                                                   ----------  ---------   ----------   ----------

Dividends declared per common share...........................     $    -      $    .30     $    -       $    .30
                                                                   ----------  ---------   ----------   ----------




   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,
                                                                   ---------------------   -----------------------
                                                                     2006         2005         2006         2005
                                                                   ----------  ---------   ----------   ----------

                                                                                             
Net income.....................................................    $  12,090   $   6,853    $  25,161    $  15,801
                                                                   ----------  ---------   ----------   ----------

Other comprehensive loss, net of tax:
  Foreign currency translation adjustment......................          232          (1)         191          (16)
                                                                   ----------  ---------   ----------   ----------
  Unrealized losses on investments:
    Unrealized holding losses arising during period............         (178)        163         (382)        (497)
    Reclassification adjustment for realized losses (gains)
      included in net income...................................           56           7           29            9
                                                                   ----------  ---------   ----------   ----------
                                                                        (122)        170         (353)        (488)
                                                                   ----------  ---------   ----------   ----------
Other comprehensive loss, net of income taxes of ($78) and $110
  for the three months and $(226) and $(311) for the six months
  ended June 30, 2006 and 2005, respectively...................          110         169         (162)        (504)
                                                                   ----------  ---------   ----------   ----------
Comprehensive income...........................................    $  12,200   $   7,022    $  24,999    $  15,297
                                                                   ----------  ---------   ----------   ----------



   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,
                                                                                     ------------------------
                                                                                        2006          2005
                                                                                     ----------    ----------

Cash flows from operating activities:
                                                                                             
Net income.......................................................................    $  25,161     $  15,801
Adjustments to reconcile net income to net cash provided
  by operating activities:
  (Benefit) for deferred income taxes............................................         (620)         (549)
  Depreciation and amortization..................................................        4,042         3,695
                                                                                     ----------    ----------
    Cash provided by operating activities before changes in assets and
     liabilities.................................................................       28,583        18,947

  Decrease in Membership income receivable.......................................          375            77
  Decrease  in inventories.......................................................          438           271
  Decrease (increase) in income tax receivable...................................         (175)          509
  (Increase) in deferred member and associate service costs......................          (15)       (1,704)
  Increase in other assets.......................................................       (2,219)         (962)
  Increase in accrued Membership benefits........................................          274           903
  Increase in deferred revenue and fees..........................................          891         2,568
  Increase in other non-current liabilities......................................          294           616
  Decrease in income tax payable.................................................       (1,738)            -
  Increase (decrease) in accounts payable and accrued expenses and other.........          229          (846)
                                                                                     ----------    ----------
    Net cash provided by operating activities....................................       26,937        20,379
                                                                                     ----------    ----------
Cash flows from investing activities:
  Additions to property and equipment............................................       (5,910)       (2,819)
  Purchases of investments - available for sale..................................       (8,559)       (3,569)
  Maturities and sales of investments - available for sale.......................       10,576         9,550
                                                                                     ----------    ----------
    Net cash provided by (used in) investing activities..........................       (3,893)        3,162
                                                                                     ----------    ----------
Cash flows from financing activities:
  Proceeds from exercise of stock options........................................          222         3,246
  Tax benefit on exercise of stock options.......................................          636           659
  Proceeds from issuance of debt.................................................       85,000         2,314
  Decrease in capital lease obligations..........................................         (310)         (329)
  Common stock dividends paid....................................................       (4,643)      (12,412)
  Repayments of debt.............................................................      (23,532)       (9,095)
  Purchases of treasury stock....................................................      (37,569)      (11,621)
                                                                                     ----------    ----------
    Net cash provided by (used in) financing activities .........................       19,804       (27,238)
                                                                                     ----------    ----------

Net increase (decrease) in cash and cash equivalents.............................       42,848        (3,697)
Cash and cash equivalents at beginning of period.................................       33,957        25,972
                                                                                     ----------    ----------
Cash and cash equivalents at end of period.......................................    $  76,805     $  22,275
                                                                                     ----------    ----------

Supplemental disclosure of cash flow information:
  Cash paid for interest.........................................................    $   1,317     $   1,212
                                                                                     ----------    ----------
  Cash paid for income taxes.....................................................    $  14,998     $   7,615
                                                                                     ----------    ----------



   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 2005 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, 2006,  and for the three month and six month periods ended June 30, 2006 and
2005,  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, 2006 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.

     Reclassifications
     Certain  amounts in the prior periods  presented have been  reclassified to
conform  to  the  current  period  financial   statement   presentation.   These
reclassifications have no effect on previously reported net income.

Note 2 - Contingencies
     We and  various  executive  officers  have been  named as  defendants  in a
putative  securities class action originally filed in the United States District
Court for the Western  District of  Oklahoma in early 2001  seeking  unspecified
damages  on the  basis  of  allegations  that we  issued  false  and  misleading
financial  information,  primarily  related to the method we used to account for
commission  advance  receivables  from sales  associates.  On March 5, 2002, the
Court granted our motion to dismiss the complaint, with prejudice, and entered a
judgment  in  favor  of the  defendants.  Plaintiffs  thereafter  filed a motion
requesting  reconsideration  of the dismissal  which was denied.  The plaintiffs
appealed the  judgment and the order  denying  their  motion to  reconsider  the
judgment  to the  Tenth  Circuit  Court  of  Appeals.  In  August  2002 the lead
institutional   plaintiff   withdrew  from  the  case,  leaving  two  individual
plaintiffs as lead plaintiffs on behalf of the putative  class.  The briefing in
the appeal was  completed  and on January 14, 2004 oral argument was held in the
appeal. On July 14, 2006 the Tenth Circuit Court of Appeals entered an Order and
Judgment affirming the trial court's dismissal with prejudice in our favor.

     Beginning  in the  second  quarter  of 2001  multiple  lawsuits  were filed
against us, certain officers,  employees,  sales associates and other defendants
in various  Mississippi state courts by current or former members seeking actual
and punitive  damages for alleged  breach of contract,  fraud and various  other
claims in connection with the sale of Memberships.  As of July 14, 2006, we were
aware of 11 separate lawsuits involving approximately 400 plaintiffs in multiple
counties  in  Mississippi.  Certain of the  Mississippi  lawsuits  also name our
former provider attorney in Mississippi as a defendant. In Mississippi, we filed
lawsuits in the United  States  District  Court for the  Southern  and  Northern
Districts of Mississippi  in which we seek to compel  arbitration of the various
Mississippi  claims  under  the  Federal  Arbitration  Act and the  terms of our
Membership  agreements.  One of the federal courts has ordered  arbitration of a
case  involving  8  plaintiffs.  These  cases  are  all  in  various  stages  of
litigation,  including  trial  settings in  Mississippi in August 2006, and seek
varying  amounts of actual and punitive  damages.  We have tried three  separate
lawsuits in Mississippi.  The first trial in Mississippi on these cases resulted
in a unanimous jury verdict in our favor,  including other named defendants,  on
all claims on October 19, 2004, while the second and third trials in Mississippi
resulted in insubstantial  plaintiffs'  verdicts on February 15, 2005 and May 9,
2005,  respectively.  On August 16, 2005 the Circuit  Judge in the  February 15,
2005   trial   overturned   the   jury's   finding   of  fraud  and   fraudulent
misrepresentation  on the grounds that the evidence was  insufficient to support
those claims and reduced the damages  awarded by the jury to a total of $525 for
four  plaintiffs.  On July 18, 2005 the  Circuit  Judge in the May 9, 2005 trial
entered an order granting plaintiff's motion to reconsider the submission of the
issue of  punitive  damages  to the jury,  and  trial on that  issue was held in
November  2005.  The trial on that issue  resulted in punitive  damage  verdicts
against us and  against  our chief  executive  officer in the  collective  total
amount of $9.9  million.  As of July 14,  2006,  our motions  for post  judgment
relief are pending with the trial court.  Pre-Paid will seek appellate relief in
that case.  Although the amount of Membership fees paid by the plaintiffs in the
Mississippi cases is $500,000 or less,  certain of the cases seek damages of $90
million. The ultimate outcome of any particular case is not determinable.

     On April 19, 2002, counsel in certain of the above-referenced Alabama suits
also filed a similar suit against us and certain  officers in the District Court
of Creek  County,  Oklahoma on behalf of Jeff and Jana Weller  individually  and
doing  business  as Hi-Tech  Auto  making  similar  allegations  relating to our
Memberships and seeking  unspecified  damages on behalf of a "nationwide" class.
The Pre-Paid  defendants'  preliminary  motions in this case were denied, and on
June 17, 2003,  the Oklahoma  Court of Civil Appeals  reversed the trial court's
denial of the Pre-Paid  defendants' motion to compel  arbitration,  finding that
the trial court  erred when it denied  Pre-Paid's  motion to compel  arbitration
pursuant to the terms of the valid Membership  contracts,  and remanded the case
to the trial court for further  proceedings  consistent  with that  opinion.  On
December 3, 2004,  the District Court ordered the plaintiffs to proceed with the
arbitration. On October 16, 2005 plaintiff Jana Weller died, and on December 20,
2005 we filed a  Suggestion  of Death Upon the Record with respect  thereto.  On
April 13,  2006 we filed a motion to dismiss  the case  based on the  failure of
timely  substitution  of the  parties  and failure to  prosecute.  The  ultimate
outcome of this case is not determinable.

     On  October  3, 2005 we  received  a Civil  Investigative  Demand  from the
Commissioner  of  Consumer  Protection  of the State of  Connecticut  requesting
information  relating  to our  memberships  and  commissions  to  associates  in
Connecticut.   Subsequent  to  our   submission  of  responsive   materials,   a
representative  of the State  informed  us that no action  will be taken in this
matter.  This  matter  will  not  appear  in  this  statement  in  future  legal
proceedings disclosures.

     On March  27,  2006 we  received  a  complaint  filed by a former  provider
attorney  law  firm in  Davidson  County,  Tennessee  seeking  compensatory  and
punitive  damages on the basis of allegations of breach of contract.  On May 15,
2006 the trial court dismissed plaintiff's complaint in its entirety.  Plaintiff
filed a notice of appeal on June 13, 2006.  The ultimate  outcome of this matter
is not determinable.

     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, 2006 was $2.5 million. We believe that we have meritorious  defenses in
all pending cases and will  vigorously  defend against the  plaintiffs'  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. 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 and,
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 have challenged our allocation of general and administrative
expenses  to  Canadian  operations.  We contend  the  allocation  of general and
administrative  expenses,  based on the  percentage of Canadian new  memberships
written and the Canadian percentage memberships in force, is reasonable. At June
30, 2006 we have accrued $472,000 for this assessment.

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 12
million  shares  during  subsequent  board  meetings.  At June 30, 2006,  we had
purchased 10.5 million  treasury shares under these  authorizations  for a total
consideration  of $260.1  million,  an average  price of $24.81  per  share.  We
purchased  and formally  retired  622,300  shares of our common stock during the
2006 second quarter for $21.4 million,  or an average price of $34.40 per share,
reducing our common stock by $6,223 and our retained  earnings by $21.4 million.
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:                                                 2006       2005      2006       2005
                                                                         --------- ---------- --------- ---------
Earnings:
                                                                                            
Net income...........................................................    $ 12,090  $   6,853  $ 25,161  $ 15,801
                                                                         --------- ---------- --------- ---------
Shares:
Weighted average shares outstanding..................................      14,863     15,397    15,125    15,480
                                                                         --------- ---------- --------- ---------
Diluted Earnings Per Share:
Earnings:
Net income...........................................................    $ 12,090  $   6,853  $ 25,161  $ 15,801
                                                                         --------- ---------- --------- ---------
Shares:
-------
Weighted average shares outstanding..................................      14,863     15,397    15,125    15,480
Assumed exercise of options..........................................          94        273       118       275
                                                                         --------- ---------- --------- ---------
Weighted average number of shares, as adjusted.......................      14,957     15,670    15,243    15,755
                                                                         --------- ---------- --------- ---------
Shares issued pursuant to option exercises...........................          89         53       111       141
                                                                         --------- ---------- --------- ---------


     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
months and six months ended June 30, 2006 and 2005.




Note 5 - Recently Issued Accounting Pronouncements
     In November 2005, the Financial  Accounting Standards Board ("FASB") issued
FASB  Staff   Position   ("FSP")  FAS  115-1  and  FAS  124-1  "The  Meaning  of
Other-Than-Temporary  Impairment and Its  Application  to Certain  Investments."
This FSP  addresses  the  determination  as to when an  investment is considered
impaired,  whether that impairment is other than temporary,  and the measurement
of  an  impairment  loss.  This  FSP  also  includes  accounting  considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary  impairments.  The adoption of this FSP January 1, 2006 did
not have a material effect on our consolidated financial position and results of
operations.

     In May 2005,  the FASB  issued SFAS No. 154  "Accounting  Changes and Error
Corrections  - a  replacement  of APB Opinion No. 20, and FASB  Statement No. 3"
("SFAS 154").  SFAS 154 replaces APB Opinion No. 20,  "Accounting  Changes," and
FASB  Statement  No. 3,  "Reporting  Accounting  Changes  in  Interim  Financial
Statements,"  and changes the  requirements for the accounting for and reporting
of a change in accounting  principle.  This  statement  applies to all voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition  provisions.  When a pronouncement includes specific
transition  provisions,  those  provisions  should  be  followed.  SFAS  154  is
effective for accounting  changes and corrections of errors made in fiscal years
beginning after December 31, 2005.

Note 6 - Notes Payable
     On June 23, 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").  The proceeds
will be used  primarily to fund further  share  repurchases,  including a tender
offer for 1 million  shares at $35 per  share,  to  refinance  $15.3  million of
existing bank indebtedness and general working capital  purposes.  After payment
of an  origination  fee of 1%, lender costs and other debt,  the net proceeds of
the Term Facility we received were $58.8 million.

     The Term  Facility  was fully  funded on June 23, 2006 and  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 plus 150 basis  points or at the LIBOR plus 250 basis
points.  The default interest rate (Wells Fargo base rate plus 150 basis points)
at June 30, 2006 was 9.75%. 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.  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,
subject to a prepayment premium of 1% in the first year, 0.5% in the second year
and none  thereafter,  with a reduction of 50% of the prepayment  premium if the
prepayment is from the proceeds of another loan provided by Wells Fargo.

     The Senior Loan is  guaranteed  by our  non-regulated  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 which we are remodeling 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 for the nine month period
     ending  September  30, 2006 of at least $60 million ($55 million for us and
     our top tier direct  subsidiaries)  and for the twelve month period  ending
     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; and
*    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.

     In addition to  customary  events of default,  it is an event of default 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 used  the  proceeds  of the  Term  Facility  to  repay  in full the $5.3
remaining balance of our existing stock loan with Bank of Oklahoma,  N.A., First
United Bank and Trust and Comerica  Bank,  which was  originated in 2003 and the
$10 million we borrowed from Bank of Oklahoma,  N. A. earlier in June 2006.  The
related loan  agreements were thereby  terminated and the associated  collateral
was  released.  As a part of the  transaction,  we also amended our existing $20
million  real  estate  loan  which  we  incurred  in  2002  to  finance  our new
headquarters  building  in Ada,  Oklahoma  to  extend  the final  maturity  from
September 2008 to August 2011. This loan,  which has a balance of $14.1 million,
with  interest at the 30 day LIBOR rate plus 2.25%,  adjusted  monthly,  remains
secured by a mortgage on our headquarters,  but the additional security interest
in our membership contracts was released. The interest rate at June 30, 2006 was
7.38%. We will continue to be required to make the same monthly payments on this
loan of $191,000 plus interest  with the balance of  approximately  $2.3 million
due at maturity.  The real estate loan was also amended to conform the financial
covenants to those under the new Senior Loan.

     Our $11.5  million  aircraft  loan was fully  funded in November  2005 with
interest payable monthly at the 30 day LIBOR rate plus 1.75%,  adjusted monthly,
and requires monthly principal  installments of $96,000 which began December 31,
2005 with the remaining  balance payable in a final installment due November 30,
2015.  The  interest  rate at June 30,  2006 was  6.88%.  The loan is  primarily
collateralized  by the aircraft  purchased.  In addition to customary  events of
default,  if Harland C. Stonecipher ceases to be our Chief Executive Officer for
a period of 90 consecutive days an event of default will occur.

         A schedule of outstanding balances as of June 30, 2006 is as follows:

                       Senior loan................................   $  75,000
                       Real estate loan...........................      14,095
                       Aircraft loan..............................      10,843
                                                                    ------------
                       Total notes payable........................      99,938
                       Less: Current portion of notes payable.....     (17,187)
                                                                    ------------
                       Long term portion..........................   $  82,751
                                                                    ------------


         A schedule of future maturities as of June 30, 2006 is as follows:

                       Repayment Schedule commencing
                              July 2006:
                       Year 1.....................................   $  17,187
                       Year 2.....................................      18,437
                       Year 3.....................................      18,437
                       Year 4.....................................      18,437
                       Year 5.....................................      18,437
                       Thereafter.................................       9,003
                                                                     -----------
                       Total notes payable........................   $  99,938
                                                                    ------------




Note 7 - Share-based Compensation
     During the six months ended June 30, 2006, 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, 2006...............       $  20.94       507,167
  Granted..................................           -                -
  Cancelled................................          19.93        (1,344)
  Exercised................................          17.76      (215,861)
                                                ------------  ------------  -----------     -----------
Outstanding, June 30, 2006.................       $  23.32       289,962        1.64          $ 3,967
                                                ------------  ------------  -----------     -----------
Options exercisable as of June 30, 2006....       $  23.32       289,962        1.64          $ 3,967
                                                ------------  ------------  -----------     -----------



     Other information pertaining to option activity during the six months ended
June 30, 2006 and 2005 was as follows:



                                                                         June 30, 2006         June 30, 2005
                                                                        --------------        ---------------
                                                                                        
Weighted average grant-date fair value of stock options granted..       Not applicable        Not applicable
Total fair value of stock options vested.........................       Not applicable          $    192
Total intrinsic value of stock options exercised.................            $3,604             $  1,917



     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.

     In December 2004, the Financial  Accounting Standards Board issued SFAS No.
123R,  Share-Based Payment ("SFAS No. 123R" or the "Statement").  This Statement
is a revision of SFAS No. 123,  Accounting for Stock-Based  Compensation  ("SFAS
123"), and supersedes Accounting Principles Board Opinion No. 25, Accounting for
Stock  Issued  to  Employees  ("APB  No.  25")  and its  related  implementation
guidance.  On January 1, 2006, we adopted the  provisions of SFAS No. 123R using
the modified  prospective  method. SFAS No. 123R focuses primarily on accounting
for  transactions  in which an entity obtains  employee  services in share-based
payment transactions.  The Statement requires entities to recognize compensation
expense for awards of equity  instruments  to employees  based on the grant-date
fair  value of those  awards  (with  limited  exceptions).  SFAS No.  123R  also
requires the benefits of tax  deductions  in excess of  recognized  compensation
expense to be reported as financing cash flows, rather than as an operating cash
flow as prescribed under the prior accounting  rules.  This requirement  reduces
net operating cash flows and increases net financing cash flows in periods after
adoption.  Total cash flow remains  unchanged from what would have been reported
under prior accounting rules.

     Prior to the adoption of SFAS No. 123R,  we followed  the  intrinsic  value
method in accordance  with APB No. 25 to account for our employee stock options.
Accordingly,  no  compensation  expense was  recognized in  connection  with the
issuance of stock  options under any of our stock option plans for periods ended
prior to January 1, 2006. The adoption of SFAS No. 123R primarily  resulted in a
change in our method of recognizing the fair value of share-based  compensation.
Our  adoption  of SFAS No.  123R did not  result in our  recording  compensation
expense  for  employee  stock  options,   since  all  options  had  vested,   no
modifications were made to existing options and no new options were granted.

     We do not expect to grant any employee options and therefore  recognize any
share-based  payments'  expense from the issuance of employee  stock  options in
2006.  The options  outstanding at December 31, 2005 did not and will not impact
2006  consolidated  results  of  operations  and  financial  position  since all
option-holders were fully vested in such options at December 31, 2005.

     We used  the  modified  prospective  method  at the  date of  adoption  and
therefore  results  for the 2005  first  quarter  have not  been  restated.  Had
compensation  expense for employee stock options  granted under our stock option
plans been determined based on fair value at the grant date consistent with SFAS
No. 123,  our net income and  earnings  per share for the 2005 period would have
been the pro  forma  amounts  indicated  below  and  were  estimated  using  the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions:

Risk free interest rate            5.16%
Expected volatility               29.46%
Dividend yield                     0.0%
Weighted average expected life     5.92 years


                                                                             Six Months
                                                                              Ended
                                                                           June 30, 2005
                                                                          ----------------
Net Income:
                                                                            
    As reported......................................................         $ 15,801
Deduct:
    Total share-based employee compensation expense determined under
fair value based method for all awards, net of related tax effects:
    Stock option plans...............................................
                                                                                  (117)
                                                                          ----------------
Pro forma net income.................................................         $ 15,684
                                                                          ----------------
Basic Earnings Per Common Share:
    As reported......................................................         $   1.02
                                                                          ----------------
    Pro forma........................................................         $   1.01
                                                                          ----------------

Diluted Earnings Per Common Share:
    As reported......................................................         $   1.00
                                                                          ----------------
    Pro forma........................................................         $   1.00
                                                                          ----------------





ITEM 1A.      RISK FACTORS
--------------------------
     There  are a  number  of risk  factors  that  could  affect  our  financial
condition or results of operations. See Note 2 - Contingencies and Part II, Item
1 - Legal Proceedings.  Please refer to page 14 and 15 of our 2005 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.    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,  2005,  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 2006 compared to the second quarter of 2005 and the first
quarter of 2006  (Table  amounts in 000's).  The sum of the  percentages  in the
tables may not total due to rounding.:



   Three Months Ended June 30, 2006      Three               %          %       Three               Three
               compared to               Months            Change     Change    Months              Months
    Three Months Ended June 30, 2005     Ended     % of     from      from       Ended    % of      Ended    % of
             and compared to            June 30,   Total    Prior   Sequential  June 30,  Total    Mar 31,    Total
    Three Months Ended March 31, 2006     2006    Revenue   Year      Period      2005    Revenue    2006    Revenue
-------------------------------------   --------  -------  -------  ----------  --------  -------  --------  --------
Revenues:
                                                                                       
  Membership fees....................   $103,111     92.7     6.2      1.4      $97,093    91.9   $101,740     92.5
  Associate services.................      6,820      6.1    (4.9)    (2.1)       7,175     6.8      6,963      6.3
  Other..............................      1,267      1.1    (6.2)      .8        1,351     1.3      1,257      1.1
                                        --------  -------  -------  ----------  --------  -------  --------  --------
                                         111,198    100.0     5.3      1.1      105,619   100.0    109,960    100.0
                                        --------  -------  -------  ----------  --------  -------  --------  --------
Costs and expenses:
  Membership benefits................     36,490     32.8     8.3      2.4       33,710    31.9     35,628     32.4
  Commissions........................     32,745     29.5   (15.7)     2.7       38,820    36.8     31,885     29.0
  Associate services and direct            7,584      6.8    (4.8)     3.9        7,963     7.5      7,302      6.6
    marketing........................
  General and administrative.........     13,020     11.7     5.5      4.4       12,337    11.7     12,467     11.3
  Other, net.........................      2,900      2.6    24.7      6.5        2,326     2.2      2,723      2.5
                                        --------  -------  -------  ----------  --------  -------  --------  --------
                                          92,739     83.4    (2.5)     3.0       95,156    90.1     90,005     81.9
                                        --------  -------  -------  ----------  --------  -------  --------  --------

Income before income taxes...........     18,459     16.6    76.4     (7.5)      10,463     9.9     19,955     18.1
Provision for income taxes...........      6,369      5.7    76.4     (7.5)       3,610     3.4      6,884      6.3
                                        --------  -------  -------  ----------  --------  -------  --------  --------

Net income...........................    $12,090     10.9    76.4     (7.5)     $ 6,853     6.5    $13,071     11.9
                                        --------  -------  -------  ----------  --------  -------  --------  --------





                                                                       Three Months Ended
                                                                       ------------------
New Memberships:                                             6/30/2006      3/31/2006     6/30/2005
----------------                                             ---------      ---------     ---------
                                                                                    
New legal service membership sales.......................       146,043       158,426        174,202
New "stand-alone" IDT membership sales...................         6,461         6,800          8,588
                                                             -----------    ------------  -------------
         Total new membership sales......................       152,504       165,226        182,790
                                                             -----------    ------------  -------------

New "add-on" IDT membership sales........................        98,156       100,405        116,723
Average Annual Membership fee............................       $327.34       $327.43        $333.71
Active Memberships:
Active legal service memberships at end of period........     1,484,498     1,488,308      1,490,276
Active "stand-alone" IDT memberships at end of period            57,167        54,453         39,071
    (see note below).....................................    -----------    ------------  -------------
         Total active memberships at end of period.......     1,541,665     1,542,761      1,529,347
                                                             -----------    ------------  -------------

Active "add-on" IDT memberships at end of period
    (see note below).....................................       507,049       485,246        397,749
New Sales Associates:
New sales associates recruited...........................        45,517        49,776         69,790
Average enrollment fee paid by new sales associates......        $49.70        $49.82         $51.45
Average Membership fee in force:
Average Annual Membership fee............................       $291.22       $288.92        $281.91


Note - reflects 6,451 net transfers from "add-on" status to "stand-alone" status
during the quarter ended June 30, 2006.

     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
     In November 2005, the Financial  Accounting Standards Board ("FASB") issued
FASB  Staff   Position   ("FSP")  FAS  115-1  and  FAS  124-1  "The  Meaning  of
Other-Than-Temporary  Impairment and Its  Application  to Certain  Investments."
This FSP  addresses  the  determination  as to when an  investment is considered
impaired,  whether that impairment is other than temporary,  and the measurement
of  an  impairment  loss.  This  FSP  also  includes  accounting  considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary  impairments.  The adoption of this FSP January 1, 2006 did
not have a material effect on our consolidated financial position and results of
operations.

     In May 2005,  the FASB  issued SFAS No. 154  "Accounting  Changes and Error
Corrections  - a  replacement  of APB Opinion No. 20, and FASB  Statement No. 3"
("SFAS 154").  SFAS 154 replaces APB Opinion No. 20,  "Accounting  Changes," and
FASB  Statement  No. 3,  "Reporting  Accounting  Changes  in  Interim  Financial
Statements,"  and changes the  requirements for the accounting for and reporting
of a change in accounting  principle.  This  statement  applies to all voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition  provisions.  When a pronouncement includes specific
transition  provisions,  those  provisions  should  be  followed.  SFAS  154  is
effective for accounting  changes and corrections of errors made in fiscal years
beginning after December 31, 2005.

Results of  Operations - Second  Quarter of 2006  compared to Second  Quarter of
--------------------------------------------------------------------------------
2005
----
     Net income  increased  76% for the second  quarter of 2006 to $12.1 million
from $6.9  million  for the prior  year's  second  quarter  primarily  due to an
increase in membership  fees of $6 million and a decrease in commissions of $6.1
million,  from $38.8 million to $32.7 million for the previous year's comparable
quarter.  Diluted earnings per share increased 84% to 81 cents per share from 44
cents per share for the prior year's comparable  quarter due to the 76% increase
in net income and an approximate  5% decrease in the weighted  average number of
outstanding shares.

     Membership  fees  totaled  $103.1  million  during the 2006 second  quarter
compared to $97.1 million for 2005, an increase of 6%. 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  16.6% during the three
months ended June 30, 2006 to 152,504 from 182,790 during the comparable  period
of 2005. At June 30, 2006,  there were  1,541,665  active  Memberships  in force
compared to 1,529,347 at June 30, 2005,  an increase of .8%.  Additionally,  the
average annual fee per Membership has increased from $282 for all Memberships in
force at June 30, 2005 to $291 for all  Memberships  in force at June 30,  2006,
primarily as a result of a larger number of Identity Theft Shield memberships.

     Associate  services revenue  decreased by  approximately  $355,000 from the
second  quarter of 2006  compared  to the  comparable  period of 2005 with a 35%
decrease in new associates  recruited.  Total new associates enrolled during the
second  quarter of 2006 were  45,517  compared  to 69,790 for the same period of
2005.  Average  enrollment  fees paid by new sales  associates  during  the 2006
second quarter were $50 compared to $51 for the comparable period of 2005 due to
specialized reduced rate $49 enrollment programs aimed at varying market niches.
We expect to continue some form of reduced enrollment programs for the remainder
of the year.  Associate  fees decreased from $7.2 million for the second quarter
of 2005 to $6.8 million during the comparable  period of 2006.  Future  revenues
from  associate  services will depend  primarily on the number of new associates
enrolled,  the  average  enrollment  fee  paid  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.  The eService
fees increased 32% to $3.3 million during the second quarter of 2006 compared to
$2.5 million for the comparable period of 2005.

     Other  revenue  decreased  $84,000  from $1.4  million  for the 2005  first
quarter to $1.3 million for the 2006 second quarter.

     Primarily as a result of the increase in Membership  fees,  total  revenues
increased to $111.2 million for the three months ended June 30, 2006 from $105.6
million during the comparable period of 2005, an increase of 5%.

     Membership  benefits  totaled $36.5 million for the three months ended June
30,  2006  compared  to $33.7  million for the  comparable  period of 2005,  and
represented  35% of Membership fees for both periods.  This  Membership  benefit
ratio  (Membership  benefits as a percentage of Membership  fees)  pertaining to
legal  service  plans should  remain near current  levels as  substantially  all
active Memberships provide for a capitated cost in the absence of any changes in
the capitated  benefit level,  which has not changed  significantly  since 1993.
However,  the higher benefit ratio of the Identity  Theft Shield  Membership may
increase  the blended  benefit  ratio if we  continue to increase  the number of
Identity Theft Shield Memberships in force.

     Commissions  to associates  decreased  15.7% to $32.7 million for the three
months ended June 30, 2006 compared to $38.8 million for the  comparable  period
of 2005,  and  represented  32% and 40% of  Membership  fees for the  respective
periods.  Commissions to associates are primarily dependent on the number of new
memberships  sold,  including  add-on  membership  sales,  during a period.  New
memberships sold during the three months ended June 30, 2006 totaled 152,504,  a
17%  decrease  from the  182,790  sold  during  the  comparable  period of 2005.
Commissions to associates  per new membership  sold were $215 per membership for
the three months ended June 30, 2006 compared to $212 for the comparable  period
of 2005. The average  commission per new membership sold varies depending on the
compensation  structure  that is in place at the time a new  membership is sold,
the amount of the Membership fee and the amount of any charge-backs  (recoupment
of previous  commission  advances)  that are  deducted  from  amounts that would
otherwise be paid to the various sales  associates  that are compensated for the
membership sale.  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 $7.6 million
for the three months  ended June 30, 2006 from $8.0  million for the  comparable
period of 2005.  The  decrease  was  primarily a result of  decreased  costs for
incentive  trips and  bonuses  and  decreased  costs for  materials  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 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 three months ended June 30,
2006  and  2005  were  $13.0  million  and  $12.3  million,   respectively,  and
represented 13% of Membership fees for both periods.

     Other expenses, net, which include depreciation and amortization,  interest
expense and premium taxes reduced by interest  income,  was $2.9 million for the
three  months  ended  June  30,  2006  compared  to $2.3  million  for the  2005
comparable  period.  Depreciation  increased  slightly  to $2.0  million for the
second  quarter of 2006 from $1.8  million  for the  comparable  period of 2005.
Interest  expense  increased  to $867,000  during the 2006 period from  $633,000
during the comparable period of 2005 as a result of higher average interest rate
and additional  debt. We expect interest expense will increase further in future
period as a result of the $80 million new senior financing we closed on June 23,
2006.  Premium taxes decreased from $499,000 for the three months ended June 30,
2005 to $484,000 for the comparable  period of 2006,  primarily as a result of a
change in regulatory  requirements in certain jurisdictions where we pay premium
taxes.  Interest income increased $74,000 to $452,000 for the three months ended
June 30, 2006 from $378,000 for the comparable period of 2005,  primarily due to
an increase in interest rates.

     We have  recorded a  provision  for income  taxes of $6.4  million and $3.6
million (34.5% of pretax income) for both periods.

Results of Operations - Second Quarter of 2006 compared to First Quarter of 2006
--------------------------------------------------------------------------------
     Second  quarter 2006  membership  fees  increased 1% to $103.1 million from
$101.7  million  for the first  quarter  of 2006.  Associate  services  revenues
decreased  during the 2006  second  quarter by  approximately  $143,000  to $6.8
million from $7.0 million for the 2006 first quarter and associate  services and
direct  marketing  expenses  increased  by  $282,000  during  the  same  period.
Membership benefits totaled $36.5 million in the second quarter of 2006 compared
to $35.6  million for the 2006 first quarter and  represented  35% of membership
fees for the two periods. Commissions to associates totaled $32.7 million in the
2006 second  quarter  compared to $31.9  million for the 2006 first  quarter and
represented 32% and 31%,  respectively,  of membership fees for the two periods.
General and administrative  expenses increased during the 2006 second quarter to
$13 million compared to $12.5 million for the 2006 first quarter and represented
13% and 12%, respectively, of membership fees for the two periods.

Results of Operations - First six months of 2006 compared to first six months of
--------------------------------------------------------------------------------
2005
----
     Membership  revenues  increased  8% the first half 2006 to a record  $204.9
million  compared  to $189.6  million  for the first  half of 2005.  Net  income
increased 59% for the first half of 2006 to $25.2 million from $15.8 million for
the prior  year's  comparable  period  primarily  due to the  increase  of $15.3
million in membership fees and a decrease in commission  expense of $5.9 million
caused by fewer new memberships sold during the 2006 period, partially offset by
an increase in  Membership  benefits  expense of $5.7 million and an increase in
general and administrative expenses of $2.1 million.  Diluted earnings per share
increased  65% to $1.65 per  share  from  $1.00  per share for the prior  year's
comparable  six  month  period  due to the 59%  increase  in net  income  and an
approximate 3% decrease in the weighted average number of outstanding shares.

     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 13% during the six months ended June
30, 2006 to 317,730 from 363,669 during the  comparable  period of 2005. At June
30, 2006, there were 1,541,665 active Memberships in force compared to 1,529,347
at June 30, 2005, an increase of 1%.  Additionally,  the average  annual fee per
Membership has increased from $282 for all Memberships in force at June 30, 2005
to $291 for all Memberships in force at June 30, 2006,  primarily as a result of
a larger number of Identity Theft Shield memberships.

     Associate  services  revenue  decreased 3% from $14.2 million for the first
six  months  of 2005 to $13.8  million  during  the  comparable  period  of 2006
primarily as a result of a 22% decrease in new associates  recruited.  Total new
associates  enrolled during the first six months of 2006 were 95,293 compared to
122,734 for the same period of 2005.  We expect to continue some form of reduced
enrollment  programs  for  the  remainder  of the  year.  Future  revenues  from
associate  services  will  depend  primarily  on the  number  of new  associates
enrolled,  the price  charged for the Certified  Field  Trainer  program and the
number who choose to  participate  in the Company's  eService  program,  but the
Company  expects that such revenues  will  continue to be largely  offset by the
direct and indirect cost to the Company of training  (including training bonuses
paid),  providing  associate services and other direct marketing  expenses.  The
eService  fees  increased  36% to $6.4  million  during  the first  half of 2006
compared to $4.7 million for the comparable period of 2005.

     Other revenue decreased slightly from $2.7 million for the six month period
ending June 2005 to $2.5 million for the same period of 2006.

     Primarily as a result of the increase in Membership  fees,  total  revenues
increased  to $221.2  million for the six months ended June 30, 2006 from $206.5
million during the comparable period of 2005 an increase of 7%.

     Membership benefits totaled $72.1 million for the six months ended June 30,
2006  compared  to  $66.4  million  for  the  comparable  period  of  2005,  and
represented  35% of Membership fees for both periods.  This  Membership  benefit
ratio  (Membership  benefits as a percentage of  Membership  fees) should remain
near  current  levels as  substantially  all active  Memberships  provide  for a
capitated  cost in the absence of any changes in the  capitated  benefit  level,
which has not changed  significantly  since 1993.  However,  the higher  benefit
ratio of the Identity Theft Shield  Membership may increase the blended  benefit
ratio if the Company  continues to sell  significant  numbers of Identity  Theft
Shield Memberships.

     Commissions to associates  decreased 8% to $64.6 million for the six months
ended June 30, 2006 compared to $70.5 million for the comparable period of 2005,
and represented 32% and 37% of Membership fees for such periods.  Commissions to
associates are primarily  dependent on the number of new memberships sold during
a period. New memberships sold during the six months ended June 30, 2006 totaled
317,730,  a 13% decrease from the 363,669 sold during the  comparable  period of
2005. Commissions to associates per new membership sold were $203 per membership
for the six  months  ended June 30,  2006  compared  to $194 for the  comparable
period of 2005. The average  commission per new membership sold varies depending
on the  compensation  structure that is in place at the time a new membership is
sold and the  amount of any  charge-backs  (recoupment  of  previous  commission
advances)  that are deducted  from  amounts that would  otherwise be paid to the
various sales associates that are compensated for the membership sale. 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 decreased to $14.9 million
for the six months  ended June 30, 2006 from $17.1  million  for the  comparable
period of 2005.  The  decrease  was  primarily a result of fewer new  associates
enrolled  during the six month  period.  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,
2006  and  2005  were  $25.5  million  and  $23.4  million,   respectively,  and
represented  12% of Membership  fees for both periods.  The increases in general
and  administrative  expense were primarily due to increased  employee costs and
property and other taxes.

     Other expenses, net, which include depreciation and amortization,  interest
expense and premium taxes reduced by interest  income,  was $5.6 million for the
six months ended June 30, 2006 compared to $5.0 million for the 2005  comparable
period.  Depreciation  increased to $4.0 million for the first half of 2006 from
$3.7 million for the comparable  period of 2005.  Interest expense  increased to
$1.5  million  during the 2006 period from $1.2  million  during the  comparable
period of 2005 as a result of higher  indebtedness  and higher average  interest
rates.  We expect interest  expense will increase  further in future period as a
result of the $80  million  new  senior  financing  we closed on June 23,  2006.
Premium taxes decreased from $1.1 million for the six months ended June 30, 2005
to $872,000 for the comparable period of 2006. Interest income increased $70,000
to  $839,000  for the six  months  ended  June 30,  2006 from  $769,000  for the
comparable period of 2005, primarily due to higher average interest rates.

     We have recorded a provision  for income taxes of $13.3  million  (34.5% of
pretax  income) for the first six months of 2006 compared to $8.3 million (34.5%
of pretax income) for the same period of 2005.

Liquidity and Capital Resources
-------------------------------
     General
     Consolidated net cash provided from operating  activities for the first six
months of 2006  increased  $6.5 million to $26.9  million from $20.4 million for
the 2005 period, although cash provided from operating activities before changes
in working  capital  items  increased  $9.6 million from $19.0  million to $28.6
million.  The increase of $9.6 million  resulted  primarily from the increase in
net income of $9.4 million.

     Consolidated net cash used in investing activities was $3.9 million for the
first six months of 2006  compared to $3.2 million of net cash  provided for the
comparable  period of 2005.  This $7.1 million  change in  investing  activities
resulted from a $3.1 million increase in additions to property and equipment and
a $5.0 million  increase in investment  purchases,  partially offset by the $1.0
million increase in the maturities and sales of investments.

     Net cash  provided by financing  activities  during the first six months of
2006 was $19.8 million compared to $27.2 million net cash used in the comparable
period of 2005.  This $47.0 million change was primarily  comprised of the $82.7
million  increase in proceeds from issuance of debt; a $7.8 million  decrease in
common stock  dividends  paid offset by $26.0  million  increase in purchases of
treasury stock; $3.0 million decrease in proceeds from exercise of stock options
and $14.4 million increase in repayments of debt.

     We purchased and formally retired 622,300 shares of our common stock during
the 2006 second  quarter for $21.4  million,  or an average  price of $34.40 per
share,  reducing our common  stock by $6,223 and our retained  earnings by $21.4
million. We had positive  consolidated  working capital of $37.5 million at June
30,  2006,  an increase of $40.6  million  compared  to a  consolidated  working
capital deficit of $3.1 million at December 31, 2005. The increase was primarily
due to a $42.8 million  increase in cash and cash  equivalents and a decrease in
income  taxes  payable of $1.7 million  partially  offset by an decrease of $6.3
million in the current portion of available-for-sale investments, an increase of
$1.5 million in the current portion of notes payable, a decrease in common stock
dividends  payable of $4.6  million  and a $1.0  million  increase  in  deferred
revenue and fees. The $37.5 million  positive  working  capital at June 30, 2006
would have been a $48.5 million positive  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 short term or the long term.

     At June 30, 2006 we reported  $100.4  million in cash and cash  equivalents
and unpledged  investments  compared to $59.9 million at December 31, 2005.  Our
investments  consist of common  stocks,  investment  grade (rated Baa or higher)
bonds primarily  issued by  corporations,  the United States  Treasury,  federal
agencies,   federally   sponsored   agencies   and   enterprises   as   well  as
mortgage-backed securities 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, 2006, we advanced commissions, net of
chargebacks,  of $62.1 million on new Membership sales compared to $71.8 million
for the same period of 2005.  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, 2006,  and related  activity for the six month period
then ended, were:



                                                                                    (Amounts in 000's)
                                                                                    ------------------
                                                                                  
Beginning unearned advance commission payments (1)...............................       $  195,792
Advance commission payments, net.................................................           62,056
Earned commissions applied.......................................................          (63,182)
Advance commission payment write-offs............................................           (1,807)
                                                                                    ------------------
Ending unearned advance commission payments before
  estimated unrecoverable payments (1)...........................................          192,859
Estimated unrecoverable advance commission payments (1)..........................          (37,079)
                                                                                    ------------------
Ending unearned advance commission payments, net (1).............................       $  155,780
                                                                                    ------------------



     (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 $44.1 million.
As such, at June 30, 2006 future commission  payments and related expense should
be  reduced  as  unearned  advance  commission  payments  of  $112  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  expected  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,  2006 of
$100.4 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.

     On June 23, 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").  The proceeds
will be used  primarily to fund further  share  repurchases,  including a tender
offer for 1 million  shares at $35 per  share,  to  refinance  $15.3  million of
existing bank indebtedness and general working capital  purposes.  After payment
of an  origination  fee of 1%, lender costs and other debt,  the net proceeds of
the Term Facility we received were $58.8 million.

     The Term  Facility  was fully  funded on June 23, 2006 and  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  plus 150  basis  points or at the LIBO Rate plus 250
basis  points.  The default  interest rate (Wells Fargo base rate plus 150 basis
points) at June 30, 2006 was 9.75%.  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.  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,  subject to a prepayment  premium of 1% in the first year,  0.5% in the
second  year and none  thereafter,  with a  reduction  of 50% of the  prepayment
premium if the prepayment is from the proceeds of another loan provided by Wells
Fargo.

     The Senior Loan is  guaranteed  by our  non-regulated  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 which we are remodeling 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  for the nine month
          period ending  September 30, 2006 of at least $60 million ($55 million
          for us and our top tier direct  subsidiaries) and for the twelve month
          period  ending 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; and

     *    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.

     In addition to  customary  events of default,  it is an event of default 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 used  the  proceeds  of the  Term  Facility  to  repay  in full the $5.3
remaining balance of our existing stock loan with Bank of Oklahoma,  N.A., First
United Bank and Trust and Comerica  Bank,  which was  originated in 2003 and the
$10 million we borrowed from Bank of Oklahoma,  N. A. earlier in June 2006.  The
related loan  agreements were thereby  terminated and the associated  collateral
was  released.  As a part of the  transaction,  we also amended our existing $20
million  real  estate  loan  which  we  incurred  in  2002  to  finance  our new
headquarters  building  in Ada,  Oklahoma  to  extend  the final  maturity  from
September 2008 to August 2011. This loan,  which has a balance of $14.1 million,
with  interest at the 30 day LIBOR rate plus 2.25%,  adjusted  monthly,  remains
secured by a mortgage on our headquarters,  but the additional security interest
in our membership contracts was released. The interest rate at June 30, 2006 was
7.38%. We will continue to be required to make the same monthly payments on this
loan of $191,000 plus interest  with the balance of  approximately  $2.3 million
due at maturity.  The real estate loan was also amended to conform the financial
covenants to those under the new Senior Loan.

     Our $11.5  million  aircraft  loan was fully  funded in November  2005 with
interest payable monthly at the 30 day LIBOR rate plus 1.75%,  adjusted monthly,
and requires monthly principal  installments of $96,000 which began December 31,
2005 with the remaining  balance payable in a final installment due November 30,
2015.  The  interest  rate at June 30,  2006 was  6.88%.  The loan is  primarily
collateralized  by the aircraft  purchased.  In addition to customary  events of
default,  if Harland C. Stonecipher ceases to be our Chief Executive Officer for
a period of 90 consecutive days an event of default will occur.


     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") and Pre-Paid Legal Services Inc. of Florida ("PPLSIF"). The ability of
PPLCI and PPLSIF to provide  funds to us is subject to a number of  restrictions
under  various  insurance  laws in the  jurisdictions  in which PPLCI and PPLSIF
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 PPLCI or PPLSIF,  or any of our  regulated
subsidiaries,  will be  funded  by us in the form of  capital  contributions  or
surplus  debentures.  At June 30,  2006,  neither  PPLSIF  nor  PPLCI  had funds
available for payment of substantial dividends without the prior approval of the
insurance commissioner.

     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, 2005  except as  disclosed
below:



                As of June 30, 2006:                               Payments Due by Period (In Thousands)
                                                        ------------------------------------------------------------

                                                                                                             More
                                                                    Less than                                than
               Contractual Obligations                    Total       1 year     1-3 years   3-5 years      5 years
                                                        ----------  ----------  -----------  ---------  ------------
                                                                                           
Long-term debt....................................      $  99,938   $  17,187   $  36,874    $  36,874  $   9,003




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, 2005.  There were no  significant
changes in the application of critical  accounting  policies or estimates during
the first six months of 2006. 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.  On July 5, we commenced a tender offer for 1 million shares of
common  stock at $35.00 per share  which is set to expire on August 2, 2006.  We
expect to resume our open market repurchase  program after the expiration of the
tender  offer as we have  existing  authorization  from the Board to purchase an
additional  515,356  shares  in  addition  to the 1  million  shares  authorized
pursuant to our pending  tender offer.  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,  2006 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, 2005. 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
--------------------------------------------------------------------
     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,  2006,  substantially  all  of  our  investments  were  in
investment   grade  (rated  Baa  or  higher)   fixed-maturity   investments  and
interest-bearing  money market accounts including certificates of deposit. 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, 2006 (1)........      $  25,177     100 bp increase            $  23,941
                                                                           200 bp increase               22,836
                                                                            50 bp decrease               25,756
                                                                           100 bp decrease               26,245

Fixed-maturity investments at December 31, 2005 (1)....      $  27,541     100 bp increase            $  26,129
                                                                           200 bp increase               24,809
                                                                            50 bp decrease               27,723
                                                                           100 bp decrease               28,613
-------------------


(1)  Excluding short-term  investments with a fair value of $2.6 million at June
     30, 2006 and December 31, 2005.

     The table above illustrates,  for example,  that an instantaneous 200 basis
     point  increase in market  interest rates at June 30, 2006 would reduce the
     estimated fair value of our  fixed-maturity  investments  by  approximately
     $2.3 million at that date. At December 31, 2005, an instantaneous 200 basis
     point  increase in market  interest  rates would have reduced the estimated
     fair value of our fixed-maturity  investments by approximately $2.7 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  interest  rate risk by  purchasing
investments that can be readily  liquidated should the interest rate environment
begin to significantly change.

     Interest Rate Risk
     We are exposed to market risk related to changes in interest  rates.  As of
June 30, 2006,  we had $99.9 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  $999,000.  As of June 30,  2006,  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.


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, 2006, 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, 2006,  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 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 second quarter of 2006.



                                                             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 2006............        45,900         $  34.13               45,900             1,091,756
May 2006..............       365,800            34.27              365,800               725,956
June 2006.............       210,600            34.67              210,600             1,515,356
----------------------  ---------------  ----------------  --------------------
Total.................       622,300         $  34.40              622,300
----------------------  ---------------  ----------------  --------------------
-----------



(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 12,000,000 shares.
     The most recent  authorization was for 1,000,000  additional shares on June
     28,  2006  and  there  has been no time  limit  set for  completion  of the
     repurchase  program.  Effective  July 5, 2006,  we commenced a  self-tender
     offer for up to 1,000,000  shares of our common  stock at a fixed  purchase
     price of $35.00  per share  which will  expire at 5:00 p.m.,  New York City
     time, on August 2, 2006, unless we extend the offer.

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 2006  Annual  Meeting  of  Shareholders  of the  Company  (the  "Annual
Meeting") was held on May 17, 2006.  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                                 13,288,068              436,734
Thomas W. Smith                              13,576,913              147,889


     The  number of  members of the Board of  Directors  is  divided  into three
classes equal in size,  with the term of office of one class expiring each year.
The new terms of  service of Messrs.  Hail and Smith  will  expire in 2009.  The
terms of the other four  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: Peter K. Grunebaum - 2007, Orland G. Aldridge -
2007; Martin H. Belsky - 2008 and Harland C. Stonecipher - 2008.



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

         Votes For                Votes Against              Abstentions
        ----------                -------------              -----------
        13,707,606                    7,771                     9,425





ITEM 6.  EXHIBITS.
         ---------
(a) 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
       and Harland C. Stonecipher (Incorporated 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 (Incorporated 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  Security  Agreement dated June 11, 2002 between Bank of  Oklahoma,  N.A. and
       the Company  (Incorporated  by reference  to Exhibit 10.2  of the  Company's
       Quarterly Report on Form 10-Q for the six months ended June 30, 2002)
 10.10 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)
*10.11 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)
 10.12 Aircraft  purchase  agreement dated December 9, 2004  by  and  between   S&S
       Aviation, LLC and  the  Company (Incorporated by reference to  Exhibit 10.13
       of the Company's Report on Form 10-K for the year ended December 31, 2004)
 10.13 Aircraft purchase  agreement dated  December 9, 2004  by and between Harland
       C. Stonecipher and/or Shirley A. Stonecipher and  Stonecipher Aviation,  LLC
       and  the  Company   (Incorporated  by  reference  to  Exhibit  10.14  of the
       Company's Report on Form 10-K for the year ended December 31, 2004)
 10.14 Assignment and Assumption  of  Lease dated December 20, 2004 between Harland
       C. and Shirley  Stonecipher and  the Company  (Incorporated  by reference to
       Exhibit  10.15 of the  Company's  Report   on Form  10-K for the year  ended
       December 31, 2004)
*10.15 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)
 10.16 Purchase  Agreement  dated August 19, 2005   between us  and Learjet,  Inc.,
       with Addendum.  (Incorporated by reference to Exhibit 10.1  of the Company's
       Report on Form 8-K dated August 19, 2005)
 10.17 Loan Agreement  dated November 30, 2005  between  Pre-Paid  legal  Services,
       Inc  and  Bank  of   Oklahoma,   N.A.   and  First  United  Bank  and  Trust
       (Incorporated  by reference to Exhibit 10.1 of  the Company's Report on Form
       8-K dated November 30, 2005)
 10.18 Aircraft  Chattel  Mortgage,  Security  Agreement  and   Assignment of Rents
       dated November 30, 2005  between  Pre-Paid legal  Services,  Inc and Bank of
       Oklahoma,  N.A. and First  United Bank and Trust  (Incorporated by reference
       to Exhibit  10.2 of the   Company's  Report on Form 8-K dated  November  30,
       2005)
 10.19 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)
 10.20 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)
 10.21 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)
 10.22 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)
 10.23 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)
 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 25, 2006       /s/ Harland C. Stonecipher
                          ----------------------------------------
                          Harland C. Stonecipher
                          Chairman, Chief Executive
                          Officer and President
                          (Principal Executive Officer)

Date: July 25, 2006       /s/ Randy Harp
                          ----------------------------------------
                          Randy Harp
                          Chief Operating Officer
                          (Duly Authorized Officer)

Date: July 25, 2006       /s/ Steve Williamson
                          ----------------------------------------
                          Steve Williamson
                          Chief Financial Officer
                          (Principal Financial and
                          Accounting Officer)





                                  Exhibit 31.1

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

I, Harland C. Stonecipher, Chief Executive Officer, 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 25, 2006       /s/ Harland C. Stonecipher
                          -----------------------------------------
                          Harland C. Stonecipher
                          Chairman, Chief Executive
                          Officer and President





                                  Exhibit 31.2

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

I, Steve Williamson, Chief Financial Officer, 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 25, 2006       /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, 2006 (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 25, 2006       /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, 2006 (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 25, 2006       /s/ Steve Williamson
                          --------------------------------------
                          Steve Williamson
                          Chief Financial Officer