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LEGAL CENTS: The latest dish on daily deal sites

Jane Pribek

Jane Pribek

Hey, did you catch the Superbowl? Of course you did. You know who won, too!

But what did you think about those controversial Groupon ads? Did they make you want to incorporate offering a deal on Groupon into your legal marketing?

One of the online deal site’s ads drawing particular scorn spoofed the plight of the Tibetan people by wrapping up a rundown of the ongoing issues there with a deal on Tibetan food available in Chicago via Groupon. Groupon made similar ads poking fun at people who want to save the whales and the rainforest. After running them for less than a week, the company pulled the ads.

Perhaps Groupon wanted to cause a controversy, subscribing to the notion that all publicity is good. Still, I know of at least a couple of people who unsubscribed from Groupon, which offers deals on everything from restaurants to spa services through the power of group purchasing, after the ads. I haven’t subscribed yet, and won’t now.

Not to be outdone, Groupon’s most aggressive competitor, LivingSocial, also bought a pre-game ad for Superbowl Sunday, featuring a man who says his life was changed by online discounts. In the end, he’s cross dressing. As is the case with Viagra ads, it’s really not fun trying to explain some things to young children after they see it on TV.

That being said, I know many people who’ve gotten amazing bargains for restaurants, personal trainers and limo rides through Groupon or LivingSocial. They don’t really concern themselves with politics.

Yet there are compelling reasons, both practical and ethical, for lawyers to avoid advertising on them.

At their core, sites such as Groupon and Living Social offer plusses and minuses for businesses.

Companies don’t have to pay anything up front to take part in a Groupon offer, which is advertised via an e-mail to subscribers. Because the offers are typically deep discounts, such as paying half price for services or products, a minimum number of subscribers have to purchase the coupon or the offer is voided. The site draws a large number of eyes for deals as a result, due to the need for group purchasing power, so one could argue it’s free marketing or advertising.

But businesses must honor the coupons, and Groupon takes a percentage of the initial sale price and gives only a portion to the merchant. An article on the GrouponWorks site said the percentage is typically slightly above or below 50 percent, while Portfolio.com reported that LivingSocial takes a 30 percent cut.

Ouch. You’re already offering a deep discount, and then paying half to Groupon?

The idea is to make money through a large volume of customers buying the coupon, who will then spend dollars beyond what they paid for it once they’ve been introduced to the business.

So even with its minuses, can the system be used for attorney services?

St. Louis attorney Craig S. Redler offered a will and power of attorney deal for $99 on Groupon last year. He ran it past his state’s ethics regulators beforehand, who OK’d the idea, according to an article in the ABA Journal.

According to the ABA article, he’s been deluged by e-mails from other lawyers wanting to know how it worked out. Perhaps not surprisingly, Redler did not return my call for comment.

Redler lost money on the deal, which 53 people bought. But he told the ABA Journal that shortly after the offer ran, he got many calls from people who didn’t buy the coupon, but now knew of his business. He deemed it a success.

After the Superbowl ads, advertising on Groupon probably wouldn’t be a wise public relations move for immigration lawyers concentrating in asylum, or plaintiff-side environmental lawyers.

But for all attorneys, need I remind you that the profession already has a public image problem?

The ABA article also mentions that a North Carolina State Bar ethics subcommittee has indicated that it believes the pay arrangements on deal sites might violate prohibitions on fee-splitting with non-lawyers.

Redler likened his use of Groupon to a discount or coupon in the Yellow Pages. He ensured that the coupon’s fine print called it a credit toward attorney fees, in case the client needed more sophisticated estate planning beyond a simple will, in part to diminish the potential concern over sharing a flat fee with a non-lawyer.

The North Carolina Bar’s ethics opinion hasn’t been released yet, but legal ethics attorneys have already been buzzing about it, said Tim Pierce, Ethics Counsel for the State Bar of Wisconsin.

“I can see where some people see this as a fee-sharing problem,” he said. “Groupon takes a piece of the selling price of the coupon, which is essentially legal fees. That’s not a whole lot different than someone gathering up a herd of customers, sending them your way and then demanding a cut of the fees – which are exactly what the rules on fee-splitting and paying for referrals are designed to prevent.”

By the way, in Wisconsin, he’s referring to SCR 20:5.4, Professional Independence of a Lawyer, and SCR 20:7.2, Advertising.

“On the other hand, there is an element of choice here,” Pierce said. “No one’s really being directed or steered to the website. People are free to take it or leave it, making it more like an advertising experience.”

He said the Office of Lawyer Regulation typically “doesn’t patrol new, innovative advertising forms.” Rather, it would likely take an aggrieved person raising concern for the agency to take action against someone; perhaps another lawyer who alleges you’ve violated the rules and improperly taken clients away from him or her. Not very likely to happen, but possible.

What’s more likely is, Pierce said, is you’ll get the coupon, and then realize it cannot be redeemed because there’s a conflict of interest. In that instance, you’d have to refund the client for the coupon under SCR 20:1.16, Declining or Terminating Representation. Do you think the deal site’s going to write the refund check? Doubtful.

Also, you simply might not want to represent someone with a coupon, especially after he or she says, “I’ve been to 10 other lawyers and they were all idiots!” That’s the toxic client who’s likely to file an OLR complaint alleging a host of violations, including your use of the deal site.

“Coming from my perspective as someone who talks to lawyers about their ethics problems all day long, I’d say to steer away from it,” Pierce said.

On the Web:

Want to learn more about Groupon and its increasingly popular competitor Living Social?

Check out:

Groupon for advertisers

LivingSocial Feature Your Business

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