Alabama State Bar: Lawyers can’t use Groupon as marketing tool

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Attorneys cannot use Groupon or other “daily deal” websites to market discounted legal services in the form of redeemable certificates, an Alabama State Bar disciplinary commission has concluded in an ethics opinion.

The opinion addressed the propriety of an attorney’s use of group coupon sites like Groupon as a form of social media marketing. In the bar association’s example, a law firm would agree to sell a coupon entitling the purchaser to $500 worth of legal services for a discounted rate of $250. The prospective client would pay the website $250 and would receive a certificate for $500 to redeem for legal services. From the sale, the website would keep 50 percent of the revenue – $125 – and remit the remaining $125 to the law firm.

The disciplinary commission concluded such a practice violated the rule against sharing fees with non-lawyers. In addition, the commission concluded that it would violate a number of other ethics rules.

“For example, it is well-settled that pursuant to Rule 1.15(a), all unearned fees must be placed into a lawyer’s trust account until earned. However, under the fee model employed by Groupon, half of the legal fee paid by the purchaser is claimed by Groupon at the time of the purchase making it impossible for the lawyer to place the entire unearned legal fee into trust as required by Rule 1.15(a). …

“Further, if the purchaser were to demand a refund prior to any services being performed by the lawyer, the purchaser would be entitled to a complete refund regardless of the fact that half of the fees were claimed by Groupon. Failure to make a full refund would be considered charging a clearly excessive fee,” the commission said.

An Indiana bar committee has concluded that using group coupon or daily deal marketing is likely not permitted under professional rules of conduct.

However, the New York State Bar Association Committee on Professional Ethics issued an opinion in support of using such sites, so long as the advertisement is not “false, deceptive or misleading.” South Carolina has also approved “daily deal” websites, albeit with caution.

Alabama State Bar. Office of General Counsel. Ethics Opinion No. 2012-01 (undated).