Looking for innovative ways to market your services and attract new clients? Maybe you’ve considered teaming up with Groupon to market and offer your services at a discount? Well, think again. The State Bar of Michigan (SBM) has stated that a lawyer’s participation in marketing services like Groupon (though the opinion never mentions Groupon by name) runs afoul of the ethical rules.
Groupon (and other daily-deal coupon sites), which has steadily increased in popularity since it launched in 2008, offers gift certificates for goods and services at deeply discounted rates. (As I write this, Groupon is featuring the following deals: $20 worth of crepes and drinks for $10; a $70 massage for $35; and $100 worth of auto detailing for $55.) You purchase the certificates directly from Groupon, who keeps a portion of the money and sends the rest to the service provider. These certificates have expiration dates, at which time the promotional price is no longer valid; however, the purchase price never expires. (For example, if you failed to get your $20 worth of crepes in time, you could still get $10 worth at any time.)
Because Groupon and similar companies keep a portion of the certificate price, the SBM says that the arrangement is more like fee-sharing than advertising; therefore, the arrangement violates MRPC 5.4(a) because a lawyer would be sharing fees with nonlawyers. The SBM also notes additional ethical concerns: (1) the certificate purchase is an advance payment of legal fees, which must be deposited in a client trust account (MRPC 1.15(g)); (2) if the lawyer must decline representation, the entire advance fee (including the company’s share) must be returned to the client (MRPC 1.16(d)); and (3) if the coupon is not redeemed within the allotted time, MRPC 1.16(d) may require that the money be returned to the client.
Interestingly, the American Bar Association (ABA) considered this issue and concluded that it was possible to structure a daily deal to avoid these ethical issues. The ABA distinguished between (1) a coupon deal, where, for example, the lawyer sells a coupon for $25 that would entitle the bearer to buy up to five hours of legal services at a 50 percent discount; and (2) a prepaid deal, where the lawyer charges $500 up front for up to five hours of legal service, a value of $1,000. The prepaid deal presented the most ethical concerns, similar to those noted by the SBM, above. The coupon deal, however, in the ABA’s view, could pass muster if structured properly because no legal fees are involved unless and until an attorney-client relationship is formed. Notably, unlike the SBM’s opinion, the ABA concluded that the money retained by the marketing company was “nothing more than payment for advertising and processing services rendered to the lawyers who are marketing their legal services.”
Reading both opinions, I wonder if this is another instance where the ethical rules are not keeping up with the realities of practicing law today, especially for new lawyers. Groupon-type marketing services don’t require any initial outlay of money from the lawyer, but the advertising reaches a wide audience. Being a featured daily deal could be an effective way for new lawyers to reach new clients and jump-start their practice.