Virtual Law Practice

Online “Daily Deals” on Legal Services

Written by

Stephanie Kimbro

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South Carolina has published a new Formal Ethics Opinion 11-05 about attorney’s using services, such as Groupon, to offer discounts and deals on their legal services.

To my knowledge, the ethics opinion is the first from a state bar that is specifically related to this topic. The question posed in the opinion is:

Does a lawyer violate the Rules of Professional Conduct by contracting with a website to offer vouchers that can be purchased from the website and then subsequently redeemed for discounted legal services such as the preparation of wills?

The opinion says a lawyer does not violate the Rules as long as the method used complies with attorney ethics rules for advertising (7.1 – 7.2) and the rule on sharing of legal fees (Rule 5.4(a)).  There are other potential risks to avoid that include clearly defining the scope of representation that is covered in the “deal”, making sure payments are routed to the trust account if required, and the duty to prospective clients. The opinion concludes that whether this online client development strategy violates the Rules or not depends on the way that the attorney has set up the procedure within the online service and manages it in accordance with the other Rules.

The question posed the SC Ethics Committee specifically mentions using the service for estate planning. In fact, it’s difficult to think of what other practice areas it might be possible to do this in. It would work best with an unbundled or limited scope representation service.  More often when people are seeking legal services online it’s because there is a pressing legal need.  The motivating factor to retain an attorney is not the discount on services.  But you never know these days. I’ve heard tales from family law attorneys claiming that the recession has prospective clients delaying major legal needs, including divorce, until they can afford it.  So maybe if your firm was the one offering a “daily deal” on that service, you might be selected above another firm.

A virtual lawyer providing unbundled services online could connect the daily deal service to their virtual law office to potentially send prospective online clients straight from the deal into the registration process to purchase the requested unbundled legal service online.

Are any other state bars addressing the use this service in online client development by lawyers?  Anyone know of a law firm using Groupon or another service for this purpose?

Comments

4 responses to “Online “Daily Deals” on Legal Services”

  1. Ryan Velo-Simpson Avatar
    Ryan Velo-Simpson

    I have wondered about the Groupon for legal services idea myself and always thought it would be a mess dealing with the trust accounting issues. What happens to client funds who do not use the service by the expiration date of the Groupon? Surely you can not keep them as prepaid flat fees since you didn’t do any legal work and so must pay them back to the client but have to make them whole so you lose money that Groupon itslef gets to keep. Interested to hear what others think…

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  2. Brian Powers Avatar
    Brian Powers

    Nice post, Stephanie. I have been considering this for quite some time. There are so many factors that complicate doing this. First, I think doing this in any way that involves holding client funds in trust is nearly impossible. In order for this to work, it really needs to a be a well defined, fixed fee arrangement for unbundled services. Second, Groupon is very problematic because of the fee-sharing implications. The agreement with Groupon would need to make it very clear that the fee paid is not a “fee-share” in nature, but rather, a fee paid to advertise the offer to groupon’s users – although who knows if that would even pass a disciplinary hearing. Third, only certain types of legal services will work here. Estate planning packages are perfectly suited (i.e. “Simple Estate Planning Package Deal – $x.xx). Basic entity formation services might work too. But the daily deal thing is an impulse buy – so it needs to be a service that people want/need – but either don’t know they want/need it until it is right in front of them OR have delayed obtaining the service because of price. Finally, the ability to meet demand might be an issue. If the perfect deal were crafted and attracted 250 estate planning clients overnight – that could be a nightmare in some ways. Having a VLO, and some document assembly capability would help – and would be a must for me.

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  3. Stephen Shaw Avatar
    Stephen Shaw

    Stephanie –

    Thanks for this post – I just found it but have been toying with this idea. I think you could work the fee-sharing and any other limitations/disclosure into the deal-site text. From what I have seen, they typically have detailed sections outlining the “deal” terms.

    One thing I would ask for is a clear refund process in the event of a matter that is outside of competence or raises a conflict issue. I am not sure if the deal sites are set up for this, but I am going to look into it. I would be interested to hear what else you find out.

    Reply
  4. Jason Mark Anderman Avatar
    Jason Mark Anderman

    Stephanie, thanks for breaking the news on this opinion, it inspired me to write a post on my own blog here: http://www.whichdraft.com/howto/?p=279 where I include the full text of the South Carolina ethics rules cited so that attorneys can review all of these coupon online marketing ethical strictures in one shot.

    Reply

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