Lawyers, Largest YP Advertisers, Prohibited From Using Groupon in NC

by: on January 20, 2011
3 Comments

A North Carolina State ethics subcommittee has proposed an opinion stating that is not ethical for lawyers to offer their services via Groupon according to the ABA Journal.

The opinion states that a lawyer is not allowed to share a fee with a nonlawyer, which in this case is Groupon, according to an Oyez column by North Carolina Lawyers Weekly.

Lawyers Are the Number One Category for Yellow Pages Advertising

Why is this a big deal?  Lawyers are the number one category for yellow pages advertising. If Groupon is looking to replace the Yellow Pages as the number one option for local advertisers, it’s a real blow if they can’t target the largest spender in the category.

While legal services was probably not a high priority item for Groupon’s once a day deal offering, it was likely to figure prominently in the Groupon stores environment where users actively search for services offering deals.

Will be interesting to see if Groupon attempts to lobby state bars to prevent similar rulings in other states.

Vinicius Vacanti is a co-founder of Yipit, the leading daily deal aggregator recommending the best daily deals by learning your tastes.

  • http://www.groupon-off.com Carl Ruzycki

    If other states follow suit, this could be bad news for Groupon. The legal industry has to represent a larger profit loss to Groupon then other merchants like restaurants, as professional fees come at a much higher rate per hour then a discounted food special. If other professional services groups like accountants and doctors take the same position, this could put a real damper on the Groupon sales growth in the future. if doctors do groupons, will this effect their ability to charge full rates for medicare and medicaid billing.

  • Carolyn Elefant

    As I wrote in my original post on this topic (http://www.legalmarketingblawg.com/2011/01/the-scoop-on-groupon-for-lawye.html), I think that the fee-splitting rationale is stupid. The prohibition on splitting fees with non-lawyers was intended to prevent lawyers from circumventing advertising rules. For example, a lawyer can’t approach an accident victim at the scene and offer to represent him in a suit, or call older people on the phone and offer to write them a will. A non-lawyer can engage in this activity, however, so bars grew concerned that a non-lawyer would make the initial contact and sell the lawyer’s service, and the two would split the fee.

    By contrast, services like Groupon and pay-per-click advertising are performance based marketing – you don’t pay unless you get results. This helps make them more affordable than YP which require a huge cash outlay and are prohibitively expensive for all but the biggest firms.

    Having said that, I don’t think that the inability to use Groupon will be a huge blow to most (but not all lawyers). The problem that I see with Groupon is that it only works for sellers of discrete services – a meal, a night at a hotel or a day at the spa. Moreover, when people buy a Groupon, they are buying that discrete product – they’re paying $10 to get a $20 meal (or 2 $10 meals) or $85 to buy a $160 pair of jeans. That’s what makes Groupons appealing. If people were to simply pay $50 for $100 off a car or $10 for a $20 discount on a concert ticket, they wouldn’t buy them because they’d have to outlay more cash after making the Groupon purchase.
    When it comes to legal services, it’s hard to predict the cost unless you know what someone’s problem is. So lawyers who want to offer $500 off the cost of legal services for $200 are not going to find many takers. Now, it’s true that a lawyer could sell a $500 will for $100 or sell an LLC incorporation for $69 since those are discrete services. But the problem there is that after someone makes the purchase and goes to meet with the lawyer, the lawyer might determine that an LLC is not appropriate. The lawyer might make this determination completely in good faith, without any intent as a bait and switch. For example, let’s say that a group of college students want to start a non-profit and so they purchase an LLC from groupon. Well, an LLC is not going to be the appropriate entity selection in many jurisdictions – the students might need a non-stock corporation or other entity which is more time consuming. IF the lawyer simply fills out the LLC, he’s committing malpractice. But if the students find that the cost of the alternative is too high, they’re stuck with a Groupon they can’t use.
    Lawyers are also more likely to lose money on Groupon services unless they’re highly efficient. Whereas a restaurant that fills empty tables with Groupon-subsidized seats will make money since the waiters and cooks are on duty anyway, at a law firm, it’s rare for staff to have a lot of downtime, so the lower-cost Groupon work will displace other work.
    As I said in my post, the one way that lawyers should use Groupon is to buy up the deals and use them as client gifts, or to take clients out to lunch. I just don’t think there’s a way for lawyers to not lose money on Groupon.

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