Last year St. Louis attorney Craig S. Redler garnered a lot more attention than he really wanted when he offered a discount coupon for a will and power of attorney through daily deal promoter Groupon. Groupon sends its members targeted advertising of daily virtual vouchers entitling the purchasers to products and services from local businesses at deep discounts through group purchasing. If a large enough group commits to purchase the coupon, the deal is on. Thus, the name Groupon. The company was founded in 2008 and its business took off so rapidly that it now has hundreds of copycat competitors. Some of the other big players in the daily deal market include Living Social, Google Offers and Amazon with its Gold Box Deals and Woot.
A Virtual Ethics Exam
Groupon grabbed headlines when it went public in 2011. Its CEO was interviewed on 60 Minutes even as I was writing this post. What focused the legal blog spotlight on Redler, however, was the question of whether advertising through Groupon could constitute fee splitting in violation of Rule 5.4(a) of the ABA Model Rules of Professional Conduct and most state ethics rules. These daily deal sites make their money by taking a cut of the proceeds from the sale of the discount voucher (which voucher is later redeemed for goods or services), rather than charge the participating business a fee up front.
Redler duly sought clearance from the Missouri Bar Association before proceeding with the Groupon deal. Since then, South Carolina and North Carolina have announced ethics committee opinions authorizing daily deal voucher programs for legal services, with certain caveats. Stephanie Kimbro did a nice job of summarizing those caveats in her Virtual Law Practice blog. The WhichDraft.com blog helpfully includes the South Carolina ethics rules in its commentary on the issue. Amber Hollister, the deputy general counsel for the Oregon State Bar discussed the question in the Oregon State Bar Bulletin with regard to ethics rules in Oregon.
Is It Worth It?
What most solo lawyers want to know before trying to decipher their state’s ethics rules on this rather complicated issue is, “Does it work? Is it worth it?” I asked Craig Redler whether, from the vantage point of one year later, he would do it all again. “Probably not,” he admitted, but not because of the clients. And not because of Groupon. He just wouldn’t want to experience all the brouhaha from the legal community again. Besides the flurry of activity from new clients, Redler’s office was inundated with about 150 phone calls and emails from lawyers wanting to know how it worked. On top of that, some of the online commentary was not very charitable towards him. (Lawyers, please don’t contact him as a result of this post. He doesn’t have time for responding.)
I wondered whether Redler could even break even financially by offering a will and power of attorney for only $99 in the Groupon deal. He ususally charges $750 for his will package. I asked whether he did it as a loss leader, and whether it ultimately paid off. “I didn’t even think in terms of ‘loss leader’ when I decided to do a Groupon deal,” he confessed. “I love Groupons and wanted to be part of it. I use them personally.”
So did Redler lose money on the deal? Or did he just gin out a no frills “Mom and Pop will” as efficiently as he could? “I sent each client an extensive questionnaire. I did a quality job for each client and gave them hours of my time. It’s impossible for me to do a plan in less than 3.5 to 4 hours,” affirms Redler. Most of his Groupon clients determined that they needed a more complex plan, some including trusts or other instruments . Avoiding a bait and switch program and keeping it ethical, Redler gave a full $750 credit to the clients who upgraded. Redler says he still made money on the Groupon experiment. It just wasn’t as profitable as his other work.
Clients As Good As Any
Some businesses have found that daily deal vouchers bring in the wrong kind of clients: the type who just want dirt cheap deals and won’t be repeat customers at full price, or folks with attitude. Redler, however, said “The people who came in were as good as any I work with.” Many of them said they had intended to get their wills drawn up for months or years, and the Groupon spurred them to finally take action.
If you’re just getting a new law practice going and you have unfilled hours on your hands, you might not have much to lose by doing a daily deals voucher program. Even $99 is more than $0. For a seasoned lawyer, however, there needs to be more pay off. The sudden throng of new clients puts pressure on the ability to service existing full pay clients, and could harm long term business relationships, if not handled well.
Fortunately for Redler, time has confirmed the wisdom of his experiment. In the past year some of the discount clients have engaged him again for additional legal services at full fee. Some of them have referred new clients to him. Even though he didn’t actually lose money, the “loss leader” did lead to additional business for Redler.
The Key: Caring & Quality Service
After viewing how Redler handled the questions of potential clients on the Groupon site, and after exploring his client philosophy in conversation, I think I know why Redler had a good experience with his Groupon clients. He offered the kind of service (will preparation) that responsible people seek. He treated his new clients with respect and concern for their welfare. He gave them all the service of a full-paying client. It sounds to me like he took care of his clients, and they returned the favor.
Before you race off to try a daily deal discount voucher program for your law practice, stay tuned for my next blog post. It contains my thoughts on what kind of legal work might be suited for a discount voucher deal, and what to watch out for. If you have already tried something like this or know an attorney who has, please share the results in the comments below.
All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.
I’m surprised he made money. I thought this would turn out like the woman who advertised cupcakes for a very low price and ended up overwhelmed with orders at such a loss she nearly folded. The most interesting thing here was the calls from attorneys. They all want to do it but don’t want to go first. I’m glad it worked out for him. I wonder what the conversion rate was? How many people that actually contacted him got a will for $99 or otherwise?
According to this site (http://wislawjournal.com/2011/02/22/the-latest-dish-on-daily-deal-sites/) at the Wisconsin Law Journal, the attorney sold 53 of the packages. At $99 a will, that comes to $5247. Assuming 2 hours of time per will, that’s roughly $26/hour – roughly what document review lawyers earn. But yes, he did make money (though we also don’t know what was lost if work was displaced)
To respond to Susan’s comments below, I find it hard to believe that Mr. Redler stopped using Groupon because of pressure from other lawyers. Perhaps that is the case, and if so, it is truly unfortunate. But I think that perhaps the experiment didn’t work out – and there is no shame in that either. I certainly do not fault Mr. Redler for trying.
Granted, many lawyers criticize practices that are well accepted in other industries. But with Groupon, it is not just lawyers who criticize the model, but business people in other sectors as well. There has been fairly extensive analysis and study on whether Groupon results in repeat business (data suggests not as much as it claims), the types of situations where it works, and whether the actual cost is worth the exposure. In the face of this kind of information, I don’t think that lawyers who decide against trying Groupon in favor of other ways to promote services should be criticized as behind the times or anti-innovation.
Debra,
Thank you for this great post! I commend Redler for trying Groupon and for taking all the right steps to comply with RPC. I recently read a quote which I loved and which speaks volumes for those who will listen:
“Science-fiction writer William Gibson is famously known for the observation that “the future is already here; it’s just not evenly distributed,” which when it comes to disruptive innovation are probably the truest words ever uttered.”
That Attorney Redler tried something new when others would challenge him is to his credit. That he would be dissuaded because of colleagues’ reactions should be telling him he’s actually on to something and to not stop.
As Jerry Lewis said, ‘if everyone is telling me I shouldn’t, chances are I’m onto something!’
I’m not advocating it for everyone, but don’t knock people who try new things and do so within the proper boundaries of our rules.
I was a little dismayed that my posts on Groupon were not mentioned, since I was one of the first to blog on this topic about a year ago and my post was picked up in several other publications. (http://www.legalmarketingblawg.com/2011/01/the-scoop-on-groupon-for-lawye.html). However, while I will agree that there are some things that lawyers are not willing to try because they are just stodgy lawyers, the Groupon model has been roundly criticized in several sectors, as I discussed at length in this post – http://myshingle.com/2011/08/articles/ethics-issues/just-because-lawyer-marketing-is-ethical-doesnt-mean-its-effective/
My concerns about Groupon don’t really stem from ethical issues – I don’t think there are many bonafide ethics issues, though it bears noting that in North Carolina, lawyers have to put the payments into trust accounts. In other industries, there is a value to getting dollars up front and being able to spend them, but in some jurisdictions, lawyers are prohibited from taking up front payments for work not yet performed.
But from an economic perspective, Groupon does not work. Yes, Redler made some money, but we also don’t know how much he lost by spending time offering discount services and displacing those where he could have earned more, not to mention the staff devoted to the work. Many new solos do not have this kind of infrastructure in place, and could very easily wind up digging themselves out of a hole.
Also, Groupon dishonors existing clients. I have no problem with discounts, but why not give your EXISTING clients a discount on future services or provide them with coupons to distribute to friends to encourage referrals. It’s one thing to pay full fare for a meal at a restaurant and then see it on Groupon (where you can get a discount meal if want to return). It’s another to pay full price for legal services and see it on sale as a two-fer when chances are, you won’t need that service again anyway.
I will grant you that Groupon could probably work in one situation: sales of purely unbundled forms or services – where presumably the lawyer already has a workflow in place and can do the work on line to minimize disruption. Or, it could work if you wanted to charge a discount for some kind of a “legal check up” where people bring in their Legal Zoom documents or corporate forms and you tell them if they need to make any changes.
It is one thing to criticize lawyers for not trying something new and different. It is quite another to suggest that lawyers’ stodginess is always the reason for not engaging in something new when there may be legitimate, economic reasons for not doing so. And indeed, here, those reasons are not even limited to lawyers, by a long shot.
Carolyn,
Groupon can be perfected and lawyers can perfect the way they structure their groupons by also limiting the number available.
But more often than not, lawyers are fearful of doing things differently and often voice an opinion without investigation simply BECAUSE it’s not the way things have been done before. No one is suggesting everyone start doing this as it may not be right for everyone, their practice area, their finances or their time constraints. But the very fact this attorney said he wouldn’t do it again, not for any of those reasons, but because of other lawyers speaks volumes about how some lawyers view those who do things differently then traditionally considered.
As a matter of fact, the way Attorney Redler handled this type of venture is to be commended on many levels. He was a user of Groupon, likes the service, wanted to be part of it and understood the risks, checked out everything to make sure he wasn’t compromised ethically, and handled the work load, gave full value credits for those who wanted to upgrade and did it successfully.
This showcases all the positives of sticking your neck out and doing it right.
Carolyn, you make many good points, as you did in your prior posts. For the record, in my original draft of this post, I DID reference your post and Nikki Black’s post on this subject from about a year ago.
When I was able to get Craig Redler to let me interview him about this, however, I rewrote the post and cut out a lot of my original material.
As Susan said, this is not for everyone. I would even say: not for most. Nevertheless, I think it might be worth an experiment for some lawyers. I’ll talk about that in my next post, and include my warnings and caveats.
Carolyn, you have no clue.
The fact that 150 lawyers contacted Craig after he made this offer just goes to show that the legal market is ripe for innovation but so many lawyers are scared to be the guinea pig. Its partially due to lawyers’ risk aversion but I think a large part has to do with the way some lawyer-bloggers will publicly ridicule any lawyer doing any thing different. Its too bad that some lawyers use their platform to tear other lawyers down rather than to explore innovative options and opportunities. Its totally irresponsible in my opinion.
Kudos to Craig for trying something different!
How is it that SPU seems to know what I’m thinking.
I just reviewed my site’s analytics and noticed my 2nd best source for visits is Yelp. I created a Yelp business acount a few months ago and haven’t thought about it since then. As you can see it still needs some fixing up. http://www.yelp.com/biz/law-office-of-paul-j-perez-manhattan-2
Yelp sends weekly updates, which include invitations to create a Yelp Deal where they take a 30% cut from what the customer pays. It might be worth a shot to see if I can convert some of those visitors in to paying customers.
We’re prescient! Paul, if you decide to pursue, let us know how it works out. I would encourage you limit the quantity for the first go round so you can get a feel for time management, client expectations and double-check how this complies (or not) with the rules in NY.
Will do. I checked the rules on my new favorite app, the NYSBA Opinion App.
Opinion #897 (12/13/11)
Digest: Lawyer may market legal services on a “deal of the day” or “group coupon” website provided that the advertising is not misleading or deceptive and makes clear that no lawyer-client relationship will be formed until the lawyer can check for conflicts and competence to provide theservices. If the lawyer is unable to provide the offered service due to a conflict or competence issue,the lawyer must give the coupon buyer a full refund. If the coupon buyer terminates the representation, the buyer is entitled to a refund subject to the lawyer’s quantum meruit claim.
Paul – your experience is exactly why every bar needs an app for ethics. I did the same thing Paul did – it’s so easy to use, it’s impossible NOT to look up a rule or opinion! It almost makes ethics fun.
Very interesting information, Paul. Thanks for sharing it. I wonder how different the Yelp audience would be from the Groupon audience. One difference is that Yelpers have a handy and familiar platform for publicizing their opinions about your services. That makes good customer service even more critical.
It’s nice to see all of you finally catching up to me. Yesterday was the one-year anniversary of my Groupon, which was for tax preparation services. I sold 46, the second-highest ever for tax prep services (51 was the highest, and Groupon fully expected me to sell about 20 – they were surprised at how well I did), and only the third tax deal to that date to actually tip. Not long after mine ran, H&R Block ran one, though it was structurally different, so ‘m not sure if it was successful.
It remains to be seen how many repeat customers I get – tax season only now starting – but I can tell you at least three of the 46 have already called to schedule appointments. In addition, at least 2 of the 46 referred new, full-price clients during last tax season. Of the 46, one had me do her trust, and another paid me to consult with them on a short sale.
As for Yelp!, well, you’re just catching up to me there, too – in fact, Groupon wanted me to have some reviews on Yelp! before they ran my deal. I did get some business – and continue to get business – from Yelp!, all of which is near-full-price (I give a first-time discount to further encourage people to come in). Of the visits to my Yelp! page, I get about 10% in as at least one-time consults. I’d like to get that up, but I also know people look well in advance of when they need it (so some of those October page views turn into March customers), and others are just skimming, and would never be clients (for example, someone who wants a Chinese-speaking preparer).
I did not consult any rules of ethics prior to engaging in discussions with Groupon (about 6 months before the deal ran), for two reasons: first, because there wasn’t a lot of such discussion going on, so no one really was saying one way or another. Second, because I flatly didn’t care. Anyone who wanted to whine was welcome to cover my rent and student loan payments, as well as my other expenses. If they didn’t want to do that, they could STFU.
We contacted Groupon about doing another one this year, but they declined. Apparently, their interest is in high-volume, low-return stuff because they can pitch the volume better (Look! The last guy brought in 1,000 new clients!). As for the horror stories, such as cupcake lady, well, as a co-worker of mine used to say “your pain is your own.” Groupon discussed that potential problem with me long before the deal ran, and gave me the option of limiting sales (I decided not to, because I would have been ecstatic to sell 1,000 Groupons). She was a fool to ignore the warning, and got what she deserved.
And yes, plenty of lawyers gave me dire warnings about negative outcomes/ethics opinions (the NC opinion hit about a week before my deal). I welcomed them to chip in to cover my costs, if they wanted to tell me how to run my business. Shockingly, no one took me up on the offer…
Would I do it again? As Mr. Big said at the end of the SATC series, “Ab-so-f’ing-lutely.”
GAZ
Funny this came up again! As Carolyn mentioned, she and I wrote about it a while ago, but it just so happens I just wrote about it again this week for my Daily Record article since the NYS Committee on Prof’nal Ethics issued an opinion on lawyers using Groupon in December.
Bottom line–it’s pretty much ok. But, I still question whether it’s a great way to market a law firm. But that’s just my opinion.
I just published the column to my blog here: http://nylawblog.typepad.com/suigeneris/2012/01/new-york-state-ethics-committee-on-lawyers-using-groupon-type-services.html
Oh, just skimmed over comments and I see that Paul mentioned the NYS opinion as well.