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 usually 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 a 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.
Adapted from a post by the author originally published in Solo Practice University™ Blog on 1/19/12. © 2012 Debra L. Bruce.