Groupons for Lawyers Gain Traction with Ethics Committees

Lawyers can use daily deal sites, like Groupon, in North Carolina, South Carolina, and New York, according to ethics opinions in those states. New York was the third state to issue an opinion addressing the potential conflict between Groupon, which takes a percentage of every transaction, and rules prohibiting fee sharing or paid referrals. The three opinions agree in most respects, but there is a clear break over how to handle the money earned from these ‘daily deal’ coupon websites.

Use of Funds Received

Both North Carolina and South Carolina specifically address the use of funds before representation, and agree that those funds must be placed in a trust account. New York does not address the issue, but it stands to reason that because the fee has not yet been earned, it would be improper for a lawyer in any state to place it directly in the firm account.

Where New York sets itself apart is on the issue of expired coupons. Presumably, like any coupon purchased from a daily deal site, the coupon for legal services would eventually expire. In such an event, the New York opinion holds that “the lawyer is entitled to treat the advance payment received as an earned retainer for being available to perform the offered service in the given time frame.” That being said, if the lawyer cannot represent the client due to a conflict, an inability to render the services, or because the client discharges the lawyer, the lawyer must give the client a full refund.

In contrast, North Carolina takes a much more firm approach to expired coupons:

If a prospective client fails to claim the discounted legal service within the designated time (before the “expiration date”), one might consider the advance payment forfeited. Even if it is assumed that this is a risk that is generally known to consumers, however, it does not justify the receipt of a windfall by the lawyer. As a fiduciary, a lawyer places the interests of his clients above his own and may not accept a legal fee for doing nothing. Such a fee is inherently excessive. Therefore, if a prospective client does not claim the discounted service within the designated time, the lawyer must refund the advance payment on deposit in the trust account for the prospective client or, if the prospective client still desires the legal service, the lawyer may charge his actual rate at the time the service is provided but must give the prospective client credit for the advance payment on deposit in the trust account.

The problem with North Carolina’s holding, in my view, is its indefinite nature. If four or five people never redeem their coupon, the lawyer may have that money in a trust account forever.


All three states agree on the importance of sufficient disclaimers. As South Carolina points out: Rule 7.1 expressly provides that an attorney must ensure that the communication does not contain any false, misleading, deceptive or unfair information about the lawyer or her services. But North Carolina goes even further. In North Carolina, attorneys must include certain disclosures in their daily deal advertisements. Specifically:

The advertisement must explain that the decision to hire a lawyer is an important one that should be considered carefully and made only after investigation into the lawyer’s credentials. In addition, the advertisement must state that a conflict of interest or a determination by the lawyer that the legal service being offered is not appropriate for a particular purchaser may prevent the lawyer from providing the service and, if so, the purchaser’s money will be refunded.

The New York opinion merely reiterates the general rules governing advertising in that state.



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  • Regardless whether it’s legal to use Groupon-style coupons, I’m pretty convinced it’s generally a bad value for law firms.

    It also encourages lawyers to deliver a half-assed work product because they are working for so much less than usual. (That isn’t Groupon’s fault, obviously, but it’s a reason for lawyers to steer clear.)

    • I agree. Ideally the point of using Groupon is to promote repeat business. But if you’re just doing a simple will or something along those lines, I doubt it will garner enough repeat business to make itself worthwhile.

  • The standard criticisms of Groupon would also apply: that most small business have difficulty implementing it successfully as a loss-leading strategy. Keenly, many businesses have little to no strategy for converting a Groupon sale to a regular sale. If the owner falls into the trap of thinking of the Groupon customer as a sale instead of a lead, it will be a drain on the bottom-line.

    It doesn’t help that among Groupon users are hardline bargin-hunters. Those users aren’t looking to discover new businesses, but are looking for the cheapest deal of the moment.