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Lawyers should stay away from 'daily deals'

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A question from a northern Indiana attorney about using online group coupons for advertising spurred a legal ethics opinion from the Indiana State Bar Association in March warning lawyers against using such offers as they are “fraught with peril.” Doing so could put a lawyer in violation of Indiana’s Rules of Professsocial-media-other-bars.gifional Conduct.

South Bend attorney Jonathan Watson, who practices at Wandling & Associates, turned to an ISBA listserv for solo and small firms to pose the question: Does anyone know if using Groupon or LivingSocial for an estate package special would run afoul of any ethics rules?

When he posted the question in January 2011, Watson had his own firm offering estate planning, small business legal services, and general litigation. He’s always been up on the latest technology, so when Groupon and other ‘daily deal’ companies started to take off a couple years ago, he considered whether it would be a good way to offer his estate planning services that are flat-fee based.

Online group coupon deals offer customers the chance to purchase goods or services at a discounted rate as long as a certain number of people purchase the same deal. Once that tipping point has been reached, the deal can move forward and people can purchase and redeem their coupons. The business offering the goods or services works with the online coupon company to make the deal happen; both share in the money generated from the sale.
 

ted waggoner Waggoner

Watson said he heard back from several people who were interested in what he found out regarding usage, but no one mentioned considering the issue from an ethics standpoint.

The post caught the eye of members of the ISBA’s Legal Ethics Committee, which decided to write an opinion on the matter. That decision came on the heels of changes to advertising rules, Indiana Rules of Professional Conduct 7.1 to 7.5, that took effect in January 2011. This issue can be considered an advertising one, noted Ted Waggoner, a committee member and attorney with Peterson Waggoner & Perkins in Rochester.


patrick olmstead Olmstead

Patrick Olmstead Jr., an Indianapolis attorney with Hoover Hull and member of the committee, added that after the advertising rules were amended, the Legal Ethics hotline started fielding more calls that were Internet related with questions about creating referral websites and what one can write in a blog.

The committee investigated how one enters into a group coupon arrangement, what kind of promises the attorney makes as the one offering the service, and what kind of promises the companies arranging the online deals make. Once the committee understood the inner workings of the deals, it compared them to the Professional Rules of Conduct and found problems in four different areas, Waggoner said.

Those four areas are the issues of lawyer-client engagement; safekeeping of property; duties to a prospective client; and fee sharing and channeling clients. The committesocial-media-other-bars.gife concluded that a lawyer using a group coupon-style arrangement may violate Professional Conduct Rules 1.15, 1.16, 5.4 and 7.2.

Why be concerned?

At first blush, Olmstead and Waggoner thought that an attorney could use these kinds of deals with no issues, but a little digging changed their minds. The turning point for Olmstead was reading a copy of a Groupon contract.

“It really does concern me that Groupon takes 50 percent no matter what it is,” he said.

It took about nine months for the committee to release its opinion, but Watson came to the conclusion that it was something attorneys couldn’t use about a week after posting his question. He zeroed in on the issue of fee splitting with nonlawyers.

“(A prohibition against) fee sharing with a nonlawyer is intended to prevent law practices from being influenced improperly from outside considerations,” Watson said. “When we advertise on Groupon, sending a percentage of fees to an outside entity could look like its influencing us in some way that’s not proper.”

Rule 5.4 prohibits fee sharing with nonlawyers except in specific circumstances.

“By the process of the advertising companies creating buying groups, the online providers such as the Company are being paid to channel buyers of legal work to the specific lawyer, in violation of the advertising and fee sharing rules,” the ethics opinion states. “We believe this is comparable to the situation analyzed in Opinion 3 of 2008, in which we concluded that there is a prohibition on the fee sharing between a brokerage firm and an attorney.”

The idea of using group coupons for legal services isn’t unique to Indiana’s legal community. Several bar associations across the country have issued their own opinions as to whether one can use online coupon deals. Indiana’s seems the most decisive in its conclusion that the deals just shouldn’t be done based on our Rules of Professional Conduct. In fact, the opinion released by ISBA’s Legal Ethics Committee, warns that “such social media marketing is fraught with peril …”

Waggoner said the opinions from the state bars of South Carolina and New York had some influence, but every state’s Rules of Professional Conduct can differ. The South Carolina bar’s opinion found the use of these coupons doesn’t violate its Rule 5.4(a) prohibition on sharing of legal fees.

Another issue that arises out of these deals is being able to control the content of the coupon advertising. The social media site has its own advertising writers, and the attorney may not have input on what the deal specifies or if it includes the term “advertising material,” Olmstead said.

“Something that simple could get someone disciplined,” he said.

Watson said he thought it was unfortunate that he couldn’t use the online group coupon deal as he thought it would be an interesting way to advertise. Watson, Olmstead and Waggoner are unaware of any Indiana attorneys who have used the service. Last year, a Missouri attorney offered to provide a will and durable power of attorney for $99 through a group coupon deal. Missouri has no formal ethics opinion on the matter, but did give the attorney the go-ahead for the agreement.

Indiana attorneys can utilize coupons or other deals to stand out when marketing their services; they just cannot involve an intermediary like these social media companies. An attorney in California last year offered $99 misdemeanor DUI defense on Cyber Monday to the first three people who contacted him.

While the Indiana opinion warns against using group coupon deals, Olmstead and Waggoner encourage anyone who is considering it to reach out to the ethics committee or other counsel before entering into such an agreement.

“If you really want to do this, let us know and we’ll help guide you through this,” Olmstead said. “I believe in that on a gut level. If you’re trying to make money, make your business more profitable through advertising, part of the cost of doing that is making sure that you’re doing it right.”•
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  • Lawyers should stay away from ' daily deals
    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.
  • Lawyers should stay away from 'daily deals'
    I agree, I mean after all it simply does not make sense to charge a fixed fee for legal services. Daily deals are here to stay though, no doubt about that, however I have to agree with the poster in saying that daily deals are not suitable for lawyers.

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  1. It really doesn't matter what the law IS, if law enforcement refuses to take reports (or take them seriously), if courts refuse to allow unrepresented parties to speak (especially in Small Claims, which is supposedly "informal"). It doesn't matter what the law IS, if constituents are unable to make effective contact or receive any meaningful response from their representatives. Two of our pets were unnecessarily killed; court records reflect that I "abandoned" them. Not so; when I was denied one of them (and my possessions, which by court order I was supposed to be able to remove), I went directly to the court. And earlier, when I tried to have the DV PO extended (it expired while the subject was on probation for violating it), the court denied any extension. The result? Same problems, less than eight hours after expiration. Ironic that the county sheriff was charged (and later pleaded to) with intimidation, but none of his officers seemed interested or capable of taking such a report from a private citizen. When I learned from one officer what I needed to do, I forwarded audio and transcript of one occurrence and my call to law enforcement (before the statute of limitations expired) to the prosecutor's office. I didn't even receive an acknowledgement. Earlier, I'd gone in to the prosecutor's office and been told that the officer's (written) report didn't match what I said occurred. Since I had the audio, I can only say that I have very little faith in Indiana government or law enforcement.

  2. One can only wonder whether Mr. Kimmel was paid for his work by Mr. Burgh ... or whether that bill fell to the citizens of Indiana, many of whom cannot afford attorneys for important matters. It really doesn't take a judge(s) to know that "pavement" can be considered a deadly weapon. It only takes a brain and some education or thought. I'm glad to see the conviction was upheld although sorry to see that the asphalt could even be considered "an issue".

  3. In response to bryanjbrown: thank you for your comment. I am familiar with Paul Ogden (and applaud his assistance to Shirley Justice) and have read of Gary Welsh's (strange) death (and have visited his blog on many occasions). I am not familiar with you (yet). I lived in Kosciusko county, where the sheriff was just removed after pleading in what seems a very "sweetheart" deal. Unfortunately, something NEEDS to change since the attorneys won't (en masse) stand up for ethics (rather making a show to please the "rules" and apparently the judges). I read that many attorneys are underemployed. Seems wisdom would be to cull the herd and get rid of the rotting apples in practice and on the bench, for everyone's sake as well as justice. I'd like to file an attorney complaint, but I have little faith in anything (other than the most flagrant and obvious) resulting in action. My own belief is that if this was medicine, there'd be maimed and injured all over and the carnage caused by "the profession" would be difficult to hide. One can dream ... meanwhile, back to figuring out to file a pro se "motion to dismiss" as well as another court required paper that Indiana is so fond of providing NO resources for (unlike many other states, who don't automatically assume that citizens involved in the court process are scumbags) so that maybe I can get the family law attorney - whose work left me with no settlement, no possessions and resulted in the death of two pets (etc ad nauseum) - to stop abusing the proceedings supplemental and small claims rules and using it as a vehicle for harassment and apparently, amusement.

  4. Been on social security sense sept 2011 2massive strokes open heart surgery and serious ovarian cancer and a blood clot in my lung all in 14 months. Got a letter in may saying that i didn't qualify and it was in form like i just applied ,called social security she said it don't make sense and you are still geting a check in june and i did ,now i get a check from my part D asking for payment for july because there will be no money for my membership, call my prescription coverage part D and confirmed no check will be there.went to social security they didn't want to answer whats going on just said i should of never been on it .no one knows where this letter came from was California im in virginia and been here sense my strokes and vcu filed for my disability i was in the hospital when they did it .It's like it was a error . My ,mothers social security was being handled in that office in California my sister was dealing with it and it had my social security number because she died last year and this letter came out of the same office and it came at the same time i got the letter for my mother benefits for death and they had the same date of being typed just one was on the mail Saturday and one on Monday. . I think it's a mistake and it should been fixed instead there just getting rid of me .i never got a formal letter saying when i was being tsken off.

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