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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. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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