ABA issues formal opinion on whether attorneys can participate in "deal of the day" programs like Groupon

Bar associations and other state authorities have been issuing opinions on whether it is permissible for lawyers to use pre-paid discount services like Groupon to advertise legal services and attract clients. The NY Bar Association has approved participating in Groupon (see here), as have North Carolina, South Carolina and Maryland (see here).  On the other hand, the Alabama State Disciplinary Commission has ruled attorneys can't use Groupon (see here).  The Indiana State Bar Association has ruled it is probably unethical (here).

The ABA Standing Committee on Ethics and Professional Responsibility had been working on an opinion on the subject for some time and it was finally released.  It is available here.  The summary reads, in part, as follows:

Deal-of-the-day or group-coupon marketing programs offer an alternative way to sell goods and services. Lawyers hoping to market legal services using these programs must comply with various Rules of Professional Conduct, including, but not limited to, rules governing fee sharing, advertising, competence, diligence, and the proper handling of legal fees. It is also incumbent upon the lawyer to determine whether conflicts of interest exist.

The opinion explains there are two different ways in which attorneys could try to use deal of the day services:

For a lawyer, the two options described above might be illustrated as follows. Assume a lawyer charges $200 per hour for legal services. The lawyer could sell a coupon for $25 that would entitle the bearer to buy up to five hours of legal services at a fifty-percent discount; in other words, the $25 would allow the bearer to pay only $100 per hour for up to five hours of legal services, potentially saving up to $500. This first option requires the coupon bearer to make additional payment to the lawyer commensurate with the number of hours actually used. Alternatively, the lawyer could sell a deal for $500 that would entitle the buyer to receive up to five hours of legal service (with a value of up to $1,000), but all of the money would be collected by the marketing organization, with no additional payment collected by the lawyer no matter how many of the five hours of legal services were actually used. For ease of reference, this opinion will refer to option one as a coupon deal and to option two as a prepaid deal.

With these two models in mind, the opinion concludes that coupon deals can be structured to comply with the Model Rules.  However, the opinion concludes there are numerous difficult issues associated with prepaid deals and, therefore, the Committee is less certain that prepaid deals can be structured to comply with all ethical and professional obligations under the Model Rules.

For comments on the opinion you can check out Lawyer Ethics Alert Blogs.