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Remember when Groupon was a thing? The company was founded in 2008, and by April 2010, it was valued at $1.35 billion. It was called "the fastest growing company ever," in an article on Forbes.com which projected that the company would bring in $1 billion in revenue faster than any other company in history.
Fast-forward a few years, and after a much-hyped IPO, the company's founder was fired, earnings have been disappointing, and hundreds of copy-cat sites have sprung up, none more fearsome than LivingSocial, an Amazon-backed rival. While Groupon seemed to be a good deal for businesses struggling to gain an initial foothold, and consumers seeking deals, the novelty is gone.
This makes the timing of this ABA Ethics opinion on lawyers and coupon sites especially curious, with both declining relevance of daily-deal sites, and the plethora of state bar ethics opinions that have already addressed the issue (in an arguably clearer manner, to boot).
The opinion begins by dividing deals into two categories: coupons and prepaid services. The former involves purchasing a coupon from the deal site, for say $20, that entitles the bearer to a discounted rate for certain services, paid at the time services are rendered, to the lawyer directly. The latter is where the client pays the entire amount of legal fees up front, and after the deal site takes its cut, the remainder is given to the lawyer.
Prepaid deals are an ethical mess, so much so that the ABA admits that it isn't quite sure if one could structure one to comply with the Model Rules. The money has to go into a trust account, the fees paid to the website have to be "reasonable," refunds are required for unused portions or whole fees, and the lawyer should talk with the client about what is covered, what is not, and how much additional work will cost.
This seems like common sense.
Coupon deals are almost certainly ethical and don't require the use of a trust account. In fact, if the ad is worded properly ("No refunds!"), and the fee is reasonable, the lawyer can pretty much spend the money immediately on life's necessities, such as printer cartridges and a taco.
Except, maybe, perhaps, when there is a conflict of interest or other reason, other than fault of the client, why the lawyer can't provide the services, in which case a refund is always required.
So maybe, just maybe, a trust account is a good practice.
You see where we're going with this? The opinion bounces back-and-forth between the two types of deals, is fraught with "maybes," and provides little guidance beyond common-sense tips that any person who has passed the Multistate Professional Responsibility Exam should already know.
"Wait, you mean overselling coupon deals beyond the amount of work I'm capable of handling is a bad idea? Total mind-blower, ABA!"
Planning on Offering a Daily Deal?
Don't even look at the ABA opinion, unless your state has remained silent on the matter. It'll crush your soul, make your brain hurt, and will provide little to no guidance whatsoever. As always, check with your state bar. From the footnotes in the ABA opinion, we can see that Indiana, Arizona, North Carolina, and a plethora of other states have already addressed the issue, as has a University of Cincinnati Law Review article.
Have you ever tried a daily-deal site? Tell us about your experience on LinkedIn.