Corporate & Securities Law

Lawyers behaving badly: offering discounts!

PoL invited “Truth on the Market bloggers” to tackle this one.  How could we resist? 

It seems that while the NC bar is apparently unfazed by 40% contingency fees, they’re right on the case when it comes to a law firm offering consumers a discount on services through Groupon.  According to the ABAJ:

[T]he Law Offices of Craig S. Redler & Associates in St. Louis, offered to provide a will and durable power of attorney for $99. Groupon gets paid a percentage of the amount earned by the advertiser, and that?s the issue that will be considered by the North Carolina ethics subcommittee. A proposed opinion written by committee staffers opines that the arrangement amounts to impermissible fee-sharing with a nonlawyer, according to an Oyez column by North Carolina Lawyers Weekly. * * *Redler says the firm lost money when clients got the $99 will and power of attorney. But the ad brought calls from a lot of new clients, most of whom sought additional legal services. From that standpoint, he says, the Groupon worked well.

Law practice commentator Carolyn Elefant, quoted in the ABAJ article, notes:

Though to date, North Carolina is the only disciplinary body that has expressly addressed Groupon, others have ruled on the ethics of other types of discounted services. A number of state disciplinary bodies don’t approve of the practice, finding that discounts may be deceptive (for example, offering a “free” consult when a lawyer never charges for consults anyway), or can give rise to a conflict of interest or constitute a “fee” in exchange for referral if given to a third party, like a realtor, for distribution.

Well, it’s obvious that Groupons or similar devices will divert lawyers from their usual straight and narrow by leading them into all sorts of nefarious practices. After all, what could be more unethical than lawyers reducing prices?

But lawyers better get ready.  Bruce Kobayashi and I discuss even more basic threats to their high-priced business model rumbling down the track.

Full post as published by Truth on the Market on February 14, 2011 (boomark / email).