Category Archives: Legal Marketing Trends

The Scoop On Groupon for Lawyers

Can Groupon, a website that leverages the concept of collective bargaining power to offer daily deals on local businesses work for lawyers? To date, I’ve seen at least one law firm that gave Groupon a try, though no word on the results of the firm’s participation. Meanwhile, the North Carolina Ethics Committee recently opined that Groupon violates state bar rules’ prohibiting fee splitting. As I’ll discuss in this post, though I don’t think Groupon is a particularly promising way for law firms to market a practice (in addition to ethics hurdles, it’s also a costly proposition), there is one way that lawyers can benefit from Groupon: as buyers of Groupon discounted servicers, rather than providers of it.

What is Groupon?
By now, most lawyers are probably familiar with Groupon, an online company that offers daily deals at local businesses. One of Wall Street’s current darlings, it’s been described somewhat derisively as darlings of the tech industry;a modern version of an online coupon book. Basically, Groupon teams up with local businesses who provide a coupon for 50 to 70 percent off a product or service. Groupon emails the deal to registered users, and if enough users commit to purchasing the coupon, the deal goes through. Groupon and the participating business split the proceeds.

How Groupon Benefits Non-Lawyer Businesses
As described here, retailers benefit from Groupon in a number of ways. First, the coupons bring business in the door, and as a result, customers are likely to spend more than just the face value of the Groupon. Second, first time customers may either become repeat customers or refer friends, so the loss on the first, discounted sale can yield future sales down in the line.

Groupon also spares retailers up-front costs of advertising. Though to be sure, Groupon ain’t free, the money comes from sale proceeds and not out-of-pocket. If a deal doesn’t go through due to insufficient numbers, retailers don’t pay. Moreover, even if consumers don’t buy a Groupon when offered, they may learn about your business and patronize it even without the discount. I know that I’ve learned about a couple of activities in my area through Groupon that I later visited even though I never thought to purchase a coupon at the time because I didn’t have an immediate use for it.

Still, even though Groupon can benefit businesses, it can also be a big bust. That’s because, as discussed here, not all consumers spend in excess of the Groupon or return after having used the coupon. Most importantly – Groupon can be costly to providers. Let’s say that a restauranteur offers a $50 meal for $25 and 100 people accept the offer. That’s $2500 in proceeds (100 x $25), but the restauranteur only receives $1250. That means the restaurant is obligated to provide $5000 in services for $1250.

A Harvard Business School paper (December 2010) offers a more extensive cost-benefit of Groupon, summarized here. What’s interesting is the study found that discount vouchers work better for some businesses than others. Merchants will low cost of goods and highly perishable products – like restaurants, spas, gyms and hotels – fall within that category – every table or room unfilled is lost revenue that can’t be recovered. By contrast, retailers of clothing or manufactured products can hold items for future sales, so the marginal business that other providers gain from Groupon is not as urgent for them.

How Can Groupon Work for Lawyers
Selling legal services via Groupon poses somewhat more of a challenge than other items. Since customers have to pre-pay for Groupons, they’ll want to purchase a service that they need or might like to use. So whereas a spa can sell a $200 Groupon for a $500 “Day of Beauty,” since customers may want to sample that type of service, a customers are unlikely to pay $200 for “$500 Worth of Legal Services” unless they have an immediate need for legal services. Second, most of the Groupons that come to my box are priced so that recipients can redeem the groupon for a full product without spending more than face value. For example, if I buy a $10 Groupon for “$20 worth of food at XYZ Restaurant,” it’s usually enough for at least one, if not two meals. That’s what makes Groupons so appealing. By contrast, if a ten dollar Groupon offered $20 of food at a five-star gourmet restaurant, I doubt that many people would buy it, because they’d have to spend more money at the restaurant in order to get the value of the Groupon.

It’s that dynamic that makes Groupons less appealing for legal services. When customers buy a $200 Groupon, they want to receive the full service in return. Presumably, that is why this lawyer anticipated the possibility that a will might not be appropriate, and offered prospective Groupon purchasers a discount on other services. However, consumers might not want to purchase the more expensive service (or simply, might not have the money for it), and might demand a refund of the Groupon instead.

In addition, a Groupon is a form of advance payment for a service. If a lawyer offers a $100 incorporation on Groupon, and fifty clients accept the deal, the lawyer receives $2500 (fifty percent of the $5000 total) once the deal goes through. However, clients might not use the service for another three months. Would that require the lawyer to place the funds in a trust account?

The North Carolina ethics committee identified another ethics problem with Groupon, characterizing it as prohibited fee splitting Consumers pay one price for Groupon and lawyers subsequently split that fee with Groupon, a non-lawyer provider, a practice that violates North Carolina’s rules. Though personally, I don’t find much mischief in fee splitting as a way to spread advertising costs, I can easily see many other bars taking the same approach.

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.

So What’s the Bottom Line on Groupon for Lawyers?
Personally, I don’t really see how Groupon can prove profitable for lawyers. Unless lawyers can offer a discrete service at a discounted rate, it seems that lawyers are bound to lose money. More importantly, unlike restaurants or hotels, will Groupons yield referrals or repeat business for lawyers? I’m skeptical, though if your experience differs, please share it in the comments. Finally, the potential ethical pitfalls associated with Groupon further diminish its desirability for lawyers.

Still – there is one terrific way for you or your law firm to use Groupon: as purchasers, rather than providers of Groupon deals. You can buy Groupons as thank-you gifts for clients and referral sources. Or snap up a bunch of Groupons to a restaurant or coffee shop at the beginning of the year, and use your Groupons throughout to treat colleagues or potential referral sources to a meal. Not only will you keep your costs down, but because you need to pre-pay for Groupons, you’ll have more incentive to actually follow through on get togethers or networking meals.

So there you have it, the scoop on Groupon.

Marketing by the Checklist

If you’ve come to this post expecting a checklist of criteria by which to evaluate your current marketing efforts or implement a new marketing initiative, then you’ve come to the wrong place.  Those kinds of checklists (especially a task list) are useful to be sure, because they make it easier to delegate marketing to a subordinate or assistant so that it doesn’t go by the wayside when your schedule picks up.  But today, I’m addressing another category of checklist:  the kind that lawyers use, or at least should use, that outline the steps or procedures involved in handling the substance of a case.

If the “checklist” concept sounds familiar to you, it’s because it’s the focal point of Anul Gawande’s book, The Checklist Manifesto: How to Get Things Right, which has been the subject of many-a-recent blog post.  I recently finished the book myself and was convinced by Gawande’s thesis:  that the “humble” checklist can minimize error in carrying out complex tasks by helping with memory recall and setting out the minimum necessary steps in a process.  Moreover, by committing routine procedures to a hard and fast list, a checklist frees up professionals to devote more time to the kinds of judgment calls that they always have to make, whether there’s a list in place or not.

Gawande draws on examples from medicine, engineering and aviation to demonstrate how checklists can minimize error.  In the medical profession for example, a study showed that by using a checklist for placing a central line (comprised of seemingly mundane tasks like wearing a mask or body-draping a patient), the  the ten-day infection rate was reduced from 11% to zero.  But you can probably imagine situations in your own practice where a checklist – such as the essential elements of a personal injury complaint to a list of documents required to file a bankruptcy petition – could also help avoid error and eliminate the risk of dismissal of a case.

OK.  So you’re convinced of the importance of checklists.  But what’s that got to do with marketing?  Plenty.  Consider these potential ways to use checklists to market your practice educate your clients and keep your firm at the forefront of their mind.  Here are some ideas:

1.  Create a task-oriented checklist of all of the steps involved in a particular type of proceeding — for example, a typical divorce dispute.  Post the checklist on your website or blog, or publish it online as a mini-ebook.  The checklist will help clients understand all of the steps involved in even a so-called simple divorce.  As a result, the list can help weed out prospects who aren’t really serious about divorce, but nevertheless, eat up your time at a free consultation.  And where a client does hire you, a task-oriented checklist helps clients know what to expect, and also familiarizes them with the amount of work that their case may potentially entail – which can help reduce complaints about excessive fees down the line.

2.   Create a client “to do checklist” – for example, a list of documents that clients should bring to the first meeting or gather together for a bankruptcy filing or preparation of an estate plan.  A client to do checklist will help you to market your practice because it makes clients’ lives easier.  Going through a bankruptcy or preparing an estate plan is stressful enough for busy clients; it’s even more stressful if they need to keep providing additional information because they forgot to write down a particular item that is required.  Clients will appreciate a checklist that they can work from and they’ll appreciate it even more if you offer it on your website and in both paper and computerized format, so that they don’t have to keep calling for another copy if they lose the list.  Satisfied clients will provide positive testimonials, which if accurate and sincere, are one of the most effective ways to attract new clients.

3.  Create a post-engagement checklist for clients to use after you’ve finished the matter for which you were retained. Even after you’ve finished a case for a client, there are still matters for which they are responsible, or that may trigger further legal action.  For example, even after an incorporation is complete, the client retains responsibility for filing annual reports and other documents to keep the corporation in good standing.  Creating a checklist of these post-representation matters will help the client avoid problems down the line.  And if you put the checklist on your law firm letterhead (or if you’re feeling particularly ambitious, create a branded mobile app for a client to download a checklist on his or her phone), clients can always get in touch with you for follow up questions or problems.

For other matters – like a bankruptcy discharge or a divorce and child custody agreement – you’ll want to create a checklist to help clients determine whether they need further assistance.  For example, after a bankruptcy, clients shouldn’t be getting calls from creditors whose debts were already discharged – and if they do, they should call you.  Likewise, for divorce matters, a lawyer might identify a list of events – such as loss of a job or an ex-spouse’s remarriage or relocation – that may trigger the filing of modification petitions.

Checklists are an ideal marketing tool:  they educate clients and enable lawyers to serve them more effectively.  Checklists aren’t as flashy as a T.V. commercial or even a fancy website, but they’re inexpensive and most of all, something that lawyers should be creating for their practices anyway.  So when you get around to making a list of the tools that you want to use to market your practice, be sure to include the humble checklist.