Monthly Archives: January 2011

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.

Boomer Law!

With the arrival of 2011, the oldest of the post-World War II Baby Boom generation will turn 65. In fact, every day for the next 19 years, 10,000 more will cross that threshold, notes the Philadelphia Bulletin. By 2030, a full 18 percent of the nation’s population will be 65 or older, up a full five percent from current numbers.

As the population of aging Boomers grows, so too will their unique legal needs (described later on in this post). Yet surprisingly, few lawyers, particularly younger solos or more recent graduates are targeting the Boomer population. Sure, there are plenty of law firms that market themselves to “seniors” with a focus on “elder law,” which traditionally covers estate or medicare planning, health care issues, guardianships or nursing home abuses. Trouble is, most Boomers don’t view themselves as growing old and indeed, cringe at being referred to as seniors.

Lawyers aren’t the only group overlooking Boomers as a potential market. Most companies do the same when advertising, to their detriment, according to the Nielson Blog, since Boomers are, on the whole, more affluent than younger segments of the population. Nielson suggests that marketers tend to ignore boomers because of “conventional wisdom that they spend little, resist technology and are slow to adopt new products needs to be re-assessed.” But actually, aging Boomers are enthusiastically adopting technology and showing willingness to try new brands and products.

A recent Pew Internet Research study on older adults and social media Generations 2010 report confirms Boomers’ tech savvy and propensity to try new things: as of May 2010, nearly half of the adults between the ages of 50-64 were using social media, up from just 25 percent a year earlier, with 20 percent of this group using social media sites on a daily basis. Another Pew study, Generations 2010, released in December 2010, shows that Boomers are using online resources for more substantive purposes such as reading the news, buying products and locate health care information which means that they’re likely to be equally receptive to using the web to find lawyers as well.

The Changing – and Expanding Scope – of Boomer Law
Boomer Law is a growth market, not only because of sheer numbers, i.e., more aging boomers, but also because the legal needs of boomers are far more diverse and complex than those of the generations that preceded them. In addition to traditional matters like guardianship, nursing home abuse and estate planning where older clients have also needed assistance, there’s a range of potential new practice areas that might cater to the unique needs of today’s Boomers. In no particular order:

1. Elder Care Mediator

Improved medical care means Boomers are likely to live longer, and because of that, they may need specialized caregiving or ongoing medical attention. Yet, as Smart Money reports, the financial costs of caregiving are increasing as are less measurable costs – such as added stress or interference with career advancement, as today’s dual-working families struggle to care for aging parents. As a result, adult children often bicker over fair allocation of responsibility for caring for aged parents which can drive families apart. Increasingly, families are turning to elder care mediators many of whom have legal training, to resolve these disputes reports the Washington Post. Rikk Larsen, a mediator quoted in the story says:

use [of mediators] has mushroomed for reasons both demographic and cultural. Americans age 85 and older comprise one of the fastest-growing segments of the population, according to the Census Bureau, and their children, the baby boomers, “are comfortable with the notion of therapy and [experts who provide] services.”

2. Granny Snatching – A New Form of Elder Abuse
In a down economy, aging boomers may also be vulnerable to theft – by their own children. Ron Winter of the Connecticut Watchdog warns of Granny Snatching, which “occurs when younger family members take custody of an elder relative under false pretenses, convince a judge to declare the elder person incompetent, allowing them to then force their aged relative into a nursing home or similar institution, and strip them of their assets.” Winter predicts that the growing elderly population will result in a rise of granny-snatching cases over the next few years, which may in turn trigger changes in existing elder care laws. Thus, there’ll be a need for lawyers who can handle granny-snatching cases and who stay on top of potential changes in the law.

3. Elder Entrepreneurship and Small Business
We often associate entrepreneurship with;younger people – and indeed, representing Gen Y entrepreneurs is a niche law practice in its own right. But according to Second Act, baby boomers are becoming entrepreneurs faster than anyone else, with the number of new businesses launched by 55-64 year olds growing 16 percent between 2007 and 2008, faster than any other group. That’s 10,00 new businesses a month. And the trend will only gain momentum as the workforce ages, predicts a report by the Kaufman Foundation. Lawyers can assist boomer entrepreneurs with legal issues related to starting and running a business (such as business entity formation and licensing, zoning and contract negotiation) as well as succession planning (estate and tax issues).

4. Long Term Care Issues
Many boomers attempted to act responsibly by purchasing long term care insurance policies. However, a 2008 GAO Report points out that concerns have been raised over denials of claims that may leave long term care insurance purchasers without coverage at a time when they being needing care. Thus, boomers may need legal representation to resolve disputes with long term care insurance providers.

5. Age Discrimination
Because boomers are entering old age reluctantly, many are not yet ready to retire. Others are unable to retire in today’s economy. Consequently, and as acknowledged by the EEOC, older workers may find themselves susceptible to unlawful age-based stereotypes and discrimination by companies seeking to force them out to save money on salaries or benefits.

Marketing to Boomers

If you decide that you want to target boomers in your practice, don’t assume that your only option for reaching this population is through expensive advertising on daytime television shows. As described above, like everyone else, boomers are increasingly spending more time on line, which is far more cost effective than traditional advertising. Moreover, online methods offer additional bang for the buck, because you can simultaneously market directly to boomers and to their children, who might take responsibility for hiring a lawyer for their parents. Here are a few suggestions:

Blogging: As mentioned earlier, boomers are using the Internet for substantive purposes like reading news and finding information on health care. Thus, they’re very likely to turn to the web for information on legal issues as well. Blogging is a great tool for conveying substantive information to prospective clients and in it can also help increase your SEO.

Social Media : In addition to blogs, boomers are also engaging in other forms of social media, especially Facebook. As I noted in this earlier post, Advertising on Facebook, it’s still fairly inexpensive to target an older demographic on Facebook. Not only that, but my own experience with Facebook (described in that post) showed that the age 50 and above demographic also had a higher “click through” rate than the other groups. But Facebook advertising isn’t your only option – you could also create a Facebook Fan Page for your law firm to share bits of relevant news of interest to boomers, or publicize free law firm seminars on legal issues.

Educational Seminars Educational seminars are a great way to target boomers, particularly those who are retired and more free time. Like webinars, seminars provide valuable information and educate consumers on the potential need for legal services. Used to be that educational seminars had to be promoted through costly radio ads or individually mailings. Now, social media tools – such as Facebook Fan pages or the events pages on Linked-In offer low cost avenues for promoting educational seminars. Don’t feel like organizing an educational seminar yourself? As described in this post, you can research organizations that represent boomers’ interests who might be interested in a speaker. Or, you could search for local groups on sites like Meet Up which are always in need of speakers.

Are you seeing any other trending issues in your practice that are relevant to boomers? And do you think that Boomer Law is a promising niche? We’ve enabled the comment section so please share your thoughts below.

Free Webinar – Creating a Niche Practice

Set Your Firm on a Course for Success in 2011 with a Niche Practice
January 19th, 2011 – from 10:00AM to 11:00AM (PST)

Click here to sign up now.

Are you looking for ways to revitalize your practice in 2011? It could be time for you to explore starting a niche practice. In this webinar presented by Carolyn Elefant (noted lawyer, author, and blogger), you’ll learn what a niche is, how it differs from specialization, and the steps you’ll need to quickly build your niche practice and get it off the ground.

As a special bonus, Carolyn will also highlight top trends for 2011 that may give you some ideas to target for a niche.

What: Building a Niche Practice with Carolyn Elefant
When: January 19th, at 10:00AM (Pacific Standard Time)
Where: On your computer and/or phone.

Space is limited so register today. There will be a 10 minute question and answer opportunity at the end of the call.

Register now to attend this event-it’s FREE!