Alabama Prohibits Groupons for Legal Services

Alabama Prohibits Groupons for Legal Services

Last Week, the Office of General Counsel for the Alabama Bar Association released an opinion discussing the use of Groupon as a marketing tool for law firms.

The opinion diverged from recent opinions released by New York, North Carolina, and South Carolina finding that use of Groupon does not violate Rule 5.4’s ban on fee sharing because the payment that Groupon received is considered an “advertising fee.” Similar to the Indiana Bar Association, the Alabama Bar Association found this argument to be unpersuasive due to the fact that Groupon requires a 50% share of each customer’s payment. Additionally, the opinion found that use of the website violated Rule 1.15(a) of the Alabama Rules of Professional Conduct because lawyers are required to place all unearned legal fees into a trust account until the fees until earned.

Under the current Groupon business model, half of the fees collected from the customer are claimed by Groupon at the time of payment. This makes it impossible for the attorney to comply with the rule.  The opinion also contemplated that the business model would violate Rule 1.16(d) (requiring attorneys to provide a full refund if the services are not performed) because the attorney would only be in a position to refund half of the amount paid.