Category Archives: Lawyer ethics opinions nonrefundable fees

ABA ethics opinion states that lawyers may use Groupon-type websites to market legal services; however, there are “numerous difficult” ethics issues

Hello and welcome to this Ethics Alert blog which will discuss the recent American Bar Association formal ethics opinion which states that lawyers may market using Groupon type websites; however, there are “numerous difficult issues associated with prepaid deals, especially how to properly manage payment of advance legal fees”.  The opinion is ABA Formal Opinion 465 (October 21, 2013).  The ethics opinion is attached and is also here: http://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/formal_opinion_465.authcheckdam.pdf

The opinion does not specifically mention the Groupon website except in a footnote referencing a state bar opinion (Alabama State Bar, Formal Op. 2012-01 (2012)); however, the opinion describes arrangements that are similar to Groupon which include “daily deals” that are advertised on a website and consumers who want deal notifications can sign up to receive them in e-mails.  After a certain number of people purchase a “deal”, the marketing organization and the business share the proceeds. The buyers get a voucher, code or coupon.

The ethics opinion says these “Deal-of-the-day or group-coupon marketing programs” are structured in two ways.  In a “coupon deal”, a lawyer would sell a coupon for a 50 percent discount for a certain number of hours of legal services.  In a “prepaid deal”, a lawyer would charge a certain reduced amount for up to a certain number of hours of legal services, which would be double the value of the amount paid. The payments are collected by the marketing organization and this “prepaid” structure is what primarily concerns the ABA Standing Committee in the formal opinion.

According to the ABA opinion, “(t)he committee believes that coupon deals can be structured to comply with the Model Rules.  The committee has identified numerous difficult issues associated with prepaid deals, especially how to properly manage payment of advance legal fees, and (the committee) is less certain that prepaid deals can be structured to comply with all ethical and professional obligations under the Model Rules.”

The opinion states that the reason that “coupon deals” may be structured to comply with the ethics rules is the fact that no legal fees are paid unless a lawyer/client relationship is established, after which time is spent and the discounted fees are collected.  According to the opinion, the aggregate amount collected from coupon sales may be deposited into a lawyer’s general account.  The opinion states that, conversely, the funds collected in “prepaid deals” amounts to advance legal fees that must be identified by purchaser name and deposited into a trust account.  The lawyer would therefore be required to obtain sufficient information about the prepaid deal buyers to comply.

Some other questions included what the lawyer must do if a deal is purchased and never used.  The opinions states that the lawyer can retain the funds from a coupon deal as long as the offer explains there will be no refunds; however, the funds collected in a prepaid deal most likely will need to be refunded to prevent the fee from becoming unreasonable/excessive under the ABA Model Rules. 

In addition, if a lawyer is unable perform legal services because of a conflict of interest or other ethical restriction, the lawyer must provide a full refund to the buyer, even if the deal is structured as a coupon.  If that happens, the lawyer must refund the full amount paid by the buyer, including the funds retained by the marketing organization.  According to the opinion, this is based on “the fact that it would be unreasonable to withhold any portion of the amount paid by the purchaser if the lawyer is precluded from providing the proffered services through no fault of the purchaser.”

The opinion noted several other ethical issues, including the duty of the lawyer to insure that the marketing statements are accurate.  The scope of services offered must also be clearly defined and the circumstances for refunds fully described, the opinion says.  Finally, the advertising should state that a client-lawyer relationship will not exist until the consultation takes place.

There is no Florida ethics opinion on Groupon type marketing; however, I have previously blogged about the recent Indiana ethics opinion (Indiana State Bar Ass’n Legal Ethics Comm., Advisory Op. 1 (2012)) which addressed this type of marketing.  The Indiana opinion reached virtually the same conclusions as the ABA opinion and stated that this type of marketing is “fraught with peril.”

Bottom line:  It is clear that lawyers who wish to participate in this marketing must be very wary of the numerous ethical “perils”.

Let’s be careful out there!

Disclaimer:  this blog is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Filed under Attorney Ethics, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics Groupon, Lawyer ethics opinions, lawyer ethics opinions Groupon type marketing, Lawyer ethics opinions nonrefundable fees, Lawyer Professionalism

The Florida Bar’s Statewide Committee on Advertising has deferred consideration of informal opinion on Linkedin “Skills and Expertise” page until 10/29/13

Hello everyone and happy Columbus Day to you. This is an update of my 9/24/13 Ethics Alert blog which discussed September 11, 2013 Florida Bar Advertising Staff Opinion which states that Florida lawyers cannot list areas of practice on Linkedin.com “Skills and Expertise” page unless they are Board Certified (or the equivalent).  The September 11, 2013 staff opinion is here:  http://it-lex.org/wp-content/uploads/2013/09/Florida-Bar-Opinion-re-LinkedIn-Redacted.pd

I was advised by the Ethics and Advertising Counsel for The Florida Bar today that the SCA was unable to consider the staff opinion at its October 8, 2013; however, the committee plans to consider the opinion at its meeting on October 29, 2013.  I will keep everyone advised.

Bottom line:  As I stated in my previous Ethics Alert, the staff opinion is not binding and is intended to provide guidance to lawyers; however, lawyers must be aware that The Florida Bar has taken this position.  This is clearly an important issue that must be addressed by The Florida Bar and the Bar’s Statewide Committee on Advertising will be considering the issue to potentially draft a formal advertising opinion at its next meeting on October 8, 2013.  If you would like to provide your comments to the Statewide Committee on Advertising, you can send them to Elizabeth Tarbert, the Ethics and Advertising Counsel for The Florida Bar who oversees the SCA, or you can attend the meeting and ask to be heard.

Be careful out there!

Disclaimer:  this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Filed under 2013 Florida comprehensive advertising rule revisions, Attorney Ethics, Florida 2013 comprehensive lawyer advertising rules, Florida Bar, Florida Lawyer Advertising opinions, Florida Lawyer advertising rules, Florida Lawyer Ethics and Professionalism, Florida Lawyer Professionalism, joe corsmeier, Joseph Corsmeier, Lawyer advertising Linkedin.com, Lawyer Advertising opinion, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer ethics opinions Linkedin.com, Lawyer ethics opinions nonrefundable fees, Lawyer responsibilities AVVO and Linkedin

Florida Bar Ethics Opinion 93-3 states that fees designated as “non-refundable” may be excessive and prohibited under certain circumstances

Hello and welcome to this Ethics Alert blog which will discuss Florida Bar Ethics Opinion 93-2, which discusses, inter alia, the propriety and effect of the designation of a fee as “non-refundable”.  As I reported in a recent Ethics Alert, the Rules Committee of the Florida Bar’s Board of Governors voted not to move forward with a proposed Bar rule amendment which would have prohibited lawyers from charging non-refundable fees.  The proposed rule amendment was opposed by, among others, the Florida Association of Criminal Defense Lawyers (FACDL).  If it had been pursued, the proposed revision would have reversed the very long standing practice of permitting non-refundable fees and Florida Bar Ethics Opinion 93-2, which opines that non-refundable fees are arguably permitted, with certain caveats.

Florida Bar Ethics Opinion 93-2 was finalized on October 1, 1993, addressed 6 questions related to attorney’s fees, including non-refundable fees.  Question 5 is below:

“If a substantial nonrefundable fee is paid to the attorney and, before any services are performed by the attorney, the client dies, or discharges the attorney, or the services called for by the attorney-client employment agreement are no longer needed for some other reason, could the attorney be subject to discipline for charging a clearly excessive fee in violation of Rule 4-1.5(a) in the event of a refusal to refund any of the ‘nonrefundable fee?'”

The Professional Ethics Committee’s response and opinion is below:

“As we stated in Opinion 76-27 [since withdrawn], the lawyer might but would not necessarily be guilty of charging an excessive fee. Again, we get into definitions of terms. We interpret the question as referring to a payment by a client to a lawyer of a sum of money designated as “nonrefundable fee,” part of which is intended to compensate the lawyer for being available but not for specific services, and part of which is intended as a present payment for legal services to be performed in the future. If the lawyer performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client, we believe the lawyer might well be guilty of charging an excessive fee if no part of it was refunded.  Dealing with an abstract situation, we cannot be more precise.

On the other hand, an attorney of towering reputation just by agreeing to represent a client may cause a threatened lawsuit to vanish and thereby obtain a substantial benefit for the client and be entitled to keep the entire amount paid, particularly if other employment had been lost or declined in order to represent that particular client.

The Committee does not believe that, by designating a retainer as nonrefundable, a lawyer is automatically insulated from a claim that the fee is excessive. Whether or not the fee is excessive under the circumstances is governed by Rule 4-1.5 rather than use of the description ‘nonrefundable.'”

Bottom line:  Lawyers in Florida must be aware that the designation of a fee as “non-refundable” does not necessarily make it so.  According to Ethics Opinions 93-3, which is not binding or precedential, but may be persuasive, a lawyer who “performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client…might well be guilty of charging an excessive fee if no part of it was refunded.”

Be careful out there!

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

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Filed under Attorney discipline, Attorney Ethics, Ethics opinions fee retainers and nonrefundable fees, Florida Lawyer Ethics and Professionalism, joe corsmeier, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer ethics opinions nonrefundable fees