So, a lawyer walks on to Groupon, offers a $99 will, scores some coverage in the ABA Journal, sells 53 of the $99 will packages (with Groupon taking a 50 percent cut) and generates 150 calls and emails from other lawyers who are interested as well as some “uncharitable” commentary. Now, he’s decided against using Groupon again. Why?
Although this fact pattern sounds like the opening of some kind of joke or riddle, actually, it was the opening for a conversation over at the Solo Practice University blog. The discussion arose in response to a post by SPU Columnist Debra Bruce, who tracked down the lawyer who ran the Groupon deal (I’m not using his name since apparently, he’s sick of the publicity) and wrote about his experience.
Debra’s article was fairly even-handed; she didn’t express an opinion on Groupon one way or another, but opened the topic for dialogue. Good, so far. However, what’s been troubling me about the post are some of the comments which portray the lawyer’s Groupon experience not as an experiment gone wrong, but rather as yet another example of an innovative lawyer run out of town for trying something new. I don’t buy it.
I’ve followed the Groupon story extensively since last year, writing two posts which analyzed its use from an ethics and economic perspective. Though I concluded that any ethics problems were either red herrings or fairly easy to address, I came down hard on Groupon’s business model. Citing the results I’d found from research studies and other industries, I argued that the Groupon model didn’t make sense to me financially. Yes, I linked to the lawyer’s site, but I never mentioned him by name. Moreover, in searching for other posts on Groupon and lawyers, I found that the overall tone was relatively positive, in the nature of “maybe Groupon could work for certain practices.” Hardly the lynch mob suggested in the SPU comment section.
What bugs me more than this re-writing of history — and indeed, what is particularly dangerous — is the implication that any criticism of a new idea — even an analytical, detailed commentary free of ad hominen attack — represents an assault on innovation. Or that any action taken by a lawyer, whether sensible or not, deserves unmitigated support simply because it was revolutionary. It’s that type of attitude that actually instills Groupthink and stifles innovation far more than open dialogue, discussion and critique.
But, I’ll let you decide for yourselves. Here are the hard, cold facts. The lawyer posted an ad for a $99 will and sold 53 packages, which amounts to a total of $5247. Subtracting Groupon’s 50 percent cut, the lawyer nets $2623.50. To his credit, the lawyer handled the work in a highly professional manner and invested the significant time in both evaluating whether a $99 will would be appropriate, and in preparing the final product. At 1 to 2 hours per will, the total take amounts to around $13 and $26 an hour.
Of course, those facts don’t tell the whole story. There’s also quite a bit that we don’t know about the secondary effects of the Groupon ad. On the plus side, apparently, the lawyer was able to “upsell” some of his more expensive estate packages (again, to his credit, he offered them at a considerable discount, because of the Groupon ad) to those clients for whom the basic will was not appropriate. He’s also received referrals from clients who purchased the $99 wills and thought highly enough of his work to recommend him to others. Finally, he’s received a good deal of publicity.
But there’s also a negative side. We don’t know how many calls the lawyer received about the package and how much time he or his staff spent vetting those calls. We don’t know how many refunds he was required to dispense once he determined that the Groupon purchaser needed something more than a basic will. We don’t know whether existing clients who missed out on the ad, or didn’t want to pay $99 without buying the product, also asking for comparable discounts. We don’t know how long it took to fill the orders, or whether handling the extra work displaced other more lucrative matters.
Looking at all of this evidence with an objective eye, the lawyer’s experience with Groupon was not an unmitigated success. Indeed, it was not a financial success at all, if we’re being brutally honest. In addition, can we also take a reality check? Really, if this lawyer really cleaned up financially, would he dropped Groupon simply due to negative peer pressure? (As an aside, deciding against using Groupon a second time is not unusual; data shows that just slightly over half of those who have used any type of deal site say that they would repeat). Perhaps that’s what many would like to believe because it fits with the overall vision of young innovators raging against the machine, but in this case, it’s simply not the reality based on a review of all the facts.
To be perfectly blunt, I would characterize this lawyer’s experience with Groupon as a failure. Yes, the experiment FAILED! There – I said it, I called the experiment a failure. I did not say that the lawyer was a failure, but that the action he took failed in that didn’t produce the type of results that made him want to do it again. That the experiment failed doesn’t mean that it had no value or that he didn’t learn from it or even generate a little cash out of it. But anyway you slice it, this didn’t work. For goodness, sake, why can’t we just call a spade a spade? Why are we compelled to paint this lawyer’s laudable but unsuccessful experiment as another example of pre-historic lawyers chasing upstart innovators out of the profession?
Believe it or not, there’s nothing wrong with failing. In fact, failure is integral to success. That’s why Seth Godin implores entrepreneurs to fail faster. If you continue to remain entrenched in a strategy, or delude others into thinking that an approach was a success but for the intervention of others, you can’t improve.
These days, very few people in the blogosphere admit abject failure – either failure in a new way of doing business or outright failure in starting a firm. The story, rather, is always upbeat and sunny. How helpful is that, especially to new solos who don’t have much money and for whom a significant error can be devastating? Isn’t it better to share with others ideas that we tried that didn’t work out so that they can perhaps do things differently?
Which raises another point. That the lack of criticism stymies the evolution and refinement of ideas. Imagine if the Groupon dialogue had involved a robust discussion of the concept of refunds – and in what situations they might work or not. In my post criticizing Groupon, I suggested that lawyers might consider giving discounts to their clients to pass on, instead of making them available widely. Another commenter at SPU site noted that Yelp might send out information on services, but for only a 30 percent cut. But if you lock yourself in to a position (that Groupon works and big old meanies chased a lawyer out of business because they were threatened by a new idea), and you’d never have reason to even examine new alternatives.
I’ll concede that frequently, ideas are criticized because the person who came up with it is truly on to something and others are envious or afraid of the potential disruption. In the legal profession, especially, naysayers abound. But at the same time, that doesn’t mean that everything new or innovative is going to work either, and when it doesn’t, it’s not a big deal to simply shrug it off, say I failed and try again, differently. That is how we learn.
Update Just so you have the full story, there’s a comment posted by attorney/CPA Greg Zblyut describing his positive experience offering tax services through Groupon (more information on the deal here. Though I still wonder how Groupon would work for many law practices where most matters do not involve repeat customers like a tax service, it’s worth sharing this extra piece of data so that if you’re still considering Groupon, you can make an informed decision).