The past few weeks have seen a flurry of activity from various state bar groups and a tremendous multi-state ethics complaint regarding pay-per-lead services for lawyers. For the most part, these services charge lawyers a flat fee (for bankruptcy lawyers, it comes to about $65) for each lead generated and sent to the lawyer’s office. The lawyer, in turn, is obligated to pay the money whether the lead turns into a paying client or not.
Some companies utilize various follow-up procedures to spur the lead to remain committed to contacting a lawyer, some use a customer relationship management database, and others a variety of sundry tools. All in the name of getting the prospect to take action, thereby increasing the value of the service to the lawyer who is paying the freight.
First, a few disclaimers. I have not spoken with any company that is the subject of these actions, nor with any company that may potentially be affected in the future.
Second, you all know how I feel about pay-per-lead as a business decision for my own firm. If you don’t, that’s OK too.
OK, now we’ve got that out of the way.
I think these actions are “horse hockey,” in the words of Col. Sherman T. Potter. Businesses of every stripe use Google AdWords to drive traffic to their sites – a system that charges each time someone clicks the link (and in that way, nothing more than a pay-per-lead service). Other companies employ CPA — cost-per-action — advertising (also known as “pay for performance”). In CPA, the advertiser pays each time a prospect clicks on their ad, views an impression, or takes some other sort of pre-defined action.
I get the “no fee splitting,” thing – and to some extent, I think it’s fine. Actually, I think it’s silly in the age of affiliate marketing, joint ventures and the general nature of business, but I get why it’s done and so I stand behind it. But an attempt to outlaw pay-per-lead is downright short-sighted and ignores the economic reality many lawyers face when advertising online.
Let’s say you’re a bankruptcy lawyer and want to start advertising online. The first thing you do is set up your website, then you hop on over to Google AdWords and set up an account. But because you know absolutely nothing about pay-per-click, direct response marketing, landing pages, email marketing, opt-ins and autoresponder technology, your visitors don’t convert to paying clients. And because you’re not real skilled at working with AdWords, you end up paying $25 a click for your keywords and search terms.
At the end of the first month, you’re in the hole for $4,000 to Google but you’ve got nothing to show for it.
In other words, you got the lead but dropped the ball big time. The system worked, but you failed.
Enter pay-per-lead. They offer you the ability to circumvent the AdWords monster, follow up with prospects, collect data and forward it all to you. For $65 a pop. More expensive than $25 a click through AdWords, but you’ve already failed going that route.
They’re going to act as … get this … an ADVERTISING AGENCY! They use their expertise to get the lead at the lowest possible price (for example, SpyFu.com estimates that TotalBankruptcy.com pays between $0.54 and $7.22 per click as opposed to your $25 per click), get some data and pass it along to you tied up in a bow. It’s up to you to close the deal, which is the way it should be.
How do they get lower prices? They’ve got tighter keyword control, better-performing ads, deeper sites and a *gasp* strategy for dealing with their online marketing. If you put together a strategy you could do it, too.
But you don’t do it in your own. Too busy, don’t care, want to offload the grunt work on someone else, whatever. So the PPL company steps in as a service provider.
Every lawyer should be scolded if they did not get their pay-per-lead contract reviewed by their OWN ethics counsel and have an opinion letter drafted. A failure to do so could spell increased malpractice insurance costs, legal fees to fight the ethics complaints, and possible disciplinary action against them. Shame on you for relying upon the word of a salesperson when making a business decision that potentially impacts your license to practice law.
I get that this is a little different from using AdWords because the PPL company doesn’t funnel the lead directly to you – they act as a go-between. And it would be best for the company to let the consumer know where their data will end up. But that’s in the nature of regulation, NOT banning the system entirely.
Let’s say the powers that be call pay-per-lead illegal and shut them down (unlikely, but not impossible). All the lawyers who rely heavily on these companies to handle their online marketing will suddenly be out in the cold. Though they’ll eventually figure out AdWords, CPA and CPM marketing they’ll spend a ton of cash bumbling over their own feet (I know because I spent a ton of cash bumbling over my own feet learning this stuff). With rising costs, they will be forced to raise their fees to consumers.
Consumers, meanwhile, will be faced with fewer effective paid marketing messages online. Information will be more difficult to obtain in the short-run.
The regulators are thinking in the past, not the present or the future. Create a system that balances the interests of the consumer and the lawyer to make it profitable for both sides of the transaction. Open the doors to the courthouse, don’t close them. In fact, don’t even leave them ajar. Swing the doors wide open, just put a sign up that makes it clear what’s going to happen once the foot goes over the threshold.
What’s the solution? First, lawyers need to understand that they are required to know enough about marketing their services to get the job done effectively and ethically. Don’t be lazy, don’t be an advertising victim, and always remember that if you let someone else control your marketing then you let them control your income and, therefore, your destiny.
Second, regulate the pay-per-lead industry with guidelines and best practices. Establish a roundtable between industry leaders, ethics attorneys, the ABA, and state regulators to hammer out a workable solution to the problem. Make the system more transparent, give consumers the information they need to have when submitting their information online, force the industry to encrypt data … whatever is perceived to be needed to protect consumers. But outlawing the practice? Hogwash.
Final note. I am deliberately avoiding a discussion of the other aspects of the complaints that have been filed because I do not want to take a position until I know more about them. I am discussing only the concept of pay-per-lead because I have a good faith belief that I understand it well enough for the purposes of this article only. I have named no company, person or entity and have not received any information regarding any action from any party. My information all comes from public knowledge, and the opinions in this article are my own and nobody else’s.
There’s the disclaimer, folks. Now give your opinions in the comments below.