|Bates v. State Bar of Arizona
113 Ariz. 394, 555 P.2d 640, affirmed in part and reversed in part.
[ Blackmun ]
[ Burger ]
[ Powell ]
[ Rehnquist ]
Bates v. State Bar of Arizona
APPEAL FROM THE SUPREME COURT OF ARIZONA
MR. JUSTICE POWELL, with whom MR. JUSTICE STEWART joins, concurring in part and dissenting in part.
I agree with the Court that appellants' Sherman Act claim is barred by the Parker v. Brown, 317 U.S. 341 (1943), exemption, and therefore join Part II of the Court's opinion. But I cannot join the Court's holding that, under the First Amendment, "truthful" newspaper advertising of a lawyer's prices for "routine legal services" may not be restrained. Ante at 384. Although the Court appears to note some reservations (mentioned below), it is clear that, within undefined limits, today's decision will effect profound changes in the practice of law, viewed for centuries as a learned profession. The supervisory power of the courts over members of the bar, as officers of the courts, and the authority of the respective States to oversee the regulation of the profession have been weakened. Although the Court's opinion professes to be framed narrowly, and its reach is subject to future clarification, the holding is explicit and expansive with respect to the advertising of undefined "routine legal services." In my view, this result is neither required by the First Amendment nor in the public interest.
Appellants, two young members of the Arizona Bar, placed an advertisement in a Phoenix newspaper apparently for the purpose of testing the validity of Arizona's ban on advertising by attorneys. The advertisement, reproduced ante at 385 [omitted], stated that appellants' "Legal Clinic" provided "legal services at very reasonable fees," and identified the following four legal services, indicating an exact price for each:
(1) Divorce or legal separation -- uncontested (both spouses sign papers): $175 plus $20 court filing fee.
(2) Preparation of all court papers and instructions on how to do your own simple uncontested divorce: $100. [p390]
(3) Adoption -- uncontested severance proceeding: $225 plus approximately $10 publication cost.
(4) Bankruptcy -- non-business, no contested proceedings -- individual: $250 plus $55 court filing fee; wife and husband: $300 plus $110 court filing fee.
(5) Change of Name -- $95 plus $20 court filing fee.
The advertisement also stated that information regarding other types of cases would be furnished on request. Since it is conceded that this advertisement violated Disciplinary Rule 2-101(b), incorporated in Rule 29(a) of the Supreme Court of Arizona, [n1] the question before us is whether the application of the disciplinary rule to appellants' advertisement violates the First Amendment.
The Court finds the resolution of that question in our recent decision in Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748 (1976). In that case, we held unconstitutional under the First and Fourteenth Amendments a Virginia statute declaring it unprofessional conduct for a licensed pharmacist to advertise the prices of prescription drugs. We concluded that commercial speech to the effect that "I will sell you the X prescription drug at the Y price" was entitled to certain protection under the First Amendment, and found that the proffered justifications were inadequate to support the ban on price advertising. But we were careful to note that we were dealing in that case with price advertising of a standardized product. The Court specifically reserved judgment as to the constitutionality of state regulation of price advertising with respect to professional services:
We stress that we have considered in this case the regulation of commercial advertising by pharmacists. Although we express no opinion as to other professions, the distinctions, historical and functional, between professions, may require consideration of quite different factors. Physicians and lawyers, for example, do not dispense [p391] standardized products; they render professional services of almost infinite variety and nature, with the consequent enhanced possibility for confusion and deception if they were to undertake certain kinds of advertising.
Id. at 773 n. 25 (emphasis in original). [n2] This case presents the issue so reserved, and the Court resolves it on the assumption that what it calls "routine" legal services are essentially no different for purposes of First Amendment analysis from prepackaged prescription drugs. In so holding, the Court fails to give appropriate weight to the two fundamental ways in which the advertising of professional services presents a different issue from that before the Court with respect to tangible products: the vastly increased potential for deception and the enhanced difficulty of effective regulation in the public interest.
It has long been thought that price advertising of legal services inevitably will be misleading because such services are individualized with respect to content and quality and because the lay consumer of legal services usually does not know in advance the precise nature and scope of the services he requires. Ante at 372. Although the Court finds some force in this reasoning and recognizes that "many services performed by attorneys are indeed unique," its first answer is the optimistic expression of hope that few lawyers "would or could advertise fixed prices for services of that type." Ibid. But the Court's basic response in view of the acknowledged potential for deceptive advertising of "unique" services is to divide the immense range of the professional product of [p392] lawyers into two categories: "unique" and "routine." The only insight afforded by the opinion as to how one draws this line is the finding that services similar to those in appellants' advertisement are routine: "the uncontested divorce, the simple adoption, the uncontested personal bankruptcy, the change of name, and the like." Ibid. What the phrase "the like" embraces is not indicated. But the advertising of such services must, in the Court's words, flow "both freely and cleanly." Ante at 384.
Even the briefest reflection on the tasks for which lawyers are trained and the variation among the services they perform should caution against facile assumptions that legal services can be classified into the routine and the unique. In most situations, it is impossible -- both for the client and the lawyer -- to identify with reasonable accuracy in advance the nature and scope of problems that may be encountered even when handling a matter that, at the outset, seems routine. Neither quantitative nor qualitative measurement of the service actually needed is likely to be feasible in advance. [n3]
This definitional problem is well illustrated by appellants' advertised willingness to obtain uncontested divorces for $195 each. A potential client can be grievously misled if he [p393] reads the advertised service as embracing all of his possible needs. A host of problems are implicated by divorce. They include alimony; support and maintenance for children; child custody; visitation rights; interests in life insurance, community property, tax refunds, and tax liabilities; and the disposition of other property rights. [n4] The processing of court papers -- apparently the only service appellants provide for $10 -- is usually the most straightforward and least demanding aspect of the lawyer's responsibility in a divorce case. More important from the viewpoint of the client is the diagnostic and advisory function: the pursuit of relevant inquiries of which the client would otherwise be unaware, and advice with respect to alternative arrangements that might prevent irreparable dissolution of the marriage or otherwise resolve the client's problem. [n5] Although those professional [p394] functions are not included within appellants' packaged routine divorce, they frequently fall within the concept of "advice" with which the lay person properly is concerned when he or she seeks legal counsel. The average lay person simply has no feeling for which services are included in the packaged divorce, and thus no capacity to judge the nature of the advertised product. [n6] As a result, the type of advertisement before us inescapably will mislead many who respond to it. In the end, it will promote distrust of lawyers and disrespect for our own system of justice.
The advertising of specified services at a fixed price is not the only infirmity of the advertisement at issue. [n7] Appellants also assert that these services are offered at "very reasonable fees." The Court finds this to be an accurate statement, since the advertised fee fell at the lower end of the range of customary charges. But the fee customarily charged in the locality for similar services has never been considered the sole determinant of the reasonableness of a fee. [n8] This is because reasonableness reflects both the quantity [p395] and quality of the service. A $195 fee may be reasonable for one divorce and unreasonable for another; and a $195 fee may be reasonable when charged by an experienced divorce lawyer and unreasonable when charged by a recent law school graduate. For reasons that are not readily apparent, the Court today discards the more discriminating approach which the profession long has used to judge the reasonableness of a fee, and substitutes an approach based on market averages. Whether a fee is "very reasonable" is a matter of opinion, and not a matter of verifiable fact as the Court suggests. One unfortunate result of today's decision is that lawyers may feel free to use a wide variety of adjectives -- such as "fair," "moderate," "low-cost," or "lowest in town" -- to describe the bargain they offer to the public.
Even if one were to accept the view that some legal services are sufficiently routine to minimize the possibility of deception, there nonetheless remains a serious enforcement problem. The Court does recognize some problems. It notes that misstatements that may be immaterial in "other advertising [p396] may be found quite inappropriate in legal advertising" precisely because "the public lacks sophistication concerning legal services." Ante at 383. It also recognizes that "advertising claims as to the quality of services . . . are not susceptible of measurement or verification," and therefore "may be so likely to be misleading as to warrant restriction." Ante at 383-384. After recognizing that problems remain in defining the boundary between deceptive and nondeceptive advertising, the Court then observes that the bar may be expected to have "a special role to play in assuring that advertising by attorneys flows both freely and cleanly." Ante at 384.
The Court seriously understates the difficulties, and overestimates the capabilities of the bar -- or indeed of any agency public or private -- to assure with a reasonable degree of effectiveness that price advertising can at the same time be both unrestrained and truthful. Ibid. There are some 400,000 lawyers in this country. They have been licensed by the States, and the organized bars within the States -- operating under codes approved by the highest courts acting pursuant to statutory authority -- have had the primary responsibility for assuring compliance with professional ethics and standards. The traditional means have been disciplinary proceedings conducted initially by voluntary bar committees subject to judicial review. In view of the sheer size of the profession, the existence of a multiplicity of jurisdictions, and the problems inherent in the maintenance of ethical standards even of a profession with established traditions, the problem of disciplinary enforcement in this country has proved to be extremely difficult. See generally ABA, Special Committee on Evaluation of Disciplinary Enforcement, Problems and Recommendations in Disciplinary Enforcement (1970).
The Court's almost casual assumption that its authorization of price advertising can be policed effectively by the bar reflects a striking underappreciation of the nature and magnitude [p397] of the disciplinary problem. The very reasons that tend to make price advertising of services inherently deceptive make its policing wholly impractical. With respect to commercial advertising, MR. JUSTICE STEWART, concurring in Virginia Pharmacy, noted that, since
the factual claims contained in commercial price or product advertisements relate to tangible goods or services, they may be tested empirically and corrected to reflect the truth.
425 U.S. at 780. But there simply is no way to test "empirically" the claims made in appellants' advertisement of legal services. There are serious difficulties in determining whether the advertised services fall within the Court's undefined category of "routine services"; whether they are described accurately and understandably; and whether appellants' claim as to reasonableness of the fees is accurate. These are not factual questions for which there are "truthful" answers; in most instances, the answers would turn on relatively subjective judgments as to which there could be wide differences of opinion. These difficulties with appellants' advertisement will inhere in any comparable price advertisement of specific legal services. Even if public agencies were established to oversee professional price advertising, adequate protection of the public from deception, and of ethical lawyers from unfair competition, could prove to be a wholly intractable problem.
The Court emphasizes the need for information that will assist persons desiring legal services to choose lawyers. Under our economic system, advertising is the most commonly used and useful means of providing information as to goods and other services, but it generally has not been used with respect to legal and certain other professional services. Until today, controlling weight has been given to the danger that general advertising of such services too often would tend to mislead, rather than inform. Moreover, there [p398] has been the further concern that the characteristics of the legal profession thought beneficial to society -- a code of professional ethics, an imbued sense of professional and public responsibility, a tradition of self-discipline, and duties as officers of the courts -- would suffer if the restraints on advertising were significantly diluted.
Pressures toward some relaxation of the proscription against general advertising have gained force in recent years with the increased recognition of the difficulty that low- and middle-income citizens experience in finding counsel willing to serve at reasonable prices. The seriousness of this problem has not been overlooked by the organized bar. At both the national and state levels, the bar has addressed the need for expanding the availability of legal services in a variety of ways, including: (i) group legal service plans, increasingly used by unions, cooperatives, and trade associations; (ii) lawyer referral plans operated by local and state bars; (iii) bar-sponsored legal clinics; (iv) public service law firms; and (v) group insurance or prepaid service plans. Notable progress has been made over the past two decades in providing counsel for indigents charged with crime. Not insignificant progress also has been made through bar-sponsored legal aid, and, more recently, the Federal Legal Services Corporation in providing counsel for indigents in civil cases. But the profession recognizes that less success has been achieved in assuring that persons who can afford to pay modest fees have access to lawyers competent and willing to represent them. [n9] [p399]
Study and experimentation continue. Following a series of hearings in 1975, the American Bar Association amended its Code of Professional Responsibility to broaden the information, when allowed by state law, that a lawyer may provide in approved means of advertising. DR 2-102 (1976). In addition to the customary data published in legal directories, the amended regulation authorizes publication of the lawyer's fee for an initial consultation, the fact that other fee information is available on specific request, and the willingness of the attorney to accept credit cards or other credit arrangements. The regulation approves placement of such advertisements in the classified section of telephone directories, in the customary law lists and legal directories, and also in directories of lawyers prepared by consumer and other groups.
The Court observes, and I agree, that there is nothing inherently misleading in the advertisement of the cost of an initial consultation. Indeed, I would not limit the fee information to the initial conference. Although the skill and experience of lawyers vary so widely as to negate any equivalence between hours of service by different lawyers, variations in quality of service by duly licensed lawyers are inevitable. Lawyers operate, at least for the purpose of internal control and accounting, on the basis of specified hourly rates, and upon request -- or in an appropriate case -- most lawyers are willing to undertake employment at such rates. The advertisement of these rates, in an appropriate medium, duly designated, would not necessarily be misleading if this fee information also made clear that the total charge for the representation would depend on the number of hours devoted to the client's problem -- a variable difficult to predict. Where the price content of the advertisement is limited to the finite item of rate per hour devoted to the client's problem, the likelihood of deceiving or misleading is considerably [p400] less than when specific services are advertised at a fixed price.
Although I disagree strongly with the Court's holding as to price advertisements of undefined -- and I believe undefinable -- routine legal services, there are reservations in its opinion worthy of emphasis, since they may serve to narrow its ultimate reach. First, the Court notes that it has not addressed "the peculiar problems associated with advertising claims relating to the quality of legal services." Ante at 366. There are inherent questions of quality in almost any type of price advertising by lawyers, and I do not view appellants' advertisement as entirely free from quality implications. Nevertheless the Court's reservation in this respect could be a limiting factor.
Second, as in Virginia Pharmacy, the Court again notes that there may be reasonable restrictions on the time, place, and manner of commercial price advertising. In my view, such restrictions should have a significantly broader reach with respect to professional services than as to standardized products. This Court long has recognized the important state interests in the regulation of professional advertising. Head v. New Mexico Board, 374 U.S. 424 (1963); Williamson v. Lee Optical Co., 348 U.S. 483 (1955); Semler v. Dental Examiners, 294 U.S. 608 (1935). [n10] And as to lawyers, the [p401] Court recently has noted that
[t]he interest of the States in regulating lawyers is especially great, since lawyers are essential to the primary governmental function of administering justice, and have historically been "officers of the courts." [n11] Goldfarb v. Virginia State Bar, 421 U.S. 773, 792 (1975). Although the opinion today finds these interests insufficient to justify prohibition of all price advertising, the state interests recognized in these cases should be weighed carefully [p402] in any future consideration of time, place, and manner restrictions. [n12]
Finally, the Court's opinion does not
foreclose the possibility that some limited supplementation, by way of warning or disclaimer or the like, might be required of even an advertisement of the kind ruled upon today so as to assure that the consumer is not misled.
Ante at 384. I view this as at least some recognition of the potential for deception inherent in fixed-price advertising of specific legal services. This recognition, though ambiguous in light of other statements in the opinion, may be viewed as encouragement to those who believe as I do -- that, if we are to have price advertisement of legal services, the public interest will require the most particularized regulation.
The area into which the Court now ventures has, until today, largely been left to self-regulation by the profession within the framework of canons or standards of conduct prescribed by the respective States and enforced where necessary by the courts. The problem of bringing clients and lawyers together on a mutually fair basis, consistent with the public interest, is as old as the profession itself. It is one of considerable complexity, especially in view of the constantly evolving nature of the need for legal services. The problem has not been resolved with complete satisfaction despite diligent and thoughtful efforts by the organized bar and others over a period of many years, and there is no [p403] reason to believe that today's best answers will be responsive to future needs.
In this context, the Court's imposition of hard and fast constitutional rules as to price advertising is neither required by precedent nor likely to serve the public interest. One of the great virtues of federalism is the opportunity it affords for experimentation and innovation, with freedom to discard or amend that which proves unsuccessful or detrimental to the public good. The constitutionalizing -- indeed the affirmative encouraging -- of competitive price advertising of specified legal services will substantially inhibit the experimentation that has been underway, and also will limit the control heretofore exercised over lawyers by the respective States.
I am apprehensive, despite the Court's expressed intent to proceed cautiously, that today's holding will be viewed by tens of thousands of lawyers as an invitation -- by the public-spirited and the selfish lawyers alike -- to engage in competitive advertising on an escalating basis. Some lawyers may gain temporary advantages; others will suffer from the economic power of stronger lawyers, or by the subtle deceit of less scrupulous lawyers. [n13] Some members of the public may [p404] benefit marginally, but the risk is that many others will be victimized by simplistic price advertising of professional services "almost infinite [in] variety and nature. . . ." Virginia Pharmacy Board, 425 U.S. at 773 n. 25. Until today, in the long history of the legal profession, it was not thought that this risk of public deception was required by the marginal First Amendment interests asserted by the Court.
1. The disciplinary rule is reproduced ante at 355, and n. 5.
2. THE CHIEF JUSTICE, concurring in Virginia Pharmacy, also emphasized the distinction between tangible products and professional services:
The Court notes that roughly 95% of all prescriptions are filled with dosage units already prepared by the manufacturer and sold to the pharmacy in that form. . . . In dispensing these prepackaged items, the pharmacist performs largely a packaging, rather than a compounding, function of former times.
425 U.S. at 773-774 (emphasis in original).
3. What legal services are routine depends on the eye of the beholder. A particular service may be quite routine to a lawyer who has specialized in that area for many years. The marital trust provisions of a will, for example, are routine to the experienced tax and estate lawyer; they may be wholly alien to the negligence litigation lawyer. And what the unsophisticated client may think is routine simply cannot be predicted. Absent even a minimal common understanding as to the service, and given the unpredictability in advance of what actually may be required, the advertising lawyer and prospective client often will have no meeting of the minds. Although widely advertised tangible products customarily vary in many respects, at least in the vast majority of cases, prospective purchasers know the product and can make a preliminary comparative judgment based on price. But not even the lawyer doing the advertising can know in advance the nature and extent of services required by the client who responds to the advertisement. Price comparisons of designated services, therefore, are more likely to mislead than to inform.
4. It may be argued that many of these problems are not applicable for couples of modest means. This is by no means invariably true, even with respect to alimony, support and maintenance, and property questions. And it certainly is not true with respect to the more sensitive problems of child custody and visitation rights.
5. A high percentage of couples seeking counsel as to divorce desire initially that it be uncontested. They often describe themselves as civilized people who have mutually agreed to separate; they want a quiet, out-of-court divorce without alimony. But experienced counsel knows that the initial spirit of amity often fades quickly when the collateral problems are carefully explored. Indeed, scrupulous counsel -- except in the rare case -- will insist that the parties have separate counsel to assure that the rights of each, and those of children, are protected adequately. In short, until the lawyer has performed his first duties of diagnosis and advice as to rights, it is usually impossible to know whether there can or will be an uncontested divorce. As President Mark Harrison of the State Bar of Arizona testified:
I suppose you can get lucky and have three clients come in in response to [appellants' advertisement] who have no children; no real property; no real disagreement, and you can handle such an uncontested divorce, and do a proper job for a [pre]determined, . . . prestated price.
* * * *
[T]he inherent vice [is] that you can't know in advance, what special problems the client who sees the advertisement will present, and if you are bound to a predetermined price . . . , sooner or later you are going to have to inevitably sacrifice the quality of service you are able to render.
6. Similar complications surround the uncontested adoption and the simple bankruptcy.
7. Use of the term "clinic" to describe a law firm of any size is unusual, and possibly ambiguous in view of its generally understood meaning in the medical profession. Appellants defend its use as justified by their plan to provide standardized legal services at low prices through the employment of automatic equipment and paralegals. But there is nothing novel or unusual about the use by law firms of automatic equipment, paralegals, and other modern techniques for serving clients at lower cost. Nor are appellants a public service law firm. They are in private practice, and though their advertising is directed primarily to clients with family incomes of less than $25,000, appellants do not limit their practice to this income level. Id. at 82.
8. For example, the American Bar Association's Code of Professional Responsibility specifics the "[f]actors to be considered as guides in determining the reasonableness of a fee. . . ." DR 2-106(b) (1976). These include:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly.
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.
(3) The fee customarily charged in the locality for similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the circumstances.
(6) The nature and length of the professional relationship with the client.
(7) The experience, reputation, and ability of the lawyer or lawyers performing the service.
(8) Whether the fee is fixed or contingent.
9. A major step forward was taken in 1965 with the initiation of the legal services program of the Office of Economic Opportunity, a program fully supported by the American Bar Association. The legal services program is now administered by the Federal Legal Services Corporation, created by Congress in 1976. Efforts by the profession to broaden the availability of legal services to persons of low- and middle-income levels also gained momentum in 1965.
10. Although Semler v. Dental Examiners involved a due process issue, rather than a First Amendment challenge, the distinction drawn in that case between the advertisement of professional services and commodities is highly relevant. Mr. Chief Justice Hughes, writing for the Court, stated:
We do not doubt the authority of the State to estimate the baleful effects of such methods and to put a stop to them. The legislature was not dealing with traders in commodities, but with the vital interest of public health, and with a profession treating bodily ills and demanding different standards of conduct from those which are traditional in the competition of the marketplace. The community is concerned with the maintenance of professional standards which will insure not only competency in individual practitioners, but protection against those who would prey upon a public peculiarly susceptible to imposition through alluring promises of physical relief. And the community is concerned in providing safeguards not only against deception, but against practices which would tend to demoralize the profession by forcing its members into an unseemly rivalry which would enlarge the opportunities of the least scrupulous. What is generally called the "ethics" of the profession is but the consensus of expert opinion as to the necessity of such standards.
294 U.S. at 612. This distinction, addressed specifically to advertising, has never been questioned by this Court until today. Indeed, Semler was recently cited with approval in Goldfarb v. Virginia State Bar, 421 U.S. 773, 792-793 (1975).
11. The Court's opinion is not without an undertone of criticism of lawyers and the legal profession for their opposition to price advertising: e.g., (i) the reference to the profession "condoning the actions of the attorney who structures his social or civic associations so as to provide contacts with potential clients," ante at 371; and (ii) the implication that opposition to advertising derives from the view that lawyers "belittle the person who earns his living by the strength of his arm" and "somehow [are] "above" trade," ante at 371-372. This indiscriminate criticism is unjustified. Lawyers are not hermits, and society would suffer if they were. Members of the legal profession customarily are leaders in the civic, charitable, cultural, and political life of most communities. Indeed, the professional responsibility of lawyers is thought to include the duty of civic and public participation. As a profession, lawyers do differ from other callings. "This is not a fancied conceit, but a cherished tradition, the preservation of which is essential to the lawyer's reverence for his calling." H. Drinker, Legal Ethics 211 (1963) (footnote omitted). There certainly can be pride in one's profession without belittling those who perform other tasks essential to an ongoing society.
12. The Court speaks specifically only of newspaper advertising, but it is clear that today's decision cannot be confined on a principled basis to price advertisements in newspapers. No distinction can be drawn between newspapers and a rather broad spectrum of other means -- for example, magazines, signs in buses and subways, posters, handbills, and mail circulations. But questions remain open as to time, place, and manner restrictions affecting other media, such as radio and television.
13. It has been suggested that price advertising will benefit younger lawyers and smaller firms, as well as the public, by enabling them to compete more favorably with the larger, established firms. The overtones of this suggestion are antitrust, rather than First Amendment, in principle. But whatever the origin, there is reason seriously to doubt the validity of the premise. With the increasing complexity of legal practice, perhaps the strongest trend in the profession today is toward specialization. Many small firms will limit their practice to intensely specialized areas; the larger, institutionalized firms are likely to have a variety of departments, each devoted to a special area of the law. The established specialist and the large law firm have advantages that are not inconsiderable if price competition becomes commonplace. They can advertise truthfully the areas in which they practice; they enjoy economies of scale that may justify lower prices; and they often possess the economic power to disadvantage the weaker or more inexperienced firms in any advertising competition. Whether the potential for increased concentration of law practice in a smaller number of larger firms would be detrimental to the public is not addressed by the Court.