FTC Staff Comment Before the Office of Court Administration of the New York State Unified Court System Concerning Proposed Amendments to Rules Governing Attorney Advertisement

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of Policy Planning
Bureau of Consumer Protection
Bureau of Economic
September 14,2006
Michael Colodner, Esq.
Counsel
Office of Court Administration
25 Beaver Street
New York, NY 10004
Re: 	Proposed Restrictions to Attorney Advertising
Dear Mr. Colodner:
The staff of the Federal Trade Commission's ("FTC" or "Commission") Office of Policy
Planning, Bureau of Consumer Protection, and Bureau of Economics1is pleased to submit these
comments on Proposed Amendments to Rules Governing Attorney Advertisement ("Proposed
~mendments"),~which address many components of attomey advertisement and solicitation.
This letter briefly summarizes the Commission's interest and experience in the regulation of
attorney advertising and solicitation and provides the staff's opinion regarding the anticipated
effects of the Proposed Amendments on consumers and competition. The FT.C Staff believes
that whle deceptive advertising by lawyers should be prohibited, restrictions on advertising and
solicitation should be specifically tailored to prevent deceptive claims and should not
unnecessarily restrict the dissemination of truthful and non-misleadmg information. As to the
proposed amendments, the FTC Staff is concerned that several provisions are overly broad, may
restrict truthful advertising, and may adversely affect prices paid and services received by
consumers. Moreover, the FTC Staff believes that New York can adequately protect consumers
from false and misleading advertising by using less restrictive means such as requiring clear and
prominent &sclosure of certain infomation.
The FTC enforces laws prohibiting unfair methods of competition and unfair or deceptive
acts or practices in or affecting commerce, includrng primary responsibility for stopping
1 	This letter expresses the views of the Federal Trade Commission's Office of Policy Planning, Bureau of
Consumer Protection, and Bureau of Economics. The letter does not necessarily represent the views of the Federal
Trade Commission or of any individual Commissioner. The Commission has, however, voted to authorize us to
submit these comments.
2 	The Proposed Amendments are available at www.nvcourts.aov/rules/proposedarnendments.shtml.

Michael Colodner
September 14,2006
Page 2 of 7
deceptive and misleading advertising practice^.^ 	Pursuant to its statutory mandate, the
Commission encourages competition in the licensed professions, including the legal profession,
to the maximum extent compatible with other state and federal goals. In particular, the
Commission seeks to identify and prevent, where possible, business practices and regulations
that impede competition without offering countervailing benefits to consumer^.^ The
Commission and its staff have had a long-stanhng interest in the effects on consumers and
competition arising from the regulation of lawyer advertising?
Debate about attorney advertising involves important policy concerns, such as preventing
statements that would deceive or mislead lay people and thereby undermine public trust in
lawyers and the legal system. The FTC Staff's view is that consumers are better off if concerns
about potentially misleading advertising are addressed through the adoption of advertising
restrictions that are narrowly tailored to prevent deceptive claims. By contrast, imposing overly
broad restrictions that prevent the communication of truthful and non-misleading information
that some consumers may value is likely to inhibit competition and frustrate informed consumer
choice. In addition, research has indicated that overly broad restrictions on truthful advertising
may adversely affect prices paid and services received by consumer^.^
Some of the Proposed Amendments are related to the style and content of media
advertising but do not necessarily target deception.' These include prohbiting voice-overs or
3 	Federal Trade Commission Act, 15 U.S.C. 5 45.
4 	Specific statutory authority for the FTC's advocacy program is found in Section 6 of the FTC Act, under
which Congress authorized the FTC "[tlo gather and compile information concerning, and to investigate fiom time to
time the organization, business, conduct, practices, and management of any person, partnership, or corporation
engaged in or whose business affects commerce," and "[tlo make public fiom time to time such portions of the
information obtained by it hereunder as are in the public interest." Id. 8 46(a), (f).
5 See, e.g., Letter from FTC Staff to Committee on Attorney Advertising, the Supreme Court of New Jersey
(Mar. 1,2006), available at htt~://www.ftc.~ov/be/V060009.~df;	see also, e.g., Letter from FTC Staff to Robert G.
Esdale, Clerk of the Alabama Supreme Court (Sept. 30,2002), available at htt~://www.ftc.~ov/be/v020023.~df.	In
addition, the staff has provided its comrnents on such proposals to, among other entities, the Supreme Court of
Mississippi (Jan. 14, 1994); the State Bar of Arizona (Apr. 17, 1990); the Ohio State Bar Association (Nov. 3,
1989); the Florida Bar Board of Governors (July 17,1989); and the State Bar of Georgia (Mar. 3 1,1987). See also
Submission of the Staff of the Federal Trade Commission to the American Bar Association Commission on
Advertising (June 24, 1994) (available online as attachment to Sept. 30,2002, Letter to Alabama Supreme Court,
supra).
6 	See, e.g., Submission of the Staff of the Federal Trade Commission to the American Bar Association
Commission on Advertising ,June 24, 1994, at 5-6 (available online as attachment to Sept. 30,2002, Letter to
Alabama Supreme Court, supra).
7 	The Proposed Amendments require that advertising be "predominantly informational, and shall be designed
to increase public awareness of situations in which the need for legal service might arise. . ." 	See $ 1200.6(a).
Consumers use many different forms of information (e.g., objective and subjective claims) to form views about price,
quality, and other product attributes to help them make their purchasing decisions. It is not clear from the Proposed
Amendments which types of advertising techniques or claims would be considered to be "predominantly
informational" and which would not. The Proposed Amendments therefore may have the effect of prohibiting or

Michael Colodner
September 14,2006
Page 3 of 7
images of non-attorney spokespersons recognizable to the public, depictions of courtrooms or
courthouses, portrayals of judges and lawyers by non-lawyers, portrayals of clients by non-
clients, re-enactments of events or scenes or persons that are not actual, and Internet pop-up
advertisements! 	Such techniques may be useful to consumers in identifying suitable providers
of legal services. For example, dramatization may be an effective way of reaching consumers
who do not know how legal terminology corresponds to their experiences and problems. The
proposed constraints would prevent the use of common methods that advertising firms have used
to make their messages memorable. These methods are unlikely to hoodwink unsuspecting
consumers, because consumers are usually familiar with them. Any concem that the actors may
be more poised or otherwise materially preferable to actual attorneys could be addressed through
a less restrictive approach of requiring clear and prominent disclosure that the lawyers are
portrayed by actors.
The Proposed Amendments prohlbit comparative claims that have not been objectively
~ e r i f i e d . ~	Requiring that material claims be substantiated can, of course, serve consumers by
helping to ensure that claims are not misleading. But if substantiation is demanded for
representations that, although not misleading, concern subjective qualities that are not easy to
measure and for which substantiation may not normally be expected, then messages that
consumers may find useful ,may be barred. The broad prohibition might be based on a concem
that unsubstantiated comparative claims could mislead consumers about the results lawyers can
achieve. But if that is the concem, then it would be better addressed by a rule directed more
narrowly to claims that could be construed as having some bearing on likely outcomes.10
Two other provisions would prohibit paid endorsements and testimonials, as well as
endorsements from existing clients.'' 	The Commission has recognized certain conditions under
which paid endorsements may be deceptive. As explained in the FTC's Endorsement Guides,
"When there exists a connection between the endorser and the seller of the advertised product
which might materially affect the weight or credibility of the endorsement (i.e., the connection is
deterring some truthful, non-misleading advertising techniques or claims that consumers find beneficial in making
decisions. To give further guidance, the Court may find it useful to clarify what types of advertising are not
predominantly informational and explain why they would be harmful to consumers.
8 	See 8s 1200.6(d)(3)-(6) and 1200.6(i)(l).
9 	See 8 1200.6(e)(2).
10 	In addition, it is not entirely clear whether literally accurate superlative descriptions (such as advertising
that an attorney is listed among "Super Lawyers " or "America's Best Lawyers", or that a lawyer has earned a
"highest" "AV" ranking awarded by Martindale-Hubbell) would be barred either as improper comparisons or as
descriptive monikers that imply an ability to obtain future results. See $ 5 1200.6 (d)(8) and (e)(l). Such
descriptions may benefit consumers so long as they are neither false nor misleading.
1 1 	See $6 1200.6(d)(l)-(2).

Michael Colodner
September 14,2006
Page 4 of 7
not reasonably expected by the auhence) such connection must be fully dis~losed."'~The
Commission's approach of requiring disclosure rather than prohibiting such endorsements
protects consumers while encouraging the truthful flow of information to consumers.
Advertisements that look like legal documents would also be prohibited by the Proposed
~mendments.l3 Although some advertisements that appear to be legal documents, especially
those delivered by mail or by hand, may deceive consumers, many other such advertisements are
unlikely to be deceptive. The Commission has addressed the issue of deceptively formatted
advertisements in the contexts of television infomercials and radio ads that appeared to be
independent programs and mailings that appeared to be an independent book review tom from a
magazine.14 In these cases, the Commission sought and obtained clear and prominent disclosures
that the materials at issue were paid advertisements. Such a narrowly tailored approach allows
the use of an effective advertising technique while protecting consumers from deception.
Because the forms of advertising prohibited by 3 1200.6 may be valuable to consumers
and promote competition, the FTC Staff recommends that such advertising be prohibited only if a
reasonable consumer would take away a false or misleading material claim from the
advertisement, and then only if the deception would not be cured by a clear and conspicuous
disclosure.l5
In addition, the FIT Staff is concerned that the Proposed Amendments' requirement that
copies of all advertisements and solicitations be placed on file with the Bar's Attorney
Disciplinary Committee and made available for public scrutiny16will likely raise the cost of
doing business for attorneys and thus likely raise prices for consumers. This is especially true
given that advertisements and solicitations as defined would include not only any and all ra&o,
television, magazine and newspaper ads, but also all web sites, mail correspondence, e-mails,
speeches, web logs ("blogs"), and other public or private presentations given by an attomey
wherein an attomey describes the nature of his or his law firm's practice.'? The FTC Staff is
12 	See Federal Trade Commission Guides Concerning the Use of Endorsements and Testimonials in
Advertising, 16 C.F.R. Part 255.5. This would include the fact that the endorser knew or had reason to believe that if
the endorsement favored the advertiser some benefit would be extended to the endorser.
13 	See 8 1200.6(d)(7).
14 	See, e.g., Bogdana Colp., 126 F.T.C. 37 (1998) (consent agreement); National Media Corp., 116 F.T.C.
549 (1993) (consent agreement); and Georgetown Publ'g House Ltd. P'ship, 122 F.T.C. 392 (1996) (consent
agreement).
15 	Indeed, the Proposed Amendments at $5 1200.6(g)-(h) already require such clear and conspicuous
disclosures on many forms of attorney advertising.
16 	See 8 1200.6(0).
17 	Section 1200.1(k) defines an "advertisement" as "any public communication made by or on behalf of a
lawyer or law fm about a lawyer or law fm,or the lawyer or law firm's services." Section 1200.1(1) defines
"solicitation" to mean any advertisement or other communication directed or targeted to a specific recipient or group
of recipients. It is unclear from the Proposed Amendments if the definitions and requirements include

Michael Colodner
September 14,2006
Page 5 of 7
concerned that any potential benefits from such extensive filing and disclosure requirements
would be outweighed by the detrimental effect that such a burdensome regulatory obligation
might have upon competition.18
The FIT is staff is also concerned that, under the Proposed Amendments, law firms and
attomeys apparently would be required to disclose in every e-mail, web log, web site or page, and
other computer-accessed communication a listing of all office locations and jurisdictions in
which the attorney and firm members are licensed.lg Even if such information is beneficial to
consumers, such disclosure requirements may impose unnecessary burdens on law firms and
attorneys in conveying that information to them. To avoid imposing unnecessary burdens, the
Court may wish to consult FTC guidance concerning how to disclose clearly and conspicuously
information in the on-line context.20
Lastly, 5 1200.8 of the Proposed Amendments relating to attorney use of computer
contact for solicitation and which, among other things, regulates the use of attorney referral
programs, may deter New York lawyers from participating in all but a limited set of programs to
the exclusion of other programs that may have pro-consumer benefit.21 For example, many
consumers and attomeys nationally have begun to participate in online services that provide
Internet-based attorney/client matching platforms.22Unlike a traditional referral service, online
matching programs do not designate one particular attorney, but invite many attomeys to respond
to a consumer inquiry. To achieve this, online matching services recruit licensed attorneys who
typically pay an application fee and a regular subscription fee to participate in the program.23 A
potential client who visits the matching service's web site can review the material about
attorneys, how they are recruited, and how the matching service works. Clients may then post a
listing with the service describing their legal needs, which the service sends to all applicable
attorneys. Interested attomeys may then send, through the service, a response to the client, the
substance of which would contain information such as fees, experience, and other qualifications
communications containing confidential material protected by attorney-client privilege.
l 8 	Indeed, given the broad reach claimed by 5 1200.5(a), the Proposed Amendments may impose burdens on
non-New York lawyers who seek to represent New Yorkers outside the state.
19 	See § 1200.6(k).
20 	See generally, Federal Trade Commission, Dot Corn Disclosures: Information about Online Advertising
(May 2000); available at htt~://www.fic.ov/bcp/conline/~ubs/buspubs/dotcom/index.pdf.
21 	See, e.g,., Letter from the Federal Trade Commission to the Professional Ethics Committee of the Texas
State Bar, May 2006; http://www.ftc.,oovlos/2006/05/V060017CommentsonaRequestforAnEthicsOpinionZma~e.pdff
22 	Although not all services are identical, many share the same general business model. See, e.g,
LexisNexis/Martindale Hubbel's Attorney Match (htt~://www.lawvers.com/find	a l a w e r / a m ~ maop 1ist.php);
Casepost (h~://www.case~ost.com);	Legalconnection (FindLaw) (htt~:Nwww.le~alconnection.com);
LegalMatch (www.lepalmatch.com~;and Legal Fish (www.lenalfish.com.).
25 	We understand that in some of these programs member attorneys may prepare a web page that may disclose
preferred areas of practice, years of experience, bar aff~liationand any other pertinent information.

Michael Colodner
September 14,2006
Page 6 of 7
that may inform the client when selecting counsel. With thls information, the client determines
which attomeys - if any - to contact, and initiates the contact. In some instances, the client's
application may invite an attorney to contact a client directly.
Online legal matching services have the potential to reduce consumers' costs for finding
legal representation, which would likely increase competition among attomeys to provide legal
services. When consumers face large costs to obtain information about marketplace prices and
quality, businesses have less incentive to compete.24A large amount of empirical research has
found that restrictions on advertising in professions leads to higher prices and either a negative or
no effect on qualityz5 In the same way that advertising has been shown to benefit consumers of
professional legal services, online legal matching services are likely to make it less expensive for
consumers to evaluate providers of legal services.26
To the extent that the Proposed Amendments may deter attorneys from participating in
attorney online legal matching services, they are likely to harm consumers. For example, the
Proposed Amendments forbid a lawyer from engaging in solicitation "by real time or interactive
computer-accessed communication unless the recipient is a close friend, relative, former client or
current client"27and specify that attorneys may only participate if such is operated by a legal aid
office or a military legal assistance office, or is a service operated, sponsored, or approved by a
bar association or authorized by law or Court rule.28Because there is uncertainty as to whether
communication through the service would constitute prohbited online communications, or even
if the Court would view an online legal matching service as a prohibited "referral7'program, the
24 	Several economists have developed models that predict firms will be able to charge higher prices when
consumers face high costs of obtaining marketplace information. See, e.g., Dale 0.Stahl, Oligopolistic Pricing with
Sequential Consumer Search, 79 AM. ECON.	REV.700 (1989); Kenneth Burdett & Kenneth L. Judd, Equilibrium
Price Dispersion, 5 1 ECONOMETRICA	955 (1983); John Carlson & R. Preston McAfee, Discrete Equilibrium Price
Dispersion, 9 1 J. POL. ECON.	480 (1983); Steven C. Salop & Joseph E. Stiglitz, Bargains and Ripofs: 	A Model of
Monopolistically Competitive Price Dispersion, 44 REV. ECON.	STUDIES293 (1977). Using these models as a
theoretical framework, several authors have found evidence that the Internet has led to lower prices by reducing
consumers' costs of comparing prices. See, e.g., Jeffrey R. Brown & Austan Goolsbee, Does the Internet Make
Markets More Competitive? Evidencefrom the Life Insurance Industry, 110 J. POL.ECON.	481 (2002); Erik
Brynjolfsson & Michael D. Smith, Frictionless Commerce? A Comparison of Internet and Conventional Retailers,
49 MGM'TSCIENCE563 (2000); James C. Cooper, Price Levels and Dispersion in Online and Ofline Marketsfor
Contact Lenses, FTC Bureau of Economics Working Paper (2006), at htt~://www.ftc.crov/be/work~a~ers/w~283.pdf.
25 	See Timothy J. Muris, California Dental Association v. Federal Trade Commission: The Return of
Footnote 17, 8 Sup. Ct. Econ. Rev. 265,293-304 (2000) (collecting citations to empirical literature on the effect of
advertising restrictions in the professions); In the Matter of Polygram Holdings, Inc., et al., FTC Docket No. 9298
(F.T.C. 2003), at 38 n.52 (same).
26 	Studies have found, for example, that the use of online consumer-to-vendor matching services in the retail
auto industry have reduced prices to consumers by approximately 2 percent. See Fiona Scott Morton et al., Internet
Car Retailing, 49 J. INDUS. ECON.501 (2001); Florian Zettelrneyer et al., Cowboys or Cowards: Why Are Internet
Car Prices Lower? (2005), at http://flomac.haas.berkeley .edu/-florianl Pauers/selection.pdf.
27 	See 5 1200.8(a)(l).
28 	See 8 1200.8(d).

Michael Colodner
September 14,2006
Page 7 of 7
rule may have the effect of detemng a New York lawyer from participating in such an online
legal service that could otherwise benefit New York consumers.
We recommend that any limitations in this regard be narrowly tailored and specifically
defined so as to prohibit conduct that has resulted in demonstrated consumer harm. Indeed,
unless such harm has been shown from legal matching and referral services, the FTC Staff
recommends that the Court consider revising 5 1200.8 so as to allow attorneys to participate in
services that promote competition by reducing the cost to consumers of finding legal
representation. If the Court is concerned that consumers may be misled with respect to the pool
of attorneys to which their requests are sent, there are less restrictive alternatives than effectively
barring such types of legal matchmg programs. For example, a legal matchng service worlung
with New York attorneys could be required to disclose to consumers the number of attorneys and
firms that participate in the program, the number to whom the consumer's request was sent, and
how the service generated the list of attorneys to whom the request was sent; in addition, the
service could be required to explain how, if at all, it limited attorney participation.
In conclusion, the FTC Staff believes that, while deceptive and misleading advertising by
lawyers should be prohibited, restrictions on advertising that are specifically tailored to prevent
deceptive claims provide the optimal level of protection for consumers. Consumers benefit from
robust competition among attorneys and from important price and quality information that
advertising and solicitation can provide. Rules that unnecessarily restrict the dissemination of
truthful and non-misleading information are likely to limit competition and harm consumers of
legal services in the New York State.
Respectfully submitted,
Maureen K. Ohlhausen, Director
Office of Policy Planning
Lydia B. Parnes, Director
Bureau of Consumer Protection
Michael A. Salinger, Director
Bureau of Economics