FTC Staff Letter to the Supreme Court of Tennessee, Concerning Proposed Amendments to the Tennessee Rules of Professional Conduct Relating to Attorney Advertising

Page 1 of 6
Office of Policy Planning
Bureau of Competition
Bureau of Consumer Protection
Bureau of Economics
January 24, 2013
Michael W. Catalano, Clerk
Tennessee Appellate Courts
100 Supreme Court Building
401 7th Avenue North
Nashville, TN 37219-1407
Re: Request for Public Comment, Docket No. M2012-01129-SC-RL1-RL
Dear Mr. Catalano:
The staff of the Federal Trade Commission’s (“FTC” or “Commission”) Office of Policy
Planning, Bureau of Competition, Bureau of Consumer Protection, and Bureau of Economics1
appreciates this opportunity to provide comments to the Supreme Court of Tennessee (“Court”)
in response to its request for public comments on proposed amendments to the Tennessee Rules
of Professional Conduct relating to attorney advertising. Based on the FTC’s expertise in
recognizing the adverse effects for consumers and competition of unduly broad restrictions on
professional advertising, as well as prior staff comments on attorney advertising, FTC staff
respectfully suggests that the Court consider several key competition and consumer protection
principles (explained below) in its review of these proposals. Applying those principles, the
Court should decline to adopt proposals that are likely to unnecessarily restrict the dissemination
of truthful and non-misleading information, thereby limiting information available to consumers
shopping for legal services in Tennessee.
I. INTEREST AND EXPERIENCE OF THE FTC
The FTC is charged under the FTC Act with preventing unfair methods of competition
and unfair or deceptive acts or practices in or affecting commerce.2 Competition is at the core of
America’s economy, driving businesses to provide the goods and services that consumers desire,
and to sell these goods and services at the lowest possible prices. For this reason, the
Commission encourages competition in the licensed professions, including the legal profession,
to the maximum extent compatible with other state and federal policies. In particular, the
Commission seeks to identify and prevent, where possible, business practices and regulations
that impede competition without offering countervailing benefits to consumers.3
The Commission and its staff have a longstanding interest in the effects on consumers
and competition of the regulation of attorney advertising and solicitation.4 The Commission
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

Page 2 of 6
consistently has taken the position that, while unfair or deceptive advertising by lawyers should
be prohibited, consumers do not benefit from the imposition of overly-broad restrictions that
prevent the communication of truthful and non-misleading information that some consumers
value. These types of restrictions are likely to inhibit competition, frustrate informed consumer
choice, and possibly lead to higher prices and decreased scope of, or access to, services.
II. PROPOSED AMENDMENTS TO THE TENESSEE RULES OF PROFESSIONAL
CONDUCT RELATING TO ATTORNEY ADVERTISING
The Tennessee Rules of Professional Conduct currently address communications
concerning a lawyer’s services. Rule 7.1 prohibits “false or misleading communication about the
lawyer or the lawyer's services.”5 Under the current rules, “a communication is false or
misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to
make the statement considered as a whole not materially misleading.”6 The proposed
amendments under consideration would change this rule, among others.
 The first set of proposed amendments, offered by the Tennessee Association for
Justice (“TAJ”), focuses on revising the rules to expand the definition of false and
misleading advertising to include “an actor and/or model play[ing] a client”7 and any
“manipulative” visual or verbal description that is “likely to confuse the viewer.”8
 In the second proposal, Attorney Matthew C. Hardin suggests changes to most of the
rules relating to attorney advertising. As stated in his petition, his proposed changes
purportedly would “prevent advertising abuses and encourage attorneys to advertise
professionally and respectfully within Tennessee.”9 His proposed changes include
lists of permissible and prohibited content that would apply to any form of attorney
advertising.
III. COMPETITION AND CONSUMER PROTECTION PRINCIPLES
Based on the FTC’s broad expertise regarding the characteristics of unfair or deceptive
advertising, as well as prior FTC staff analyses of efforts to restrict attorney advertising, FTC
staff respectfully urges the Court to consider the following competition and consumer protection
principles as part of its review of the proposals. Each of these principles seeks to promote
competition and protect consumers by discouraging unnecessary restrictions on the
dissemination of truthful and non-misleading information. These principles are most important
when proposed restrictions sweep broadly and may inhibit truthful and non-deceptive
advertising; it is in those situations where proponents should bear the high burden of
demonstrating that the proposed restrictions target legitimate and well-substantiated problems,
and that the proposed restrictions are no broader than necessary to address those concerns.
As explained below, the Court also should consider the potential competitive impact of
an advertisement pre-screening and evaluation system that would enable one group of attorneys
to limit advertising by their competitors.

Page 3 of 6
 While unfair or deceptive advertising by lawyers should be prohibited, restrictions on
advertising should be specifically tailored to prevent deceptive claims and should not
unnecessarily restrict the dissemination of truthful and non-misleading information.
Imposing overly broad restrictions prevents the communication of truthful and non-
misleading information that some consumers may value, which is likely to inhibit
competition and frustrate informed consumer choice. Research indicates that overly
broad restrictions also may adversely affect the prices consumers pay, as well as the
scope and quality of services that they receive.10
Some of the proposed regulations, such as the prohibition on using actors/models
(TAJ Petition, Rule 7.1(D)), generally recognizable spokespersons (Hardin Petition,
Rule 7.7(b)(1)(B)), and certain background sounds (Hardin Petition, Rule
7.7(b)(1)(C)), do not on their face target deception. Because these common
advertising methods are not inherently deceptive, more narrowly tailored rules would
better address the concerns underlying the proposed regulations. For example,
requiring a clear and prominent disclosure that actors are portraying clients would be
a less restrictive way to alleviate any concern about potential deception, in the event
the Court decides this is a concern worth addressing.
Likewise, it is not necessarily deceptive to use a spokesperson who purports to speak
in the place of and on behalf of a lawyer or law firm. The risk of deception may
increase, however, when that individual is a celebrity who is offering an endorsement.
In those cases, requiring the celebrity to express his or her honest opinions, findings,
beliefs, or experiences would reduce the risk of deception without unduly restricting
the free flow of information.11
 Prohibiting any advertisement that is “unsubstantiated in fact” (Hardin Petition, Rule
7.1(c)(1)(D)) may prohibit some useful, non-deceptive claims that are difficult to
verify. A substantiation requirement serves consumers by helping ensure that
advertising claims are not misleading. However, some representations may concern
subjective qualities that are not easy to verify with objective evidence – for example,
claims about the quality or dedication of the lawyer.12A narrower rule governing
claims that mischaracterize or promise particular outcomes might better address the
concerns underlying this proposed rule.13
 The FTC supports industry self-regulation under certain circumstances. There are
risks to consumers and competition, however, when one group of competitors
regulates another. By requiring pre-screening and evaluation of most attorney
advertisements by a review committee of the Board of Professional Responsibility (in
accordance with the criteria as required under Hardin Petition, Rule 7.8), the Court
would put some attorneys in a position to limit advertising by their competitors,
giving the reviewing attorneys both the incentive and the ability to dampen
competition under the guise of protecting consumers. Required pre-screening would
also raise the cost of doing business for attorneys, which likely would result in higher
prices for attorney services and discourage some truthful and valuable advertising.

Page 4 of 6
Given the potential burden on competition and consumers, FTC staff recommends
that the Court forego the filing and pre-screening components of the Proposed Rules.
Instead, the Court should continue to enforce the general prohibition against
deceptive and misleading claims through sanctions for violations. If the Court
nevertheless believes, based on credible evidence, that pre-screening is necessary to
prevent harm to reasonable consumers, the Court should be mindful of the federal and
state antitrust laws that would apply to the review committee as a whole and its
members individually.14
 Both the TAJ Petition and the Hardin Petition propose rules prohibiting advertising in
the state of Tennessee by individual lawyers or lawyers for firms without a bona fide
office in the state (TAJ Petition, Rule 7.2(1), Hardin Petition, Rule 7.0(c)). A “bona
fide office” is defined as “a physical location… where the lawyer or law firm
reasonably expects to furnish legal services in a substantial way on a regular and
continuing basis” (TAJ Petition at 5). The Tennessee Rules of Professional Conduct
do not, however, impose a residency requirement for practicing law in Tennessee.
Therefore, this restriction may be overbroad and eliminate competition to provide
lawyer services by attorneys who are licensed to practice in the state but do not
maintain an office in the state, as well as by attorneys who seek to represent
Tennessee residents in national class action lawsuits, to the extent otherwise
permitted by applicable Tennessee law. We urge the Court to consider whether
prohibiting otherwise permissible advertising by attorneys without a bona fide office
in Tennessee is necessary to protect the public.
IV. CONCLUSION
FTC staff believes consumers receive the greatest benefit when reasonable restrictions
on advertising are specifically and narrowly tailored to prevent unfair or deceptive claims while
preserving competition and ensuring consumer access to truthful and non-misleading
information. Rules that unnecessarily restrict the dissemination of truthful and non-misleading
information are likely to limit competition and harm consumers of legal services in Tennessee.
Respectfully submitted,
Andrew I. Gavil, Director
Office of Policy Planning
Richard A. Feinstein, Director
Bureau of Competition

Page 5 of 6
Charles A. Harwood, Acting Director
Bureau of Consumer Protection
Howard Shelanski, Director
Bureau of Economics
1 This staff letter expresses the views of the Federal Trade Commission’s Office of Policy Planning, Bureau of
Competition, 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, however, has
voted to authorize staff to submit these comments.
2 Federal Trade Commission Act, 15 U.S.C. § 45.
3 Specific statutory authority for the FTC’s advocacy program is found in Section 6 of the FTC Act, under which
Congress authorized the FTC “[t]o gather and compile information concerning, and to investigate from time to time
the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged
in or whose business affects commerce,” and “[t]o make public from time to time such portions of the information
obtained by it hereunder as are in the public interest.” Id. § 46(a), (f).
4 See, e.g., Letter from FTC Staff to the Indiana Supreme Court (May 11, 2007), available at
http://www.ftc.gov/be/V070010.pdf; Letter from FTC Staff to the Florida Bar (Mar. 23, 2007), available at
http://www.ftc.gov/be/ V070002.pdf; Letter from FTC Staff to the Rules of Professional Conduct Committee,
Louisiana State Bar Association (Mar. 14, 2007), available at http://www ftc.gov/opa/2007/03/fyi07225.htm; Letter
from FTC Staff to the Office of Court Administration, Supreme Court of New York (Sept. 14, 2006), available at
http://www.ftc.gov/os/2006/09/V060020-image.pdf; Letter from FTC Staff to the Professional Ethics Committee for
the State Bar of Texas (May 26, 2006), available at
http://www.ftc.gov/os/2006/05/V060017CommentsonaRequestforAnEthicsOpinionImage.pdf; Letter from FTC Staff
to Committee on Attorney Advertising, Supreme Court of New Jersey (Mar. 1, 2006), available at
http://www.ftc.gov/be/V060009.pdf; see also, e.g., Letter from FTC Staff to Robert G. Esdale, Clerk of the Alabama
Supreme Court (Sept. 30, 2002), available at http://www.ftc.gov/be/v020023.pdf. In addition, FTC staff has
provided comments 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. 31, 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).
5 Tenn. Sup. Ct. R. 8, RPC 7.1.
6 Id.
7 TAJ Petition, Proposed Rule 7.1(1)(D).
8 TAJ Petition, Proposed Rule 7.1(2).
9 Hardin Petition at 1.
10 See, e.g., Timothy J. Muris, California Dental Association v. Federal Trade Commission: The Revenge of
Footnote 17, 8 S. CT. ECON. REV. 265, 293-304 (2000) (discussing the empirical literature on the effect of
advertising restrictions in the professions); In the Matter of Polygram Holdings, Inc, et al, FTC Dkt. No. 9298

Page 6 of 6
(F.T.C. 2003), at 38 n. 52 (same); Frank H. Stephen & James H. Love, Regulation of the Legal Professions, 5860
ENCYCLOPEDIA OF LAW & ECON. 987, 997 (1999), available at http://encyclo.findlaw.com/5860book.pdf
(concluding that empirical studies demonstrate that restrictions on attorney advertising likely have the effect of
raising fees); Submission of the Staff of the Federal Trade Commission to the American Bar Association
Commission on Advertising, 5-6 (June 24, 1994) (available online as attachment to Sept. 30, 2002, Letter to
Alabama Supreme Court, supra).
11 See FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 C.F.R. § 255.1.
12 See FTC Policy Statement on Deception, appended to Cliffdale Associates, Inc., 103 F.T.C. 110, 174 (1984),
available at http://www.ftc.gov/bcp/policystmt/ad-decept htm.
13 See Hardin Petition at 32 (concern that misleading and deceptive advertising poses the threat of “false promises of
easy results.”).
14 Due to the risk of anticompetitive behavior, a leading antitrust treatise advocates subjecting any governmental
agency comprising members of the profession that it regulates to direct and active governmental supervision. See
AREEDA & HOVENKAMP, I ANTITRUST LAW ¶227a, at 208 (3rd ed. 2006) (“Without reasonable assurance
that the body is far more broadly based than the very persons who are to be regulated, outside supervision seems
required.”). See also In the Matter of North Carolina State Board of Dental Examiners, FTC Dkt. 9343 (Comm.
Op. Feb. 8, 2011) (federal antitrust laws apply to actions of state dental board comprising mainly practicing
dentists), available at http://www.ftc.gov/os/adjpro/d9343/110208commopinion.pdf (currently on appeal before the
U.S. Court of Appeals for the 4th Cir., No. 12-1172).