FTC and Department of Justice Comment to the Hon. Helene E. Weinstein Concerning New York A.B. A01837 to Establish that Certain Real Estate Services May be Provided Only by Attorneys

UNITD STATES OF AMERICA
FEDERA TRE COMMSSION
Washington, DC 20580
DEPARTMENT OF JUSTICE
Washington, DC 20530
April 27, 2007
By email and first class mail
Assemblywoman Helene E. Weinstein
Chair, Commttee on Judiciar
New York State Assembly
3520 Nostrand Avenue
Brooklyn, NY 11229
Re: Assemblv Bil A01837
Dear Assemblywoman Weinstein:
Pursuant to our conversations with Committee on Judiciar ("the Committee ) staff, we
are pleased to provide our comments on Assembly Bil A01837 ("AOI837" or "the bil" or "the
proposed legislation ) which would establish that certain services related to real estate
transactions may be provided only by attorneys.
The Justice Deparment and the Federal Trade Commission ("FTC") believe that non-
attorneys should be permtted to compete with attorneys except where specialized legal
knowledge and training is demonstrably necessar to protect the interests of consumers.
Competition leads to lower prices, better products and services, and enhanced consumer choice.
We are concerned that the proposed legislation, which would prevent non-attorneys from
competing with attorneys in situations where there is no clear showing that non-attorney service
providers have caused consumer harm, is not in the best interests of consumers. We recommend
that the Committee reject the bil so as to preserve attorney/non-attorney competition.
! A01837 was previously before the Committee in 2006 . as Bil A05596. The two bills are identical and
raise the same competition concerns. This letter is a re-submission of our June 21 , 2006, letter providing our
comments on A05596.

The Interest and Experience of the U.S. Department
of Justice and the Federal Trade Commission
The Justice Department and the FTC are entrusted with enforcing the federal antitrust
laws. We work to promote free and unfettered competition in all sectors of the American
economy. The United States Supreme Court has observed that "ultimately competition will
produce not only lower prices, but also better goods and services. ' The heart of our national
economic policy long has been faith in the value of competition. ",2 Like all consumers
consumers of professional services benefit from competition ' and if competition to provide such
services is restrained, consumers may be forced to pay increased prices or accept services of
lower quality.
The Justice Department and the FTC are concerned about increasing efforts across the
country to prevent non-attorneys from competing with attorneys through the adoption of
excessively broad unauthorized practice of law restrictions by state courts and legislatures. In
addressing these concerns , the Justice Department and the FTC encourage competition through
advocacy letters and amicus curiae briefs filed with state supreme courts. Through these letters
and filings, the Justice Deparment and the FTC have urged several states, the American Bar
Association, and many state bar associations to reject or narrow such restrictions on competition
between attorneys and non-attorneys ' Separately, the Justice Deparment has obtained
Not Sac 'y oJProf'1 Eng rs v. United States 435 U. S. 679, 695 (1978) (quoting Standard Oil Co.
340 U. S. 231 , 248 (1951)); accord FTC v. Superior Court Trial Lawyers Ass ' 493 U. S. 411 , 423 (1990).
FTC
See, e.g, Prof'1 Eng 435 U.S. at 689; Goldfarb v. Virginia State Bar 421 U. S. 773 , 787 (1975); see
also United States v. Am. Bar Ass ' 934 F. Supp. 435 (D. C. 1996), modifed 135 F. Supp. 2d 28 (D. C. 2001).
4 See letter from the Justice Departent and the FTC to Executive Director of the Kansas Bar Ass n (Feb. 4
2005); letter from the Justice Departent and the FTC to Task Force to Define the Practice of Law in Massachusetts
Massachusetts Bar Ass n (Dec. 16 2004); letter from the Justice Departent and the FTC to Unauthorized Practice
of Law Commttee , Indiana State Bar Ass n (Oct. 1 2003); letter from the Justice Departent and the FTC to
Standing Commttee on the Unlicensed Practice of Law, State Bar of Georgia (Mar. 20, 2003); letters from the
Justice Departent to Speaker of the Rhode Island House of Representatives and to the President of the Rhode
Island Senate et 01. (June 30 , 2003 and Mar. 28 , 2003); letter from the Justice Department and the FTC to Task
Force on the Model Definition of the Practice of Law, American Bar Ass n (Dec. 20 , 2002); letter from the Justice
Department and the FTC to Speaker of the Rhode Island House of Representatives et 01. (Mar. 29 2002); letter
from the Justice Department and the FTC to President of the North Carolina State Bar (July II , 2002); letter from
the Justice Department and the FTC to Ethics Committee of the North Carolina Statc Bar (Dec. 14 2001); letter
from the Justice Department to Board of Govemors of the Kentucky Bar Ass n (June 10 , 1999 and Sept. 10 , 1997);
letter from the Justice Departent and the FTC to Supreme Court of Virginia (Jan. 3 , 1997); letter from the Justice
Departent and the FTC to Virginia State Bar (Sept. 20 1996). Brief Amicus Curiae of the United States of
America and the FTC in Lorrie McMahon v. Advanced Title Servs. Co. oJw. Va. No. 31706 (filed May 25 2004),
available at htto://\\rw\v. usdoi. !2ov/atricasesif:03700,'203790. htm Brief Amicus Curiae of the United States of
America and the FTC in On Review ofULP Advisory Opinion 2003-2 (filed July 28 2003), available at
hnj):iiw\\'\' usdoi . Qov/atr/cascsif2011 00i 20 1197 l1tm; Brief Amicus Curiae of the United States of America in
Support of Movants Kentucky Land Title Ass et al. in Ky. Land Title Ass v. Ky. Bar Ass ' No. 2000-SC-

injunctions prohibiting bar associations from unreasonably restraining competition by non-
attorneys in violation of the antitrust laws5 These comments are part of our ongoing efforts in
this area.
The Proposed Legislation
Section 484 of Aricle 15 of New York' s Judiciary Law states that certain activities
including "preparng deeds , mortgages, assignents, discharges , leases or any other instruments
affecting real estate " may only be perfoDTed by attorneys.' The proposed legislation would add
a new section, 484- , which would define the following tasks as "the historic and essential
elements of the practice of relevant real estate law in the state:
conducting title searches;
preparng title abstracts;
reading or rendering opinions on real estate titles and the insurability of said titles;
preparng or issuing title insurance reports or commitments;
clearng title exceptions; ..
marking up title insurance reports or commitments;
collecting title insurance premiums; and
issuing title insurance policies on behalf oftitle insurance companies,
While proposed Section 484-A does not expressly bar non-attorneys ITom providing these
services, defining such services as "the historic and essential elements of the practice of. , , law
will have the same practical effect.
000207-KB (Ky. , filed Feb. 29 , 2000), available at http)!www.usdoi. "ov!atr/cases/f4400/4491.htm. The letters to
the American Bar Association, Indiana, Rhode Island, Massachusetts, North Carolina, Georgia, Kansas, and Virginia
may be found on the Departent of Justice s website Illt1.://\'v \v\v. usdoi . l!Ov/alT/public/comments!comments.htm.
5 In United States v. Allen County Bar Ass the Justice Departent sued and obtained a judgment against
a bar association that had restrained title insurance companies from competing in the business of certifying title. The
bar association had adopted a resolution requiring lawyers ' examinations of title abstracts and had induced banks and
others to require the lawyers' examinations of their real estate transactions. Civ. No. F- 79-0042 (N.D. Ind. 1980). In
United States v. N. Y. County Lawyers Ass ' the Justice Departent obtained a court order prohibiting a county bar
association from restricting the trst and estate services that corporate fiduciaries could provide in competition with
lawyers. No. 80 Civ. 6129 (S. Y. 1981). See also United States v. County Bar Ass ' No. 80- 112-S (M.D. Ala.
1980). In addition, the Justice Department has obtained injunctions against other anticompetitive restrictions in
professional associations ' ethical codes and against other anticompetitive activities by associations of lawyers. See
, United States v. Am. Bar Ass ' 934 Supp. 435; Prof'! Eng 435 V. S 679; United States v. Am. lnst. of
Architects 1990-2 Trade Cas. (CCH) 256 (D. C. 1990); United States v. Sac 'y oj Authors ' Reps. , 1982-
Trade Cas. (CCH) 210 (S. Y. 1982).
6 N. Y. Jud. L. Art. 15 484 (McKinney s 2006).
7 A01837

The proposed legislation would also expand the list of activities that only an attorney may
provide to include certain activities that presently can be conducted in New York by non-
attorneys. Specifically, the proposed legislation would prohibit anyone other than an attorney
from:
giving advice or negotiating the terms and conditions for the sale of real property;
preparing contracts or agreements for the sale of real property;
rendering opinions on the legal status of or requirements to clear real estate titles;
and
preparing or receiving compensation for passing upon the regularity and legality
oflegal documents or instrments
The proposed legislation would further modify Aricle 15 by amending Section 495.
Subsection 5 of Section 495 currently allows corporations and voluntary associations
(collectively, " companies ) to examine and insure titles to real property, and to prepare deeds
mortgages, assignents, discharges, leases or any other instruments affecting real property
insofar as such instruments are necessary to the examination and insuring of titles, and
necessar or incidental to loans made by any such corporation or association.'" A01837 would
bar non- attorneys employed by such companies from performing such work. 10 It also would bar
these companies from representing anyone in a reaJ estate or mortgage closing, or any other legal
transaction or activity where AOl837 bars non-attorney service providers.
Restrjctions on Attorney/Non-Attorney Competition Should Be Examined
to Determine Whether Thev Are in the Public Interest
The Justice Department and the FTC recognize that there are services requiring the
knowledge and skill of a person trained in the law that should be provided only by attorneys.
However, we also believe that consumers benefit from attorney/non-attorney competition in the
provision of many other services, Allowing non-attorneys to compete in the provision of certain
types of services permits consumers to select from a broader range of options, considering for
themselves such factors as cost, convenience, and the degree of assurance that the necessar
documents and commitments are suffcient. As the United States Supreme Court stated:
9 N.Y. Jud. L. Art. 15 g 495. 5 (McKinney s 2006).
10 A01837 g 3.
11

The assumption that competition is the best method of allocating resources in a ftee
market recognizes that all elements of a bargain quality, service, safety, and
durability - and not just the immediate cost, are favorably affected by the free
opportunity to select among alternative offers.
In general, competition policy calls for any restriction on competition to be justified by a '
valid need for the restriction, such as the need to protect the public ftom harm, and for the
restriction to be narrowly drawn to minimize its anti competitive impact. I' The inquiry into the
public interest involves not only an assessment of the harm that consumers may suffer ftom
allowing non-attorneys to perform certain tasks, but also consideration of the benefits that accrue
to consumers when attorneys and non-attorneys compete. I'
The Proposed Legislation Would Likely Hurt New York
Consumers by Restraining Competition Between Attorneys and Non-Attornevs
The Justice Department and the FTC believe that adopting the proposed legislation would
harm consumers and not serve the public interest, The legislation s restrictions on non-attorney
service providers will eliminate attorney/non-attorney competition for many services where
competition likely benefits consumers. If the proposed legislation is adopted, New York
consumers likely will be disadvantaged in at least the following ways:
Prices that consumers pay to negotiate real estate transactions are likelv to
increase. The proposed legislation would force New Yorkers to retain an attorney
to obtain "advice or (to J negotiate the terms and conditions of and thereafter
prepare contracts or agreements for the sale ofreal property."IS It would further
harm consumers by removing significant non-attorney competition ftom the
marketplace with respect to the sale of real property. This would appear to be
contrar to the long history ofreal estate transactions in New York,!' and as
12 Not
'/
Sac 'y of Prof'1 Eng 'rs v. United States 435 U. S. 679 , 695 (1978) (emphasis added); accord, FTC
v. Superior Court Trial Lawyers Ass ' 493 U. S. 411 , 423 (1990).
13 CJ FTC. v. Ind. Fed'n of Dentists 476 U. S. 447 , 459 (1986) ("Absent some countervailing
procompetitive virte " an impediment to "the ordinary give and take of the market place.
. .
cannot be sustained
under the Rule of Reason. (internal quotations and citations omitted).
14
See Prof'1 Eng 435 U. S. at 689; GoldJarb v. Va. State Bar 421 U. S. 773 , 787 (1975). See also In re
Opinion No. 26 oJ the Comm. on Unauthorized Practice oJ Law 654 A.2d 1344 , 1345-46 (N.J. 1995) (lawyer/non-
lawyer competition benefits the public interest).
IS AOl8379 1.
16 See, e. , Duncan Hill Realty, Inc. v. Dep 't oJ State 62 A.D. 2d 690, 696 (N. Y. App. Div. , 1978)
(noting that "from time irmemorial real estate brokers and agents have drafted ' simple ' contracts between their
clients as part of their work"