FTC Staff Comment to Ms. Lilia G. Judson, Executive Director, Indiana Supreme Court, Concerning Proposed Rules on Attorney Advertising

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 ind ividual Com missioner. The Comm ission has, however, voted to autho rize us to
submit these comments.
2 The Propo sed Amendme nts are available at http://www.in.gov/judiciary/rules/proposed/2007
/pcr-isba(jan).pdf.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of Policy Planning
Bureau of Consumer Protection
Bureau of Economics
May 11, 2007
Ms. Lilia G. Judson
Executive Director
Indiana Supreme Court
Division of State Court Administration
115 West Washington Street
Suite 1080, South Tower
Indianapolis, IN 46204
Re: Proposed Amendments to Indiana Rules of Court Concerning
Attorney Advertising
Dear Ms. Judson:
The Staff of the Federal Trade Commission’s (“FTC” or “Commission”) Office of Policy
Planning, Bureau of Consumer Protection, and Bureau of Economics1 is pleased to submit these
comments on Proposed Amendments to the Indiana Rules of Court (“Proposed Amendments”),2
which address attorney advertising and solicitation. The FTC Staff believes that although
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-misleading information. Accordingly, the FTC Staff
generally supports the Proposed Amendments because they prohibit false, deceptive and
misleading advertisements, and do not impose blanket prohibitions on specific forms of
advertisements. The FTC Staff believes that additional modifications regarding the scope of the
prohibition on comparative claims and restrictions on attorney referral programs could further
enhance consumer access to helpful information about legal services.

Lilia Judson
May 11, 2007
Page 2 of 7
3 Federal Trade Commission Act, 15 U.S.C. § 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 FT C “[t]o gather and comp ile 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).
5 See, e.g., Letter fro m FT C Staff to the Flo rida B ar (M ar. 23 , 200 7), 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 , 200 7), ava ilable a t http://www .ftc.gov/o pa/2007 /03/fyi0722 5.htm; Letter fro m FT C Staff to
the Office of Court A dministration, Supreme C ourt of New York (Sept. 14, 200 6), 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 (M ay 26, 200 6), ava ilable a t http://www.ftc.gov/os/2006/05/V060017C ommentsonaRequestforAnEthics
OpinionImage.pdf; Letter from FTC Staff to Committee on Attorney Advertising, the Supreme Court of New Jersey
(M ar. 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, 200 2), available at http://www.ftc.gov/be/v020023.pdf. In
addition, the staff has provided its 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,
198 9); the F lorida Bar Bo ard o f Governo rs (July 17, 19 89); and the State B ar of G eorgia (M ar. 31 , 198 7). See also
Submission of the Staff of the Federal Trade Commission to the American Bar Association Commission on
Advertising (June 24, 1 994 ) (available online as attachment to Sept. 30, 20 02, L etter to A labam a Sup reme Court,
supra).
Discussion
The FTC enforces laws prohibiting unfair methods of competition and unfair or deceptive
acts or practices in or affecting commerce, including deceptive and misleading advertising
practices.3 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 consumers.4 The Commission and its staff have had a long-standing
interest in the effects on consumers and competition arising from the regulation of lawyer
advertising.5
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. Similarly, imposing restrictions on some types of solicitation may increase consumer
search costs. In addition, research has indicated that overly broad restrictions on truthful

Lilia Judson
May 11, 2007
Page 3 of 7
6 See, e.g., Submission of the Staff of the Federal Trade Commission to the American Bar Association
Commission on Advertising, June 24, 19 94, at 5-6 (available online as attachment to Sep t. 30, 2002 , Letter to
Alab ama Supreme Court, supra note 5 ). See also Tim othy J. M uris, California Dental Association v. Federal Trade
Commission: The Revenge of Footnote 17, 8 SU P. CT. EC O N. REV. 265, 293-304 (2000) (discussing the empirical
literature on the effect of advertising restrictions in the professions and citing, among others: James H. Love & Jack
H. Stephen, Advertising, Price and Quality in Self-regulating Professions: A Survey, 3 INTL. J. EC O N. BU S. 227
(1996); J. Ho ward Beales & Tim othy J. M uris, State and Fed eral R egu lation of Na tiona l Advertising 8-9 (1993);
R.S. B ond, J.J. Kwoka, J.J. P helan & I.T. W itten, Effects of Restrictions on A dvertising a nd C om mercial P ractice in
the Professions: The Case o f Optom etry (1980); J.F. Cady, Restricted Advertising and Competition: The Case of
Retail Drugs (W ashington, D .C.: Am erican Enterprise Institute, 19 76); J.F. Cady, An Estim ate of the Price Effects
on Restrictions on Drug Price Advertising, 14 EC O N. IN Q. 490 , 504 (1976); Jame s H. Love, et al., Spatial Aspects of
Competition in the Market for Legal Services, 26 REG. ST U D. 137 (1992); Frank H. Stephen, Advertising, Consumer
Sea rch C osts, an d Prices in a Professional Service M arket, 26 AP P LIE D EC O N. 117 7 (1994 )); In the Matter of
Polygram Holdings, Inc.; FTC D ocket No . 929 8, at 38 n.52 (F.T .C. 20 03), aff’d, 416 F.3d. 29 (D.C. Cir. 2005)
(same). See also Tim othy J. M uris & Fred S. M cChesney, Advertising and the Price and Q uality of Leg al Services:
The Case for Legal Clinics, 1 AM E R IC A N BAR FO U N D. RES. J. 179, 184 (19 79) (discussing that attorney advertising
results in the phenomena of increased consumer requests for legal services coupled with lower prices and higher
quality of services, particularly in specialized areas of the law); see Frank H. S tephen & James H. Love, Regulation
of the Legal Professions, 5860 ENCY CLOPED IA OF L. & EC O N. 987, 997 (1999), available at http://encyclo.findlaw
.com/5860book.pdf (empirical studies demonstrate that restrictions on attorney advertising have the effect of raising
fees).
7 See Rule 7.2(b).
8 See Rule 7.2(a ). The com ment to Rule 7.2 explains that, “Lawyer ad vertising can serve a valuable p ublic
purpose by informing persons about lawyers and the law, making both more available, affordable, and useful to the
public. . .Advertising which blankets the legal professio n in a fog of puffery or diminishes respe ct for the courts. . . is
inconsistent with the public’s best interests.”
9 See Rule 7.3.
10 See Rules 7.4 & 7.5.
advertising may adversely affect prices paid and services received by consumers.6
The Proposed Amendments prohibit an attorney from participating in advertising that is
false, misleading, or which promotes behavior that is either illegal or in violation of rules
governing attorney conduct.7 The Proposed Amendments define advertising as, “Any manner of
public communication partly or entirely intended or expected to promote the purchase or use of
the professional services of a lawyer . . . .”8 The Proposed Amendments prohibit solicitation in
certain circumstances, restrict the types of referral programs attorneys may utilize,9 and limit how
an attorney may communicate a speciality or a firm name.10 Also, absent “special circumstances
that serve to protect the probable targets of an advertisement from being misled or deceived,” the
Proposed Amendments impose a presumption that advertising is misleading if it, among other
things, expresses or implies a prediction of future success, makes an unsubstantiated comparison
to other lawyer’s services, refers to past results in a manner that creates an expectation of similar
results in future matters, contains an endorsement or testimonial that may create an unjustified
expectation about a lawyer’s abilities or a person’s legal rights, or consists of a dramatization

Lilia Judson
May 11, 2007
Page 4 of 7
11 See Rule 7.2(c). We note that “special circumstances” as used in the rule is unclear; we recommend that the
Bar provide guidance as to what such special circumstances would rebut the presumption imposed by the rule.
12 See Rule 7.3(b)(1).
13 See Rule 7.3(b)(2).
14 See Rule 7.3(b)(3). We no te that, unlike the other restrictions contained in 7.3(b), to withstand
Constitutional scrutiny, the state would likely need to demonstrate that this provision advances a state interest in a
direct and m aterial way. See Florida Ba r v. Went For It, 515 U.S. 618 , 626 (1995 ). In Went for It, the Co urt upheld
a restrictio n nearly identical to 7.3(b)(3 ) because the Florid a Bar demonstrated a non-speculative state interest in
preventing a specific consumer harm, which it illustrated with a report containing substantiated data showing that
Florid a con sumers opposed so licitations in the immediate wake of an accide nt. Id. at 626-27 .
15 See Rule 7.3(b)(4) & (5)
16 See Rule 7.3(e)(1)-(4).
17 See, e.g,., Letter from the Federal Trade Commission to the Professional Ethics Committee of the Texas
State B ar, M ay 2006, ava ilable a t http://www.ftc.gov/os/2006/05/V060017C ommentsonaRequestforAnEthics
OpinionImage.pdf. Although not all services are identical, m any share the same ge neral b usiness m ode l. See, e.g,,
LexisNexis/Martindale Hubbel’s Attorney Match (http://www.lawyers.com/find_a_lawyer/am/am_aop_list.php);
Case post (http://www.casepost.com); LegalConnection (FindLaw) (http://www.legalconnection.com);
LegalMatch (www.legalmatch.com); and Legal Fish (www.legalfish.com).
without adequate disclosure.11
Some Rule 7.3 Restrictions on Solicitations May Provide Protections for Consumers,
While Others May Impede Consumer Access to Efficient Attorney-Matching Programs
Rule 7.3, entitled Recommendation or Solicitation of Professional Employment, provides
some protections for consumers, but also may limit the use of some attorney referral programs.
Rule 7.3(b) bars attorneys from approaching potential clients who have made known their desire
not to be solicited,12 from engaging in coercion,13 from solicitation within 30 days of an event
involving personal injury or wrongful death,14 or if the person is unable to exercise reasonable
judgment.15 The FTC certainly supports such efforts to protect consumers from unwanted and
coercive solicitation.
Rule 7.3(e), however, also prohibits attorneys from participating in referral services
unless such service is affiliated with a public defender, an approved not-for-profit program, a bar
association, or a military legal assistance office.16 We understand that many consumers and
attorneys participate in online services that provide Internet-based attorney/client matching
platforms.17 Online matching programs do not refer one particular attorney to a consumer, but
through web-based programs consumers invite attorneys to respond to an inquiry. Online
matching services recruit licensed attorneys who typically pay an application fee and a regular

Lilia Judson
May 11, 2007
Page 5 of 7
18 W e understand that in some of these programs memb er attorneys may prepare a w eb page that may disclose
preferred areas of practice, years of experience, bar affiliations, and any other pertinent information.
19 Several economists have developed models that predict firms will be able to charge higher prices when
consumers face high costs in obtaining marketp lace info rmatio n. See, e.g., Dale O. Stahl, Oligopo listic Pricin g with
Sequential Consumer Search, 79 AM . EC O N. REV. 700 (1989); Kenneth B urdett & K enneth L. Jud d, Equilibrium
Price Dispersion, 51 ECONOMETRICA 955 (1983); John Carlso n & R . Preston M cAfee, Discrete Equilibrium Price
Dispersion, 91 J. PO L. EC O N. 480 (1983); Steven C. Salop & Jo seph E. Stiglitz, Bargains and Ripoffs: A Model of
Monopolistically Competitive Price Dispersion, 44 REV. EC O N. STUDIES 293 (1977). Using these m odels as a
theoretical framework, several authors have found evidence that the Internet has led to lower prices by reducing
consumers’ costs o f comparing price s. See, e.g., Jeffrey R. Bro wn & Austan Go olsbe e, Does the Internet Make
Ma rkets Mo re Com petitive? Evid ence from the Life Insura nce Industry, 110 J. PO L. EC O N. 481 (2002); Erik
Brynjolfsson & M ichael D. Sm ith, Frictionless Commerce ? A C omparison of Internet an d Co nventional Retailers,
49 MGM ’T SCIENCE 563 (2000); Jame s C. Coop er, Price Levels and Dispersion in Online and Offline Markets for
Contact Lenses, FTC B ureau of Economics W orking Paper (2 006 ), ava ilable a t http://www.ftc.gov/be/workp apers/
wp283.pdf.
20 See Tim othy J. M uris, California Dental Association v. Federal Trade Commission: The Revenge of
Footnote 17, 8 SU P. CT. EC O N. REV. 265, 293-304 (2000) (collecting citations to empirical literature on the effect of
advertising restrictions in the pro fessions); In the Ma tter of Polygram Holding s, Inc., FTC Docket No. 9298 (F.T.C.
2003), at 38 n.52 (same).
21 Studies have found , for example, that the use of online con sumer-to-vendor matching services in the retail
auto industry have reduced prices to consumers by approximately two percent. See Fiona Scott Morton et al.,
Internet Car Retailing, 49 J. IN D U S. EC O N. 501 (20 01); Florian Zettelmeyer et al., Cow boys o r Cow ards: W hy Are
Internet Car Prices Lower? (2005), at http://flomac.haas.berkeley.edu/~florian/ Papers/selection.pdf.
subscription fee to participate in the program.18 A potential client who visits the matching
service’s website can review the material about attorneys, how they are recruited, and how the
matching service works. Interested consumers then post a listing with the service describing
their legal needs, which the service sends to all applicable participating attorneys. Attorneys 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 that may inform the client when
selecting counsel. With this information, the client determines which attorneys – 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 in finding
legal representation, which would likely increase competition among attorneys to provide legal
services. When consumers face large costs to obtain information about marketplace prices and
quality, businesses have less incentive to compete.19 A large amount of empirical research has
found that restrictions on advertising in professions lead to higher prices and either a negative or
no effect on quality.20 In the same way that advertising has been shown to benefit consumers of
professional legal services, online legal matching services may make it less expensive for
consumers to evaluate providers of legal services.21
It is unclear whether online legal matching services would be classified as referrals under
the Proposed Amendments since they appear only to set up a platform for attorneys to respond to
client requests rather than supply a recommendation. If the Bar is concerned that consumers may
be misled with respect to the pool of attorneys to which their requests are sent, there are less

Lilia Judson
May 11, 2007
Page 6 of 7
22 See Rule 7.2(c)(5).
restrictive alternatives than effectively barring such types of legal matching programs. For
example, a legal matching service working with Indiana 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. Further, the service could be required to explain how, if at all, it
limited attorney participation. Unless consumer harm has been demonstrated from legal
matching and referral services, the FTC Staff recommends that the Bar consider revising Rule 7.3
to clarify that attorneys may participate in these types of services.
The Substantiation Requirement for All Comparative
Advertisements May Prohibit Some Useful, Non-Deceptive Advertising
The FTC Staff is concerned about the effect of the Proposed Amendments’ presumption
that comparative claims are not misleading only if such claims can be “factually substantiated.”22
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 concern that unsubstantiated comparative
claims could mislead consumers about the results lawyers can achieve. But if that is the concern,
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, such as Proposed Amendments 7(c)(2) and
7(c)(6).
Conclusion
In conclusion, the FTC Staff believes that the Proposed Amendments are likely to
promote effective attorney advertising regulation by prohibiting deceptive and misleading
attorney advertising without imposing blanket prohibitions on forms of speech. We are
concerned, however, that while some restraints on solicitation may serve consumer interests,
others may impede consumer access to efficient attorney-matching programs, and that the
substantiation requirement on comparative advertisements may prohibit some useful, non-
deceptive advertising. Accordingly, we urge the Bar to modify the Proposed Amendments to
facilitate consumer access to useful information about legal services.

Lilia Judson
May 11, 2007
Page 7 of 7
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