FTC Staff Comment Before the New Jersey Supreme Courts Committee on Attorney Advertising Concerning Rules Governing Attorney Advertising

4 I
Federal Trade Commission
Office of the Rc~ional Director
26 F(:d~raJ Plaza, 22nd Fl.
~ew York, New York 10278
(212) 264-1200
COMMISSION AUTHORIlW 	~
November 	9, 	1987
Harold 	L. 	Rubenstein, 	Esq.
Secretary
New 	Jersey 	Supreme 	Court's 	Committee
on 	Attorney 	Advertising
Administrative 	Office 	of 	the 	Courts
Hughes 	Justice 	Complex 	- 	C.N. 	037
Trenton, 	New 	Jersey 	08625
Dear 	Mr. 	Rubenstein:
The 	Federal 	Trade 	Commission 	staff 	is 	pleased 	to 	submit
these 	comments 	regarding 	the 	Rules 	of 	professio~al Conduct
governing 	advertising 	by 	lawyers 	in 	New 	Jersey. 	We 	understand
that 	the 	Committee 	on 	Attorney 	Advertising 	is 	assessing 	the
likely 	effect 	of 	these 	rules 	on 	the 	availability 	of 	information
to 	consumers 	and 	on 	the 	cost 	and 	quality 	of 	legal 	services. 	We
also 	understand 	that, 	based 	on 	this 	evaluation, 	the 	Committee 	may
recommend 	modification 	of 	the 	rules 	to 	the 	New 	Jersey 	Supreme
Court.
In 	this 	letter, 	we 	focus 	on 	Rules 	of 	Professional
Conduct 	("RPC") 	7.1 	through 	7.5. 	These 	rules 	cover 	advertising,
communications 	regarding 	a 	lawyer's 	services, 	personal 	contact
with 	prospective 	clients, 	referrals 	and 	multi-disciplinary
practice, 	communication 	of 	fields 	of 	practice, 	and 	use 	of 	firm
names 	and 	letterheads. 	~e 	are 	concerned 	that 	some 	of 	the 	rules
may 	harm 	consumers 	by 	restraining 	price 	and 	service 	competition,
discouraging 	referrals 	and 	associations 	between 	attorneys,
restricting 	the 	development 	of 	innovative 	and 	efficient 	forms 	of
legal 	practice, 	and 	unnecessarily 	limiting 	the 	information
available 	to 	consumers. 	These 	restrictions 	do 	not 	appear 	to 	have
countervailing 	benefits 	that 	outweigh 	these 	undesirable 	effects.
1 	T!'lis 	letter 	presents 	the 	comments 	of 	the 	Federal 	Trade
Commission's 	New 	York 	Regional 	Office 	and 	the 	Bureaus 	of
Competition, 	Consumer 	Protection, 	and 	Economics. 	The 	views
expressed 	are 	not 	necessarily 	those 	of 	the 	Commission 	or 	of 	any
individual 	Commissioner, 	although 	the 	Co~mission (Commissioners
Bailey 	and 	Azcuenaga 	disser-ting) 	has 	voted 	to 	authorize 	the
presentation 	of 	these 	comments 	to 	you.
--------- ------ ~-

Harold 	L. 	Rubenstein, 	Esg. 	- 	2 	-
As 	discussed 	in 	more 	detail 	below, 	the 	Committee 	may
wish 	to 	recommend 	that 	the 	New 	Jersey 	Supreme 	Court: 	(1) 	clarify
and 	amend 	RPC 	7.I(a) 	to 	permit 	truthful, 	non-deceptive 	endorse-
ments 	and 	experience, 	success, 	and 	comparison 	claims, 	as 	well 	as
non-deceptive 	communications 	regarding 	legal 	fees; 	(2) 	clarify
and 	amend 	RPC 	7.2{a) 	to 	permit 	advertising 	in 	any 	media 	and 	to
ensure 	that 	attorneys 	will 	not 	be 	unnecessarily 	deterred 	from
advertising; 	(3) 	modify 	RPC 	7.2(c) 	to 	allow 	the 	payment 	of
referral 	fees 	to 	attorneys 	and 	the 	use 	of 	for-profit 	referral
services; 	(4) 	modlfy 	RPC 	7.3(a), 	(b), 	and 	(c) 	to 	remove 	unneces-
sary 	restrictions 	on 	sollcitation; 	(5) 	clarify 	or 	modify
RPC 	7.3{d) 	so 	as 	not 	to 	discourage 	referrals 	and 	associations 	of
attorneys 	in 	ditfere~t law 	firms 	for 	particular 	cases;
(6) 	eliminate 	the 	restrictions 	in 	RPC 	7.3{e) 	on 	practice 	with
non-lawyers 	and 	on 	lawyers 	influenclng 	the 	professional 	judgment
of 	other 	lawyers; 	(7) 	modify 	RPC 	7.4 	to 	allow 	non-deceptive
claims 	of 	certification 	and 	express 	and 	implied 	claims 	of
specialty; 	(8) 	modify 	RPC 	7.5 	to 	allow 	the 	use 	of 	non-deceptive
trade 	names 	and 	to 	eliminate 	unnecessary 	reguirements 	associated
with 	firm 	names 	and 	letterheads.
~e 	note 	that 	the 	Committee 	has 	been 	authorized 	by 	the
New 	Jersey 	Supreme 	Court 	to 	render 	advisory 	opinions 	and
formul3te 	guidelines 	with 	respect 	to 	the 	rules. 	In 	this
connection, 	we 	further 	suggest 	that 	the 	Committee 	consider
adopting 	the 	least 	restrictive 	ir.terpretation 	of 	the 	rules
consisten~ with 	facilitating 	truthful, 	non-deceptive 	advertising
and 	fair 	competition.
Interest 	and 	Experience 	of 	the 	Federal 	Trade 	Commission
For 	more 	than 	a 	decade, 	the 	Commission's 	staff 	has
conducted 	investigations 	concerning 	the 	effects 	of 	restrictions
on 	the 	business 	practices 	of 	State-licensed 	professionals,
including 	lawyers, 	accountants, 	dentists, 	physicians, 	non-
physici=n 	health-care 	providers, 	and 	others. 	The 	goal 	of 	the
Commission 	has 	been 	to 	identlfy 	and 	seek 	the 	removal 	of
restrictions 	that 	prevent 	professionals 	from 	advertising 	or
providing 	services 	desired 	by 	consumers 	without 	providing
countervalling 	benefits. 	we 	believe 	that 	the 	existing 	Rules 	of
Professional 	Conduct 	governing 	promotional 	activity 	by 	lawyers 	in
New 	Jersey 	may 	result 	in 	such 	adverse 	effects.

Harold 	L. 	Rubenstein, 	Esq.
The 	Benefits 	of 	Advertising
- 	3 	-
The 	beneficial 	effects 	of 	3dvertising 	and 	promotion 	are
wioely 	recognized. 	Truthful, 	non-deceptive 	promotional 	activity
communicates 	information 	about 	firms 	offering 	the 	services 	that
consumers 	may 	wish 	to 	purchase. 	Such 	lnformation 	helps 	consumers
make 	decisions 	that 	refl~ct 	their 	true 	preferences 	and 	promotes
the 	efficient 	delivery 	of 	services. 	Before 	advertising 	by
attorneys 	was 	permitted, 	many 	Americans 	may 	have 	failed 	to 	obtain
the 	servises 	ot 	an 	attorney, 	even 	when 	tney 	had 	s~rious legal
probl~ms,~ because 	they 	feared 	that 	legal 	representation 	would
cost 	too 	much 	or 	because 	they 	were 	unable 	to 	locate 	a 	lawyer
sufficiently 	sKIlled 	at 	handling 	their 	particular 	problems. 3 	A
recent 	empirical 	study 	suggests 	that 	the 	removal 	of 	restrictions
on 	the 	dissemination 	of 	truthful 	information 	about 	lawyers 	and
legal 	s~rvices will 	tend 	to 	enhance 	competition 	and 	lower
prices. 4
Because 	the 	free 	flow 	of 	commercial 	information 	is
vital 	to 	a 	market 	economy, 	restrictions 	on 	that 	flow 	may 	under-
mine 	economic 	efficiency. 	The 	use 	of 	advertising 	has 	the 	effect
of 	facilitating 	entry 	into 	the 	different 	markets 	for 	professional
services 	and 	ultimately 	leads 	to 	lower 	prices. 	See 	American
Medical 	Association, 	94 	r.T.C. 	7Cl, 	1005 	(1979),-aTf'd, 	63e 	F.2d
443 	(20 	Clr. 	1980), 	aff'd 	memo 	bv 	an 	e 	uallv 	divide~ Court, 	455
U.S. 	676 	(1982). 	In 	the 	lega 	pro 	eSS1on, 	aaVert1S1ng 	1S 	most
2 For 	example, 	a 	natiOnw1oe 	survey 	in 	191~ 	by 	the 	Ameri=an 	Bar
Foundation 	and 	the 	American 	Bar 	~ssociation found 	that 	only 	nine
percent 	of 	the 	people 	who 	had 	property 	damage 	problems, 	ten
percent 	of 	those 	who 	had 	landlord 	problems, 	and 	one 	percent 	of
those 	who 	felt 	that 	they 	were 	the 	victims 	of 	employment 	discrim-
ination 	sought 	~he 	services 	of 	an 	attorney 	after 	the 	most 	recent
occurrence. 	B. 	Curran, 	The 	Leoal 	Needs 	of 	the 	Public: 	The 	Final
Recort 	of 	a 	~a:ional 	Survey 	IJ; 	;~~II).
3 	Ie. 	at 	228, 	231.
4 	Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	I~Froving Cons~mer Ac=ess 	to 	Legal 	Services:
7he 	Case 	for 	Removing 	Restrictior.s 	o~ 	~ruthful Aovertising 	(1984)
[hereinafter 	CO~SUffier ~CC~5S 	to 	~egal Ser.ices).

Harold 	L. 	Rubenstein, 	Esq. 	- 	4 	-
often 	used 	by 	newlS-licensed 	lawyers 	who 	lacK 	the 	client 	base 	of
established 	firms. 	The 	effective 	use 	of 	advertising 	helps 	firms
in 	the 	legal 	profession 	to 	achieve 	a 	sufficient 	level 	of 	output
to 	exploit 	economies 	of 	scale 	and 	lower 	production 	costs, 	such 	as
through 	the 	wse 	of 	com?uterization, 	standardized 	forms, 	and
specialization. 6
Although 	concern 	has 	been 	voiced 	that 	advertising 	may
lead 	to 	lower 	quality 	l~gal 	services, 	the 	empirical 	evidence
suggests 	that 	the 	quality 	of 	legal 	services 	provided 	by 	flrms
that 	advertise 	is 	at 	least 	as 	high 	as, 	lf 	not 	higher 	than, 	that 	-.
provided 	by 	firms 	that 	do 	not 	advertise. 7
RPC 	7.1: 	Communications 	Concerning 	a 	Lawyer's 	Service
We 	fully 	endorse 	the 	general 	vi~w embodied 	in 	RPC 	7.1
that 	false 	and 	deceptive 	communications 	should 	be 	prohibited.
Nonetheless, 	as 	set 	forth 	below, 	we 	believe 	that 	the 	specific
definition 	of 	"false 	or 	misleading" 	contained 	in 	the 	rule 	may
prohibit 	many 	truthful, 	non-deceptive 	communications, 	which 	would
limit 	the 	ben~fits discussed 	above.
RPC 	7. 1 ( 3) ( 2 ) : 	"Unjustified 	Expectations"
R?C 	7.1 	defines 	a 	comm~~ication 	as 	false 	and 	misleading
if 	it 	"is 	likely 	to 	cr~ate an 	unjustified 	expectation 	about
5 See 	McChesney, 	Commercial 	Speech 	in 	the 	Frofessions: 	The
Supreme 	Court's 	Unanswered 	QueStlons 	and 	Qu~stlonable Answers,
134 	U. 	Pa. 	L. 	Rev. 	25, 	86-92 	(1965) 	(detaiilng 	surveys 	snowlng
that 	acvertising 	is 	most 	often 	used 	by 	s~aller 	firms 	and 	younger
attorneys).
6 See 	Consumer 	Access 	to 	Legal 	Services, 	suora 	note 	4, 	at 	63-65
(describing 	operations 	of 	high 	volume 	legal 	cllnics 	that
advertise). 	Moreover, 	firms 	that 	are 	una~le 	to 	advertise 	are
forced 	to 	expend 	greater 	resources 	on 	less 	efficient 	forms 	of
promotion, 	and 	thereby 	increase 	production 	costs. 	See 	McChesnev,-- 	.suora 	note 	5, 	at 	66-80.
7 Muri~ 	& M=Chesn~y, 	Adv~rtisi~? 	and 	the 	Price 	and 	Qualit v 	of
Leaal 	Services: 	T~~ 	Case 	tor 	Lee:l 	Cll~ics, 	1979 	Am. 	B. 	Found.
Resear=n 	..J • 	.J./~.

i
Harold 	L. 	RUbenst~in, 	Esg. 	- 	5 	-
results 	the 	lawyer 	can 	achieve.. 	"An 	identical 	provision
is 	contained 	in 	ABA 	Model 	Rule 	7.1. 	The 	ABA 	comments 	with
respect 	to 	the 	provision 	state: 	"The 	prohibition 	in 	paragraph
(b) 	of 	statements 	that 	may 	create 	'unjustified 	expectations'
would 	ordinarily 	preclude 	advertisements 	about 	results 	obtained
on 	behalf 	of 	a 	client, 	such 	as 	the 	amount 	of 	a 	damage 	award 	or
the 	lawyer's 	record 	in 	obtaining 	favorable 	verdicts, 	and 	adver-
tisements 	containing 	client 	endorsem~nts."
The 	comments 	suggest 	that 	information 	about 	past
results 	"may 	create 	the 	unjustified 	expectation 	that 	similar
results 	can 	be 	obt~ined for 	others 	without 	reference 	to 	the
specific 	factual 	and 	legal 	circumstances." 	This 	interpretation
of 	the 	phrase 	"likely 	to 	create 	an 	unjustified 	expectation" 	is 	so
broad 	that 	it 	could 	chill 	the 	use 	of 	much 	advertising 	that 	is
truthful 	and 	beneficial 	to consumers. 	For 	example, 	consumers 	may
wish 	to 	consider 	an 	attorney's 	past 	results 	as 	one 	of 	several
factors 	in 	selecting 	a 	lawyer. 	While 	it 	may 	be 	impossible 	to
provide 	com~lete information 	about 	prior 	cases 	in 	an 	advertise-
ment, 	there 	is 	no 	reason 	to 	believe 	an 	advertisement 	of 	prior
experience 	could 	not 	be 	presented 	in 	a 	way 	that 	is 	not 	decep-
tive. 	Information 	that 	is 	less 	than 	complete 	may, 	nonetheless,
not 	be 	misleading 	as 	long 	as 	it 	does 	not 	omit 	material 	facts. 	As
the 	United 	States 	Supreme 	Court 	observed 	in 	Bates 	v. 	State 	Bar 	of
Arizona, 	433 	u.S. 	350, 	374 	(1977), 	"it 	seems 	peculiar 	to 	deny 	the
consume~, on 	the 	ground 	~hat 	the 	information 	is 	incompl~te, at
leas~ some 	of 	the 	relevant 	information 	needed 	to 	reach 	an
informed 	decision."
Adver~ising by 	means 	of 	testimonials 	and 	endorsements
has 	tracitionally 	been 	recognized 	as 	effective 	by 	sellers 	of
goocs 	and 	services. 	For 	example, 	the 	listing 	of 	certain 	clients
such 	as 	major 	banks 	or 	corporatior.s 	in 	the 	Martindale-Hubbell
directory 	suggests 	that 	a 	firm 	can 	handle 	complicated 	legal
problems 	in 	which 	large 	sums 	of 	money 	may 	be 	at 	risk. 	Advertis-
ing 	in 	which 	clients 	attes: 	truthfully 	that 	they 	use 	a 	firm's
legal 	services 	provides 	the 	general 	public 	the 	s~me 	information
that 	is 	available 	to 	users 	of 	legal 	directories. 	Advertising 	in
which 	=lients 	discuss 	their 	reasons 	for 	satisfaction 	witn 	a 	law
firm 	conveys 	even 	more 	information 	than 	do 	legal 	directories. 	An
advertisement 	in 	which 	a 	famous 	athlete 	or 	actor 	states 	truth-
f~lly 	t~at 	he 	or 	she 	uses 	a 	particular 	firm 	or 	attorney 	indicates
to 	consumers 	that 	someone 	who 	can 	soend 	a 	substantial 	sum 	to 	find
a 	good 	attorney, 	and 	who 	may 	have 	significant 	assets 	at 	stake,
believes 	a 'particular 	lawyer 	to 	be 	effective. 	Testimonials 	are
not 	necessarily 	misleading 	and 	may 	be 	effe~tive in 	attracting 	and
retaining 	consur.er 	interest 	in 	the 	acve~tiser's message.

.' (
Harold 	L. 	Rubenstein, 	Esq. 	- 	6 	-
In 	short, 	we 	believe 	that 	advertisements 	containing
client 	endorsements 	or 	information 	about 	past 	successes 	can 	be
presented 	in 	ways 	not 	likely 	to 	create 	unjustificd 	expecta-
tions. 	The 	Committee 	may 	wish 	to 	consider 	recommending 	modifica-
tions 	of 	RPC 	7.l(a)(2) 	that 	would 	make 	it 	clear 	that 	communi-
cations 	containing 	truthful 	and 	non-deceptive 	endorsements,
testimonials, 	and 	statements 	of 	attorneys' 	prior 	results 	are
permitted.
RPC 	7.l(a)(3): 	Comparative 	Communications
RPC 	7.l(a)(3) 	provides 	that 	a 	lawy~r 	shall 	not 	compare
"the 	lawyer's 	service 	with 	other 	lawyers' 	scrvices." 	This 	broad
prohibition 	precludes 	communication 	of 	lnformation 	that
accurately 	compares 	the 	characteristics 	of 	competing 	lawyers 	and
law 	firms. 	If 	such 	comparative 	information 	were 	permitted, 	it
may 	encourage 	improvement 	and 	innovation 	in 	the 	delivery 	of
services 	and 	assist 	consumers 	in 	making 	rational 	purchase
decisions. 	Of 	course, 	comparisons 	containing 	false 	or 	deceptive
statements, 	e~ther 	about 	the 	advertiser 	or 	a 	competitor, 	can 	be
harmful. 	However, 	such 	statements 	already 	are 	prohibited 	by 	RPC
7.l(a)(l).8
We 	note 	that 	ABA 	Model 	Rule 	7.l(c) 	would 	only 	prohibit
comparative 	claims 	where 	the 	comp~rison cannot 	be 	"factually
substantiated." 	~e 	believe 	that 	the 	A3A's 	less 	restrictive
8 RPC 	7.l(~·)(1) 	defines 	a 	communication 	as 	false 	or 	misleajing
if 	it 	"contains 	a 	material 	misrepresentation 	of 	fact 	or 	law, 	or
omits 	a 	f:ct 	necessary 	to 	maKe 	:~e 	Stat~~ent 	considered 	as 	a
whole 	not 	ma:erlally 	misleading."
r 	~~~ _-.- 	-".~~__--... 	~_~_~ 	_

".
Harold 	L. 	Rubenstein, 	Esq. 	- 	7 	-
provision 	is 	still 	unnecessarily 	broad, 	and 	that 	it 	may 	in 	fact
preclude 	or 	discourage 	useful 	comparative 	information. 9 	In 	this
connection, 	we 	recognize 	that 	some 	comparative 	statements 	may 	not
be 	readily 	amenable 	to 	empirical 	verification. 	Examples 	of 	such
claims 	are 	"friendlier 	service" 	or 	"more 	convenient 	hours." 	Even
though 	such 	statements 	are 	not 	readily subject 	to 	verification,
however, 	they 	may 	be 	truthful 	and 	non-deceptive, 	and 	indicate
qualiti~s that 	may 	be 	important 	to 	consumers. 	Moreover, 	such
communications 	can 	attract 	consumers' 	attention 	to 	the
advertising 	attorney. 	Even 	communication 	that 	is 	designed 	only
to 	attract 	att~ntion can 	inform 	consumers 	of 	a 	lawyer's 	presence
in 	a 	community, 	Which 	is 	itself 	useful 	information.
A requirement 	of 	factual 	substantiation 	for 	all 	such
statements 	would 	be 	broader 	than 	necessary 	to 	prevent
deception. 	The 	Commission 	generally 	requires 	that 	advertisers
have 	a 	"reasonable 	basis" 	for 	any 	objectively 	verifiable 	and
material 	claims 	that 	they 	make, 	because 	the 	act 	of 	maKing 	such 	a
~laim 	im?lies 	some 	basis 	for 	it, 	and 	consumers 	~ould 	be 	deceived
If 	a 	reasonable 	level 	of 	support 	were 	lacking. lU 	However,
subjective 	claims 	do 	not 	similarly 	imply 	that 	substantiation
exists, 	and 	so 	may 	be 	made 	without 	it.
9 In 	a 	statement 	of 	policy 	regarding 	comparative 	advertising,
the 	federal 	Trade 	Commission 	recognized 	the 	benefits 	of
comparative 	advertising 	and 	indicated 	concern 	about 	standards 	set
by 	sel:-regulatory 	bodies 	that 	might 	discourage 	the 	use 	of 	such
advertising:
On 	occ~sion, 	a 	higher 	standard 	of 	substantiation 	by
advertisers 	~sing 	comparative 	advertising 	has 	been
re~uired ~y 	self-regulation 	entities. 	The 	Commission
evaluates 	comoarative 	acvertisina 	in 	the 	same 	manner 	as
it 	evaluates 	all 	ether 	advertisi~g techniques.
[I)nter~retations that 	impose 	a 	higher 	standard 	of
substantiation 	for 	comparative 	claims 	than 	for
unilateral 	claims 	are 	inappropriate 	and 	should 	be
revised.
16 	C.F.R. 	§ 	l4.15(c)(2) 	(1987).
10 	S~~ 	FTC 	Policy 	Statement 	~ec3rding Advertising
Su=s~~iation, 104 	f.T.C. 	839 	(1954).

- Harold 	L. 	Rubenstein, 	Esq. 	- 	8 	-
Accordingly, 	the 	Co~mittee may 	wish 	to 	recommend 	that
tte 	prohibition 	on 	comparative 	claims 	be 	removed, 	and 	replaced 	by
requirements 	that 	an 	attorney 	have 	a 	reasonable 	basis 	for 	any
material 	objective 	claims, 	and 	tnat 	such 	claims 	be 	truthful 	and
non-deceptive.
RPC 	7. 1 ( a ) ( 4 ) : 	Fee 	Advertis.i.ng
The 	current 	Rule 	limits 	permissible 	communications
relating 	to 	legal 	fees, 	and 	may 	essentially 	prohibit
communications 	concerning 	reduced 	or 	promotional 	prices. 	For
example, 	RPC 	7.1(a)(4) 	appears 	to 	preclude 	lawyers 	from 	maKing
non-deceptive 	offers 	of 	short-term 	"reduced 	fees" 	during 	periods
when 	tney 	have 	extra 	time. 	A tax 	attorney 	might 	want 	to 	offer
reduced 	fees 	on 	tax 	preparation 	for 	a 	few 	weeKs 	prior 	to 	the
busiest 	tax 	season; 	an 	attorney 	might 	want 	to 	offer 	for 	a 	week 	a
"special 	low 	price" 	on 	preparation 	of 	a 	will. 	A new 	attorney
might 	want 	to 	announce 	the 	opening 	of 	his 	or 	her 	practice 	with
"special 	introductory 	fees." 	Under 	RPC 	7.l(a)(4) 	attorneys 	may
not 	be 	permitted 	to 	communicate 	such 	information 	to 	consumers.
They 	may 	be 	precluded 	or 	deterred 	from 	communicating 	and
employing 	promotional 	prices, 	even 	where 	such 	activity 	would
facilitate 	efforts 	to 	enter 	the 	legal 	market 	or 	to 	introduce 	new
and 	innovative 	services.
Tne 	Supreme 	Court 	has 	characterized 	price 	competition
as 	the 	"central 	nervous 	system" 	of 	the 	marketplace,ll 	with 	price
restraints 	ge£2rally 	res~rded as 	having 	a 	"pernicious 	effect 	on
competition." 	In 	this 	connection, 	several 	recent 	Court
decisions 	articulated 	pel icy 	considerations 	that 	appear 	relevant
to 	the 	Committee's 	deliberations. 	~he 	Court 	has 	rejected 	effo:~s
to 	justify 	restrictions 	on 	price 	competition 	and 	price 	advert:s-
11 United-States 	v. 	Socony-Vacuum 	Oil 	Co., 	310 	U.S. 	150, 	226
n.59 	(1940).
12 ~crt:-Jer:1 Pac. 	Ry. 	Co. 	v. 	United 	St.-:t'::s, 	356 	u.S. 	1, 	5 	(1958) .
.- .-...,.. -- .... - - --_.--,.......-."...-=---- ~......-.._ .......,>.,."',..-- ~----

, .
Harold 	L. 	Rubenstein, 	Esq. 	- 	9 	-
ing 	by 	professionals 	on 	the 	ground 	that 	such 	activity 	is
"unprofessional."13 	In 	its 	Virginia 	State 	Board 	of 	Pharmacy
decision,14 	the 	Court, 	While 	recognizing 	the 	state's 	authority 	to
protect 	the 	public 	health 	and 	welfare, 	struck 	down 	restrictions
on 	prescription 	drug 	price 	advI~tising by 	pharmacists. IS 	In
nates 	v. 	State 	Bar 	of 	Arizona, 	the 	Court 	found 	that 	the
advertisement 	of 	"very 	reasonable" 	prices 	for 	legal 	services 	was
not 	mislegding 	and 	was 	within 	the 	scope 	of 	First 	Amendment
protection. 	In 	so 	ruling 	the 	Court 	made 	reference 	to 	empirical
13 See, 	e.g., 	National 	Soc'y 	of 	Professional 	Englrs 	v. 	United
States, 	435 	U.S. 	679 	(1978) 	(ethical 	restriction 	on 	competitive
bidding 	b~ 	engine~r held 	anticompetitive 	"on 	its 	face"): 	Bates 	v.
State 	Bar 	of 	Ariz., 	433 	U.S. 	350 	(1977) 	(state 	supreme 	court
prOhibition 	on 	attorney 	advertising 	condemned); 	Virginia 	State
Bd. 	of 	Pharmacy 	v. 	Virginia 	Citizens 	Consumer 	Council, 	Inc.,
425 	U.s. 	748 	(1976) 	(restrictions 	on 	prescription 	drug 	price
advertising 	by 	phar~acists 	unjustified).
14 425 	u.S. 	748 	(1976).
15 The 	contention 	that 	price 	advertising 	by 	pharmacists 	~as
"unprofessional" 	and 	that 	it 	might 	prompt 	consumers 	to 	shop
around, 	thus 	injuring 	the 	pharmacist-customer 	relationship, 	was
rejected 	as 	a 	basis 	for 	depriving 	consumers 	of 	valuable 	prlce
informa~ion. 	As 	the 	Supreme 	Court 	stated, 	the 	better 	alternative
to 	this 	"highly 	paternalistic 	approach" 	is 	to 	assume 	that 	price
information
is 	not 	in 	i~self harmful, 	that 	people 	will 	perceive
their 	own 	best 	interests 	if 	only 	they 	are 	well 	enough
informed, 	and 	that 	the 	best 	means 	to 	that 	end 	is 	to 	open
the 	channels 	of 	communication 	rather 	than 	to 	close
them. 	If 	they 	are 	truly 	open, 	nothing 	prevents 	the
"professional" 	pharmacist 	from 	marketing 	his 	own
assertedly 	superior 	product, 	and 	contrasting 	it 	with
that 	of 	the 	low-cost, 	high-volume 	prescription 	drug
retailer.
425 	U.S. 	at 	770.
16
--:-'----- --
433 	U.S. 	350 	(1977).
"'c, ~ , _ )54JE!i r-t!."ri:--._ .4i

Harold 	L. 	Rubenstein, 	Esq. 	- 	10 	-
Consu~er 	Access 	to 	Legal 	Services, 	suora 	note 	4, 	at 	126.
studies 	that 	suggest 	a 	strong 	association 	between 	price
advertising 	for 	certain 	products 	and 	lower 	retail 	prices. 17 	As
noted 	previously, 	a 	recent 	FTC 	study 	resulted 	in 	"convincing
support 	for 	the 	proposition 	that 	greater 	flexibility 	to 	engage 	in
non-deceptive 	advertising 	will 	be 	associated 	with 	lower 	prices
for 	consumers 	of 	legal 	services. nlB
We 	suggest 	that 	the 	Committee 	exercise 	caution 	before
placing 	restrictions 	on 	price 	information. 	Of 	course, 	it 	is 	well
recogniz~d that 	communications 	relating 	to 	fees 	that 	are 	false 	or
misleading, 	such 	as 	"bait 	and 	switch" 	tactics 	or 	similar 	decep-
tive 	practices, 	should 	be 	prohibited 	because 	they 	would 	harm
consumers. 	RPC 	7.1(a)(1) 	contains 	such 	a 	prOhibition. 	RPC
7.l(a)(4), 	however, 	precludes 	tru~hful, non-deceptive
communications 	relating 	to 	legal 	fees. 	This 	restriction 	is
detrimental 	to 	consumers 	to 	the 	extent 	that 	it 	deters 	lawyers
from 	communicating 	useful 	price 	information 	and 	from 	offering
reduced 	fees.
RPC 	7.2: 	Advertising
Rule 	7.2, 	which 	regulates 	attorney 	advertising, 	was 	the
subject 	of 	the 	New 	Jersey 	Supreme 	Court's 	decision 	in 	In 	re
Felmeister 	& Issacs, 	104 	N.J. 	515 	(1986). 	In 	Felmeister 	the
Court 	(a) 	unanimously 	decided 	to 	retain 	a 	prohlbition 	against 	the
use 	of 	dr~wings, animations, 	dramatization, 	music 	or 	lyrics 	in
television 	advertising, 	while 	rejecting 	this 	prohibition 	for 	non-
television 	advertising; 	and 	(b) 	unanimously 	rejected 	a 	require-
ment 	that 	all 	attorney 	advertising 	be 	"dignified." 	A majority 	of
the 	Court 	went 	on 	to 	adopt 	a 	req~irement 	that 	all 	attorney
advertising 	be 	"predominantly 	informational." 	Although 	the
majority 	decision 	by 	Chief 	Justice 	Wilentz 	emphasized 	that 	this
formulation 	"is 	tentative 	and 	subject 	to 	change 	based 	on 	future
experience," 	l04 	N.J. 	at 	518, 	the 	Court 	expressed 	the 	view 	that
:his 	standard 	would 	serve 	the 	state's 	interest 	in 	"assuring 	that
citizens' 	decisions 	about 	their 	need 	for 	counsel 	and 	their
selection 	of 	counsel 	are 	rationally 	rather 	than 	emotionally
17 Bates, 	433 	U.S. 	at 	377. 	The 	Court 	cited 	the 	following
authorities: 	J. 	Cady, 	Restricted 	Advertising 	and 	Competition:
Tje 	Case 	of 	Retail 	Drugs 	(1976); 	Senham, 	The 	Effect 	of
AcvertisinG'on 	the 	Price 	of 	Eyeglasses, 	15 	J. 	Law 	& Econ. 	337
(19i2).
18

• !
.,
Harold 	L. 	Rubenstein, 	Esq.
-...
- 	11 	-
determined." 	104 	N.J. 	at 	535. 	A dissent 	by 	Justice 	Handler
rejected 	this 	"predominantly-rational-informational" 	standard 	as
unworkable, 	unnecessary, 	unwise 	and 	constitutionally 	suspect.
We 	~gree 	with 	the 	Courtls 	rejection 	of 	the 	"dignity"
standard, 	but 	w~ 	question 	the 	decision 	to 	restrict 	television
advertising. 	We 	also 	question 	the 	wisdom 	of 	the 	predominantly
informational 	standard 	tor 	many 	of 	the 	sa~e 	reasons 	expressed 	by
the 	dissent. 	We 	discuss 	below 	these 	and 	other 	aspects 	of 	RPC 	7.2
regarding 	advertising.
RPC 	7.2(a}: 	Permissible 	Advertising 	Media 	and
Restrictions 	Relating 	to 	Television
RPC 	7.2(a} 	perm~ts, 	subject 	to 	certain 	qualifications,
attorney 	advertising 	through 	"public 	media, 	such 	as 	a 	telephone
directory, 	legal 	directory, 	newspaper 	or 	other 	periodical, 	radio
or 	television, 	or 	through 	mailed 	written 	communication."
Attorneys 	may 	interpret 	the 	list 	of 	media 	in 	RPC 	7.2(a) 	as
exclusive 	and 	conclude 	that 	advertising 	in 	media 	not 	listed 	is
prohibited. 	If 	so, 	the 	listing 	of 	specific 	media 	that 	may 	be
used 	in 	advertising 	could 	discourage 	innovation 	in 	ways 	not
intended, 	especially 	since 	the 	phrase 	"public 	media" 	is
ambiguous. 	For 	example, 	the 	rule 	might 	be 	interpreted 	to
prohibit 	sponsorship 	of 	mus~um ex~ibits or 	youth 	sports 	teams.
In 	addition, 	the 	specificity 	of 	the 	rule 	does 	not 	appear 	to
anticipate 	changing 	technologies. 	Thus, 	for 	example, 	the 	rule
might 	be 	interpreted 	to 	exclude 	advertising 	in 	computer 	bulletin
boards, 	on-line 	directories, 	or 	similar 	media 	that 	may 	become
inc~easingly important 	as 	electronic 	communication 	becomes 	more
common. 	Therefore, 	the 	Committee 	may 	wish 	to 	consider
recommending 	clarification 	or 	modification 	of 	RPC 	7.l(a) 	to 	avoid
this 	problem.
Pursuant 	to 	the 	Felmeister 	decision, 	RPC 	7.2(a}
continues 	to 	prohibit 	the 	use 	of 	drawings, 	animations, 	dramati-
zation, 	music, 	or 	lyrics 	in 	television 	advertising. 	We 	believe
this 	prohibition 	may 	deprive 	consumers 	of 	the 	benefits 	of 	adver-
tising 	techniques 	that 	have 	proven 	effective 	in 	marketing 	goods
and 	services. 	The 	current 	prohibition 	would 	preclude 	a 	vast
array 	of 	useful 	television 	advertising 	tec~niques. 	A musical
slogan 	or 	an 	lmage 	of 	animated 	charaCters 	may, 	for 	instance,
enhance 	consumer 	retention 	of 	information 	in 	an 	advertisement.
In 	addition, 	it 	can 	serve 	as 	a 	unifying 	theme 	for 	a 	firm's
advertising 	campaign, 	linking 	the 	firm's 	various 	advertisements
in 	the 	cons~mer's mind, 	and 	thereby 	increasing 	the 	impact 	of

Harold 	L. 	Rubenstein, 	Esq. 	- 	12 	-
advertising. 19 	A musical 	soundtracK 	may 	draw 	and 	retain
consumers' 	interest 	in 	an 	advertis~ment. 	A dramatization 	may
convey 	an 	image 	to 	which 	consumers 	in 	need 	of 	legal 	assistance
can 	relate.
Any 	danger 	to 	consumers 	that 	might 	result 	from 	the
prohibited 	advertising 	appears 	to 	be 	largely 	speculative. 	The
desirability 	and 	need 	for 	bringing 	information 	to 	consumers
regarding 	the 	availabi~ity of 	legal 	services 	is, 	on 	the 	other
hand, 	well-documented.~O 	Accordingly, 	we 	believe 	the 	existing
restrictions 	o~ 	television 	advertising 	are 	contrary 	to 	consumers'
interests.
RPC 	7.2(a): 	"Predominantly 	Informational"
Standard 	Replaces 	"Dignity~ Standard
In 	replacing 	the 	"dignity" 	standard 	with 	a 	"predomi-
nantly 	informational" 	standard, 	the 	New 	Jersey 	Supreme 	Court 	in
Felmeister 	stated 	that 	"if 	necessary, 	we 	may 	adopt 	the 	dignity
standard 	in 	the 	future." 	104 	N.J. 	at 	548. 	Advertising 	that 	is
not 	false 	or 	deceptive, 	even 	t~ough viewed 	by 	some 	as 	lacking 	in
dignity, 	non~theless may 	assist 	consumers 	in 	choosing 	legal
services 	that 	best 	suit 	their 	needs. 	For 	example, 	some 	lawyers
consider 	the 	acvertisement 	of 	holiday 	discounts 	on 	legal 	services
to 	be 	undignified. 	However, 	an 	advertisement 	offering 	a 	reduced
price 	on 	legal 	services 	provides 	information 	that 	consumers
concerned 	about 	the 	cost 	of 	legal 	services 	might 	find 	very
us:ful.
Whether 	an 	advertisement 	is 	"dignified" 	is 	a 	matter 	of
the 	viewer's 	individual 	standards. 	It 	is 	virtually 	impossible 	to
write 	a 	definition 	of 	"dignified" 	tnat 	will 	encompass 	every
consumer's 	definition. 	As 	the 	ABA 	states 	in 	its 	comment 	to 	Model
Rule 	7.2, 	"[q]uestions 	of 	effectiveness 	and 	taste 	in 	advertising
are 	matters 	of 	spec~lation a~d 	subjective 	judgment." 	Last 	year,
the 	ABA's 	Commission 	on 	Advertising 	considered 	a 	proposal 	to
issue 	guidelines 	on 	dignity 	in 	lawyer 	advertising. 	The
Commission 	rejected 	the 	proposal 	because 	of 	the 	difficulty 	of
defining 	dignity. 	Attorneys 	may 	not 	be 	able 	to 	determine 	whether
a 	particular 	advertisemen~ co~ld 	be 	considered 	undignified 	and
may 	therefore 	abandon 	a 	proposed 	advertisement 	even 	though 	it
would 	be 	allowed.
19
20
p.
L. 	Andrew, 	Birt.h 	of 	A Sales:r.an 	3,; 	(1960).
Se~, 	e.a., 	discussion 	of 	"~~e 	Benefits 	of 	Advertising" 	at
3-:-5uFra, 	and 	ii,aterial5 	ci~-:j 	tnerei.:1.

Harold 	L. 	Rubenstein, 	Esq. 	- 	13 	-
The 	"predominantly 	informational" 	standard 	embodied 	in
RPC 	7.2(a) 	may 	be 	considered 	less 	ambiguous 	than 	the 	dignity
standard, 	but 	it 	too 	may 	prevent 	or 	discourage 	useful, 	non-
deceptive 	advertising. 	The 	New 	Jersey 	Supreme 	Court 	in
Felmeister 	nonetheless 	adopted 	this 	standard 	based 	on 	what 	it
considered 	an 	overriding 	state 	interest 	in 	ensuring 	that
consumers 	make 	"rational" 	decisions 	in 	selecting 	legal 	counsel.
We 	believe 	that 	the 	drawbacks 	associated 	with 	the 	"predominantly
informational" 	standard 	far 	outweigh 	any 	benefits. 	The 	general
ambiguity 	of 	the 	"predominantly 	informational" 	standard 	may 	chill
useful, 	non-decep~ive advertising, 	including 	advertising 	that 	may 	~.
convey 	some, 	albeit 	not 	a 	"predominant" 	amount 	of 	information.
In 	addition, 	it 	is 	recognized 	that 	the 	aspects 	of 	advertising
that 	may 	be 	regarded 	by 	some 	as 	non-informational 	may 	be 	most
effective 	in 	reaching 	some 	consumers 	who 	might 	not 	otherwise
obtain 	needed 	legal 	services.
RPC 	7. 2 ( c ) : 	Lawyer 	Referral 	Services
RPC 	7.2(c) 	appears 	to 	preclude 	the 	use 	of 	for-profit
lawyer 	referral 	services. 	Such 	organizations 	enable 	lawyers 	to
pool 	their 	advertising 	resources 	while 	maintaining 	independent
practices. 	Consumers 	in 	need 	of 	legal 	advice 	on 	a 	particular
subject 	may 	benefit 	from 	the 	knowledge 	such 	services 	pO~3e~s
about 	the 	particular 	ex?er:ise 	of 	each 	member 	attorney. 	ror-
profit 	referral 	services 	may 	be 	able 	to 	provide 	more 	useful
information 	to 	consumers 	than 	non-profit 	bar 	association 	referral
services, 	which 	may 	be 	obliged 	to 	give 	ref~rra15 on 	an 	equal
basis 	to 	all 	attorneys.
RPC 	7.2(c) 	also 	ap?ears 	to 	prOhibit 	the 	payment 	of 	fees
to 	lawyers 	who 	refer 	prospective 	clients 	to 	other 	lawyers. 	This
prohibition 	is 	discussed 	below 	in 	connection 	with 	RPC 	7.3(d),
which 	also 	prohibi:s 	referral 	fees.
R?C 	7.3: 	Personal 	Contact 	with 	P:os?e~tive Clients
RPC 	7.3 	regulates 	direct 	client 	solicitation 	and
matters 	that 	may 	influence 	a 	lawyer's 	independent 	judgment. 	As
discussed 	below, 	several 	aspects 	of 	this 	rule 	a?pear 	to 	be 	unduly
restrictive 	and 	may 	preclude 	or 	in~ibit useful 	contacts 	with
prospective 	clients 	and 	various 	procompetitive 	pra=tices.
RPC 	7.3(a) 	and 	(b): 	Direct 	Solicitation
RPC 	7.3(a) 	permits 	Olrect 	solicitation 	of 	prospective
clients 	subject 	to 	restrictions 	set 	forth 	in 	RPC 	7.3(b). 	The
restric:ions, 	which 	are 	intended 	to 	prevent 	abusive 	solicita-

· 	Harold 	L. 	Rubenstein, 	Esq. 	- 	14 	-
tions, 	preclude 	certain 	written 	and 	other 	contacts 	with 	prospec-
tive 	clients. 	Although 	RPC 	7.3 	reflects 	the 	benefits 	of 	allowing
communications 	between 	lawyers 	and 	potential 	clients, 	the
restrictions 	in 	RPC 	7.3(b) 	appear 	to 	be 	overbroad. 	Specifically,
and 	as 	discussed 	further 	below, 	we 	believe 	that 	the 	rule 	may 	not
ffi~Ke clear 	and 	appropriate 	distinctions 	between 	written,
telephone 	or 	in-person 	solicitation. 	The 	rule 	also 	contains
problematic 	and 	ambiguous 	standards 	which 	may 	be 	subject 	to
unduly 	restrictive 	interpretations. 	In 	general, 	we 	believe 	that
RPC 	7.3(b) 	may 	deprive 	consumers 	of 	helpful 	information 	about 	the
nature 	and 	availability 	of 	legal 	services, 	and 	that 	any 	potential
abuses 	can 	be 	effectively 	prevented 	through 	more 	limited 	and
specific 	regulatory 	provisions.
Written 	communications 	from 	lawyers 	may 	provide 	useful
information 	to 	prospectiv~ clients. 	For 	example, 	by 	targeting
letters 	to 	a 	particular 	audience, 	the 	lawyer 	can 	provide 	informa-
tion 	to 	those 	consumers 	who 	are 	most 	likely 	to 	need 	legal
services 	and 	to 	benefit 	from 	information 	about 	what 	services 	are
available, 	Spencer 	v. 	Honorable 	Justices 	of 	the 	Supreme 	Court 	of
Pennsylvania, 	579 	F. 	Supp. 	88U, 	891 	(£.0. 	Pa. 	1984), 	aff'd 	mem.,
760 	F.2d 	261 	(3d 	Cir. 	1985), 	and 	who 	may 	need 	to 	have 	a 	lawyer
take 	action 	expeditiously 	on 	their 	behalf. 	See 	also 	Adams 	v.
Attornev 	Registration 	and 	Disciplinary 	CommiSSlon, 	801 	F.2a 	968,
973 	(7tn 	Cir. 	1966), 	and 	Koffler 	v. 	Joint 	Bar 	Association, 	51
N.Y.2d 	140, 	146, 	412 	N.E.2d 	927, 	931, 	432 	N.Y.S.2d 	872, 	675-76
(1980), 	cert. 	denied, 	450 	U.S. 	1026 	(1981).
Although 	it 	is 	not 	impossible, 	it 	is 	unlikely 	that
written 	communications 	will 	be 	intrusive 	or 	coercive, 	or 	involve
intimidation 	or 	duress. 	In 	re 	Von 	Wieoen, 	63 	N.Y.2d 	163, 	170,
470 	N.E.2d 	838, 	841, 	481 	N.Y.S.2d 	40, 	43 	(1984), 	cert. 	denied 	sub
nom. 	Committee 	on 	Professional 	Standards 	v. 	Von 	Wi~gen,
105 	S. 	Ct. 	2701 	(198~); 	Koffler, 	51 	N.Y.2d 	at 	149, 	412 	N.E.2d 	at
933, 	432 	N.Y.S.2d 	at 	677-78. 	A letter 	or 	a 	telegram 	from 	an
a~torney offering 	legal 	services 	requires 	no 	immediate
res?onse. 	The 	consumer 	can 	give 	the 	communication 	careful
consideration 	and 	make 	a 	reasoned 	decision 	about 	selecting 	a
lawyer.
Telephone 	solicitation 	can 	also 	provide 	useful 	informa-
tion, 	and 	it 	may 	present 	less 	risk 	of 	harm 	to 	consumers 	than 	does
in-person 	solicitation. 	We 	reco9nize, 	of 	course, 	that 	telephone
sales 	can 	be 	used 	to 	injure 	consumers. 	However, 	a 	siffi~le
prOhibition 	of 	false 	or 	deceptive 	telephone 	solicitation 	would
seem 	aceq~ate to 	protect 	consumer 	interests.

,
arold 	L. 	Rubenstein, 	Esq. 	- 	15 	-
In-person 	contact 	may 	also 	provide 	consumers 	with
:ruthful, 	non-deceptive 	information 	that 	will 	help 	the~ select 	a
.awyer. 	As 	the 	Supreme 	Court 	noted 	in 	Ohralik 	v. 	Ohio 	State 	Bar
\s soc i a t ion, 	4 3 6 	U. S. 	44 7, 	457 	(1 978 ), 	in - pe r son 	con t act s 	can
:onvey 	information 	about 	the 	availability 	and 	terms 	of 	a 	lawyer's
legal 	services 	and, 	in 	this 	respect, 	serve 	much 	the 	same 	function
3S 	advertising.
It 	is 	recognized, 	however, 	that 	abuses 	may 	result 	from
in-person 	solicitatlon 	by 	lawyers. 	Injured 	or 	emotionally
distressed 	people 	may 	be 	vulnerable 	to 	the 	exercise 	of 	undue
influence 	when 	face 	to 	face 	with 	a 	lawyer, 	as 	the 	Supreme 	Court
reasoned 	in 	Ohralik, 	436 	U.S. 	at 	465. 	The 	Federal 	Trade
Commission 	considered 	the 	concerns 	that 	underlie 	the 	Ohralik
opinion 	when 	it 	decided 	American 	Medical 	Association, 	94 	F.T.C.
701 	(1979), 	affld, 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	atfld 	memo 	by 	an
equally 	divioed 	Court., 	455 	U.S. 	676 	(1982). 	After 	weighing 	the
possible 	harms 	and 	benefits 	to 	consumers, 	the 	FTC 	ord~red 	the 	AMA
to 	cease 	and 	desist 	from 	banning 	all 	solicitation, 	but 	permitted
it 	to 	proscribe 	uninvited, 	in-person 	solicitation 	of 	persons 	who,
because 	of 	their 	particular 	circumstances, 	are 	vulnerable 	to
undue 	influence. 	•
In 	this 	connection, 	RPC 	7.3(b)(1) 	prohibits 	solicita-
tion 	where 	"the 	lawyer 	knows 	or 	reasonably 	should 	know 	that 	the
physical, 	emotional 	or 	mental 	state 	of 	the 	person 	is 	such 	that
the 	person 	could 	not 	exercise 	reasona~le judgment 	in 	employing 	a
lawyer." 	Tnis 	rule 	would 	appropriately 	preclude 	uninvited 	in-
person 	solicitation 	where 	the 	risk 	of 	abuse 	is 	substantial.
Ho~ever, 	the 	rule 	a~pears 	to 	be 	overbroad 	in 	that 	it 	covers 	all
types 	of 	solicitation, 	including 	written 	communication 	as 	well 	as
in-person 	contact, 	without 	distinction. 	Thus, 	it 	may 	be
interpreted 	to 	preclude 	or 	discourage 	types 	of 	solicitation 	where
the 	danger 	of 	undue 	influence 	is 	likely 	to 	be 	minimal 	and 	would
ordinarily 	be 	outweighed 	by 	the 	benefits 	of 	providing 	truthful,
non-deceptive 	information 	to 	consumers 	who 	may 	be 	in 	need 	of
legal 	services.
In 	summary, 	we 	believe 	that 	the 	current 	rule 	governing
solicitation 	co~ld 	be 	interpreted 	to 	preclude 	or 	discourage
useful 	forms 	of 	communication 	and 	contact, 	and 	that 	the 	objective
of 	the 	rule 	- 	to 	prevent 	abusive 	solicitation 	- 	would 	best 	be
served 	by 	less 	restrictive 	provisions. 	Accordingly, 	we 	believe
it 	would 	be 	appropriat.e 	for 	the 	rule 	to 	prOhibit: 	(1) 	false 	or
deceptive 	solicitation 	(RFC 	7.1 	would 	appear 	to 	cover 	such
contact); 	(2) 	solicitation 	eirected 	to 	any 	person 	who 	has 	made
known 	that 	he 	or 	she 	does 	not 	wish 	to 	receive 	any 	communication
I
I!

..
. Harold 	L. 	Rubenstein, 	Esq. 	- 	16 	-
from 	the 	lawyer 	(covered 	by 	RPC 	7.3(b)(2); 	and 	(3) 	uninvited, 	in-
person 	solicitation 	of 	persons 	WhO, 	because 	of 	their 	particular
circumstances, 	are 	vulnerable 	to 	undue 	influence.
In 	addi~ion, 	the 	Committee 	may 	wish 	to 	recommend
r~tention of 	the 	rule 	prohibiting 	solicitation 	involving
"coercion, 	duress, 	or 	harassment" 	(contained 	in 	RPC 	7.3(b)(3)),
provided 	this 	provision 	is 	not 	interpreted 	to 	prohibit 	solicita-
tions 	under 	circumstances 	that 	pose 	no 	danger 	of 	harm 	to
consumers. 	We 	note, 	however, 	that 	some 	licensing 	boarcs 	and
private 	associations 	1n 	other 	professions 	have 	interpreted 	these
or 	similar 	terms 	brOadly 	and 	have 	applied 	them 	to 	ban 	solicita-
tion 	under 	circumstances 	that 	pose 	no 	danger 	of 	abuse. 	So 	long
as 	these 	terms 	are 	interpreted 	fairly 	and 	objectively,2l 	such 	a
provision 	would 	adequately 	protect 	consumers 	and 	simultaneously
allow 	them 	to 	receive 	helpful 	information 	about 	legal 	services.
RPC 	7.3(c) 	through 	7.3(f): 	Referral 	Fees;
Preservation 	of 	Professional 	Independence
RPC 	7.3(c) 	through 	(f) 	regulate 	a 	lawyer's 	association
with 	other 	lawyers 	as 	well 	as 	with 	non-lawyers. 	It 	also 	regu-
lates 	activity 	to 	facilitate 	the 	use 	of 	a 	lawyer's 	services,
including 	the 	payment 	of 	referral 	fees. 	The 	apparent 	objective
of 	these 	provisions 	is 	to 	guard 	a 	lawyer's 	independent 	prcfes-
sional 	judgment 	against 	imprope~ 	influence. 	We 	believe~ 	howev~r,
that 	certain 	of 	these 	rules, 	particularly 	RPC 	7.3(d) 	and 	(e), 	are
unnecessary 	and 	may 	preclude 	or 	discourage 	activity 	that 	is
procompetitive 	and 	useful 	to 	consumers.
RPC 	7.3(d) 	prohibits 	the 	payment 	of 	referral 	fees
except 	for 	usual 	charges 	paid 	to 	a 	bar 	association-approved
referral 	service. 	Two 	justifications 	have 	been 	offered 	to
support 	such 	restrictions 	on 	referral 	fees. 	First, 	it 	has 	been
argued 	that 	permitting 	referral 	fees 	would 	tempt 	some 	lawyers 	to
refer 	legal 	matters 	to 	the 	lawyer 	who 	pays 	the 	highest 	referral
fee, 	rather 	than 	to 	the 	best 	qualified 	lawyer. 	In 	personal
injury 	and 	other 	cases 	that 	are 	taKen 	on 	a 	contingent 	fee 	basis,
21 As 	noted 	in 	the 	discussion 	above, 	different 	kinds 	of
solicitation 	may 	present 	different 	risks 	of 	abuse, 	so 	the 	proper
interpretation 	of 	these 	terms 	may 	depend 	on 	whether 	the
solicitation 	at 	issue 	involves 	mail, 	telphor-e, 	or 	in-person
contact. 	Written 	communication 	seems 	to 	pres~nt little 	danger 	of
coercion 	or 	undue 	influence. 	Telephone 	solicitation 	may 	present
less 	potential 	for 	abuse 	~han 	in-person 	solicitation 	because
telephone 	calls 	are 	easier 	to 	terminate 	than 	face-to-face
conversatlons.

Harold 	L. 	RUbenst~i~, Esq.
......
- 	17 	-
however, 	the 	referring 	lawyer 	typically 	receives 	one-thiro 	of 	any
fee 	recovered 	by 	the 	lawyer 	who 	handles 	the 	case. 22 	ThUS, 	it 	is
probable 	that 	the 	referring 	attorney 	will 	select 	the 	lawyer 	who
he 	or 	she 	believes 	is 	the 	most 	likely 	to 	recover 	the 	largest
award 	for 	the 	prospective 	client; 	to 	this 	extent, 	the 	attorney's
and 	the 	client's 	interests 	are 	the 	same. 	Even 	when 	no 	contin-
gency 	fee 	is 	involved, 	a 	lawyer 	referring 	a 	client 	to 	a
specialist 	has 	every 	incentive 	to 	make 	suitable 	referrals 	in
order 	to 	~aintain client 	goodwill, 	in 	the 	interest 	of 	obtaining
repeat 	business 	and 	of 	preserving 	his 	or 	her 	professional
reputation. 	.,
Second, 	some 	have 	argued 	that 	the 	attorney 	to 	whom 	a
case 	is 	referred 	will 	increase 	the 	total 	fee 	paid 	by 	the 	client
in 	order 	to 	recoup 	the 	referral 	fee. 	This 	would 	generally 	not
appear 	to 	be 	a 	valid 	concern. 	To 	the 	extent 	that 	some 	clients
are 	price-sensitive, 	the 	risk 	of 	losing 	these 	clients 	would
likely 	constrain 	such 	fee 	increases. 	In 	addition, 	by
facilitating 	referrals 	to 	experts, 	referral 	fees 	may 	actually
reduce 	the 	total 	fees 	charged 	to 	clients. 	Because 	of 	their 	more
predictable 	and 	more 	specialized 	workload, 	and 	their 	greater
familiarity 	with 	the 	subject, 	experts 	may 	be 	able 	to 	reduce 	costs
and 	pass 	on 	such 	savings 	to 	clients.
RPC 	7.3(d) 	could 	also 	be 	problematic 	if 	it 	were
interpreted 	to 	preclude 	a 	division 	of 	fees 	between 	attorneys.
Such 	division 	of 	fee 	arrangements, 	however, 	can 	provide
incentives 	for 	attorney 	referrals 	and 	other 	associations 	that 	are
desirable 	for 	the 	client 	and 	beneficial 	for 	consumers
ge~erally. 	Such 	arrangements 	~ay 	benefit 	a 	client 	in 	cases 	in
which 	neither 	attorney 	alone 	could 	serve 	the 	client 	well. 	For
example, 	one 	lawyer 	may 	not 	have 	sufficient 	time, 	resources, 	or
expertise 	to 	handle 	all 	as?ects 	of 	a 	particular 	client's 	case.
An 	attorney 	from 	Firm 	X might 	serve 	as 	Chief 	trial 	attorney,
while 	his 	or 	her 	co-counsel 	from 	Firm 	Y might 	perform 	the 	bulk 	of
the 	pretrial 	preparation. 	The 	Committee 	may 	wish 	to 	consider
recommending 	clarification 	or 	modification 	of 	RPC 	7.3(d) 	to 	the
extent 	that 	it 	may 	be 	interpreted 	to 	prohibit 	or 	discourage 	such
useful 	arrangements.
RPC 	7.3(e) 	may 	be 	interpreted 	to 	prohibit 	a 	lawyer 	from
forming 	a 	partnership 	or 	sharing 	legal 	fees 	with 	a 	non-lawyer,
except 	under 	limited 	cir=umstances, 	or 	from 	practicing 	in 	an
organiz~tion authorized 	to 	?ractice 	law 	for 	a 	profit 	if 	a 	non-
lawyer 	owns 	an 	interest 	in 	the 	o~ganization or 	is 	an 	officer 	or
22 	Referral 	Fees:
Feb. 	1955, 	at 	40. Everytocy 	Does 	It, 	But 	Is 	It 	OK?, 	A.B.A.J.,
----.--~.~ 	~x~~~_. 	_

Harold 	L. 	Rubenstein, 	Esq. 	- 	18 	-
director. 	If 	so 	interpreted, 	this 	rule 	may 	limit 	the 	ability 	of
lawyers 	to 	establish 	multi-disciplinary 	practices 	with 	other
professionals, 	such 	as 	psychologists 	or 	accountants, 	to 	deal
efficiently 	with 	both 	the 	legal 	and 	non-legal 	aspects 	of 	specific
problems. 	The 	rule 	also 	would 	appear 	to 	prohibit 	lawyers 	from
including 	any 	lay 	persons, 	such 	as 	marketing 	directors, 	as
partners 	in 	their 	law 	firms. 	Finally, 	such 	a 	restriction 	would
appear 	to 	prohibIt 	corporate 	practice, 	and 	thereby 	prevent 	the
use 	of 	potentiaJly 	efficient 	business 	formats.
The 	FTC 	has 	examined 	similar 	restrictions 	on 	associa-
tions 	between 	physicians 	and 	non-physicians 	and 	concluded 	that
they 	restrain 	competition 	unnecessarily. 	In 	American 	Medical
Association, 	94 	F.T.C. 	701, 	1017-18 	(1979), 	aft'd, 	638 	F.20 	443
(2d 	Clr. 	1980), 	aff'd 	memo 	by 	an 	equally 	divided 	Court, 	455 	u.s.
676 	(1982), 	the 	Commission 	tound 	that 	the 	AMA's 	ethlcal 	restric-
tions 	on 	the 	formation 	of 	professional 	associations 	with 	non-
physicians 	had 	an 	adverse 	effect 	on 	competition. 	The 	AMA's 	form
of 	practice 	restrictions 	precluded 	a 	wide 	variety 	of 	professional
ventures 	and 	potentially 	efficient 	business 	formats, 	such 	as
health 	maintenance 	organizations 	and 	prepaid 	health 	care 	plans.
The 	Commission 	concluded 	that 	the 	prohibitions 	were 	much 	broader
than 	needed 	to 	prevent 	non-physician 	influence 	over 	medical
procedures 	or 	consumer 	deception 	about 	the 	skills 	of 	a 	non-
physician 	partner 	or 	associate.
The 	staff 	of 	the 	FTC's 	Bureau 	of 	Economics 	concluded
from 	a 	study 	of 	the 	optometric 	profession 	that 	the 	price 	of
optometrlc 	services 	is 	lower 	in 	jurisdictions 	in 	which 	business
associations 	between 	professionals 	and 	lay 	persons 	are
permitted. 23 	Restrictions 	on 	such 	business 	associations 	impede
the 	formation 	of 	chain 	firms 	and 	other 	volume 	operations 	and 	may
make 	it 	difficult 	to 	achieve 	ecor.omies 	of 	scale.
In 	summary, 	RPC 	7.3(e) 	may 	be 	interpreted 	to 	limit
potentially 	procompetitive 	professional 	ventures, 	innovative
business 	formats, 	and 	perhaps 	some 	forms 	of 	prepaid 	legal
services.
23 	Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Ef:ects 	of
Restrictions 	on 	Advertisi~g and 	Comrr.ercial 	Practice 	in 	the
Professions: 	The 	Case 	of 	Optometry 	25-26 	(1980).

Harold 	L. 	Rubenstein, 	Esq.
RPC 	7.4: 	Communication 	of 	Fields 	of 	Practice
- 	19 	-
RPC 	7.4 	states 	in 	part 	that 	·when 	the 	Supre~e Court 	has
designated 	areas 	of 	specialty 	certification, 	only 	those 	attorneys
so 	certified 	may 	advertise 	that 	they 	are 	specialists 	in 	or 	limit
their 	practices 	to 	those 	areas." 	RPC 	7.4 	may 	be 	interpreted 	to
prohibit 	statements 	concernin; 	a 	l~wyer's 	skills 	or 	training. 	It
also 	may 	preclude 	truthful 	statements 	that 	a 	lawyer 	practices
only 	in 	a 	certain 	area 	of 	the 	law.
With 	regard 	to 	claims 	of 	certification, 	clearly, 	it
would 	be 	deceptive 	for 	an 	attorney 	to 	advertise 	that 	he 	or 	she 	is
"certified" 	in 	an. area 	of 	law 	if 	no 	certification 	procedure
exists 	or 	if 	the 	attorney 	has 	not 	obtained 	certification.
Conduct 	of 	this 	sort 	is 	al~eady prohibited 	by 	the 	general 	rule
against 	deceptive 	advertising. 	we 	believe, 	however, 	that 	a
lawyer 	should 	be 	able 	to 	advertise, 	without 	prior 	approval 	by 	the
state, 	any 	truthful, 	non-deceptive 	information 	about 	any 	certifi-
cation 	that 	he 	or 	she 	has 	obtained. 	The 	advertising 	of 	certifi-
cation 	programs 	can 	beneficially 	provide 	consumers 	with 	facts
about 	an 	attorney's 	special 	skills 	~hen certification 	require-
ments 	are 	reasonably 	related 	to 	assuring 	proficiency 	in 	tne
subject 	area 	certified.
In 	this 	connection, 	we 	caution 	against 	any 	unnecessary
restrictions 	on 	the 	nature 	of 	the 	certifying 	program 	or.organlza-
tion. 	For 	instance, 	we 	are 	aware 	that 	some 	states 	have
considered 	requiring 	that 	such 	programs 	be 	approved 	by 	the 	state
bar, 	making 	such 	approval 	a 	prerequisite 	to 	claims 	of 	certifica-
tion. 	Such 	restrictions 	could 	discourage 	attorneys 	from 	taking
additional 	training 	after 	law 	school 	where 	it 	might 	not 	lead 	to
certification. 	It 	could 	also 	restrain 	the 	development 	of 	bona
fioe 	private 	certifying 	orsanizations. 24
Moreover, 	attorneys 	who 	do 	not 	hold 	a 	"certification"
should 	nonetheless 	be 	permitted 	~o 	truthfully 	advertise 	special
sKills 	or 	training, 	includlng 	claims 	that 	their 	practice 	focuses
on 	a 	particular 	area 	of 	law. 	Unnecessary 	restrictions 	on 	such
-advertising 	would 	not 	only 	deprive 	consumers 	of 	useful 	informa-
tion, 	but 	would 	also 	inhibit 	comoetition 	between 	certified 	and
non-certified 	attorneys 	in 	fields 	for 	which 	a 	certificate 	is
available. 	Restrictions 	that 	would 	reduce 	the 	number 	of 	practi-
tioners 	who 	could 	truthfully 	bring 	their 	special 	skills 	to 	the
24 	Use 	of 	ce~tificates that 	are 	not 	bona 	fide, 	or 	that
iss~ed by 	programs 	not 	related 	to 	improving 	st~ills in 	a
area, 	would 	be 	prohibited 	under 	the 	rule 	against 	"false
misleading" 	communications.
are
subject
and

L
Harold 	L. 	Rubenstein, 	Esq. 	- 	20 	-
attention 	of 	the 	public 	are 	likely 	to 	reduce 	competition 	and
accordingly 	raise 	the 	cost 	of 	legal 	services 	in 	those 	subject
areas.
Certain 	claims 	that 	might 	be 	interpreted 	as 	implied
claims 	of 	specialization 	may 	also 	provide 	consumers 	with 	useful
information. 	For 	example, 	a 	true 	statement 	that 	an 	attorney 	is 	a
member 	of 	an 	organization 	of 	trial 	lawyers 	can 	benefit 	consumers
by 	informing 	them 	that 	the 	attorney 	has 	sufficient 	interest 	in
trial 	advocacy 	to 	join 	the 	organization 	and 	has 	access 	to 	the
organization's 	training 	and 	materials. 	There 	are 	many 	ways 	to
obtain 	expertise, 	and 	information 	that 	an 	attorney 	has 	special
experience 	or 	Skills 	in 	a 	particular 	field 	is 	clearly 	useful 	to
consumers 	needing 	help 	in 	that 	field.
In 	summary, 	consumers 	could 	benefit 	from 	modification
and 	clarification 'of 	RPC 	7.4 	so 	that 	truthful, 	non-deceptive
specialty 	claims, 	express 	or 	implied, 	will 	not 	be 	prohibited 	or
discouraged. 	The 	Committee 	may 	also 	wish 	to 	consider 	recommend-
ing 	that 	attorneys 	who 	have 	successfully 	completed 	bona 	fide
certification 	or 	other 	training 	programs 	be 	permitted 	to
communicate 	that 	fact.
RPC 	7.5: 	Firm 	Names 	and 	Letterheacs
RPC 	7.5 	prohibits 	the 	use 	of 	trade 	names 	by 	lawyers 	and
law 	firms 	except 	"nonprofit 	legal 	aid 	or 	public 	int~rest law
firms." 	This 	restriction 	a?pears 	unnecessary 	and 	may 	deprive
advertisers 	and 	consumers 	of 	the 	benefits 	of 	useful 	and 	informa-
tive 	trade 	names.
A trade 	name 	is 	used 	to 	identify 	particular 	gooos 	or
services. 	Over 	time, 	consumers 	tend 	to 	associate 	the 	trade 	name
with 	attributes 	of 	the 	service, 	such 	as 	quality, 	price, 	or 	typ~
of 	service. 	In 	addition, 	a 	trade 	name 	by 	itself 	can 	convey
information, 	such 	as 	location 	of 	the 	provider 	or 	field 	of
practice. 	As 	long 	as 	a 	trade 	name 	is 	not 	inherently 	confusing 	or
deceptive, 	it 	may 	be 	more 	effective 	than 	traditional 	firm 	names
in 	reaching 	consumers 	in 	need 	of 	legal 	services.
R?C 	7.5(a) 	would 	deprive 	most 	lawyers 	and 	law 	firms 	of
the 	option 	of 	using 	a 	trade 	name 	in 	New 	Jersey, 	even 	if 	that 	name
has 	been 	successfully 	developed 	and 	used 	to 	identify 	their

Harold 	L. 	Rubenstein, 	Esq. 	- 	21 	-
practice 	in 	other 	states. 	This 	limitation 	could 	result 	in 	the
sacrificing 	of 	advertising 	efficiencies 	that 	might 	result 	in
lower 	costs 	and 	hence 	permit 	lower 	prices 	for 	clients.
A law 	firm 	may 	also 	wish 	to 	use 	more 	than 	one 	name 	to
create 	separate 	identities 	for 	dlfferent 	orfices 	if 	each 	office
~ractices in 	a 	different 	area 	of 	the 	law, 	provides 	a 	ditferent
level 	of 	s~rvice, 	attracts 	a 	different 	clientele, 	or 	is 	marketed
differently. 	It 	may 	be 	more 	efficient 	for 	a 	law 	firm 	to 	have
different 	flrm 	names 	associated 	with 	services 	with 	different 	sets
of 	attributes 	in 	order 	to 	communicate 	more 	easily 	with 	potential
clients 	through 	advertising 	and 	reputation. 	For 	example, 	one
firm 	name 	might 	be 	used 	for 	complex 	corporate 	services 	while
another 	would 	be 	used 	for 	more 	routine 	individual 	services.
RPC 	7.5(a} 	appears 	to 	unnecessarily 	sacrifice 	the
advantages 	that 	may 	be 	associated 	with 	the 	use 	of 	non-deceptive
trade 	names. 	Accordingly, 	the 	Committee 	may 	wish 	to 	consider
recommending 	modification 	of 	RPC 	7.5 	to 	permit 	the 	use 	of 	such
trade 	names. 	.
RPC 	7.5(b) 	also 	contains 	requirements 	that 	may 	have
substantial 	competitive 	drawbacks. 	It 	provides 	that 	"(i]n 	New
Jersey, 	identification 	of 	all 	lawyers 	of 	the 	firm, 	in 	advertise-
ments, 	on 	letterheads 	or 	anyWhere 	else 	that 	the 	firm 	name 	is
used, 	shall 	indicate 	the 	jurisdictional 	limitations 	on 	those 	not
licensed 	to 	practice 	in 	New 	Jersey." 	In 	addition, 	if 	the 	firm
name 	includes 	any 	attorney 	not 	licensed 	to 	practice 	in 	New
Jersey, 	the 	name 	of 	at 	least 	one 	licensed 	New 	Jersey 	attorney
responsible 	for 	the 	firm's 	New 	Jersey 	practice 	must 	be 	included
in 	any 	advertisement, 	letterhead, 	or 	other 	communication. 	These
requiremen~s may 	unnecessarily 	inflate 	the 	cost 	of 	law 	firm
advertising, 	especially 	to 	the 	extent 	that 	multi-state 	law 	firms
may 	face 	varying 	state 	disclosure 	requirements. 	Such 	increased
costs 	may 	be 	passed 	en 	to 	the 	consumers 	of 	legal 	services.
In 	addition, 	the 	required 	disclosures 	are 	likely 	to
distract 	consumers 	from 	the 	information 	the 	firm 	wishes 	to 	convey
through 	i:s 	name. 	On 	the 	other 	hand, 	it 	is 	unlikely 	that 	the
disclosures 	will 	inform 	consumers 	about 	the 	quality 	of 	service
~hat can 	be 	ex?ected 	or 	about 	the 	attorney 	likely 	to 	handle 	a
particular 	legal 	problem. 	The 	assignment 	of 	counsel, 	and 	the
need 	for 	local 	counsel, 	will 	of 	course 	deoend 	on 	the 	nature 	of
the 	legal 	problem. 	A consumer 	will 	learn"the 	identity 	of 	the
lawyer 	who 	will 	provide 	the 	legal 	services 	sought 	when 	he 	or 	she
calls 	or 	visits 	the 	law 	firm's 	local 	office.

..
Harold 	L. 	Rubenstein, 	Esq.
Conclusion
- 	22 	-
.'l	
./ I
• '·r ,j:
/ 	. ..:/
Certain 	features 	of 	the 	existing 	New 	Jersey 	Rules 	of
Professional 	Conduct 	could 	injure 	consumers 	by 	imposing 	unneces-
sary 	restrictions 	on 	price 	competition, 	referrals 	and 	associa-
tions, 	efficient 	forms 	of 	practice, 	and 	dissemination 	of 	informa-
tion 	about 	legal 	services. 	In 	the 	interest 	of 	eliminating
unnecessary 	restrictions 	on 	competition 	among 	attorneys 	we
suggest 	that 	the 	Committee 	consider 	the 	specific 	suggestions
discussed 	herein.
We 	hope 	that 	this 	letter 	will 	aid 	the 	Committee's
assessment 	of 	the 	likely 	effect 	of 	toe 	rules 	on 	the 	availability
of 	information 	to 	consumers 	and 	on 	the 	cost 	and 	quality 	of 	legal
services. 	We 	also 	hope 	our 	comments 	will 	assist 	the 	Committee 	in
formulating 	opinions, 	interpretations, 	and 	guidelines 	regarding
attorney 	advertising. 	We 	appreciate 	this 	opportunity 	to 	present
our 	views. 	If 	you 	have 	any 	questions 	or 	would 	like 	further
information 	regarding 	these 	comments, 	please 	contact 	FTC 	staff
attorney 	Maria 	Gambale 	at 	(212) 	264-1207.
Very 	truly 	yours,
I 	'
.•• ,' I.' / /~//-:;;Yf:~~, ( '. "'.//. 	I ~ .	'. 	,. 	... 	1/ 	•
James 	M. 	Giffin;'. 	. ..
~Acting 	Regional 	Director
...... -- - ~ .~.~- -~~ --.--~-....~~----.~~~~-....,....------	-e ": 	-.., i ,pt=e .'LC1. 	:;::;:,