FTC Staff Comment Before the American Bar Association Concerning Proposed Amendment to the Model Rules of Professional Conduct to Eliminate Broad Restrictions on Mailing Letters to Persons Known to Need Legal Services

UNITED STArES OF AMERICA
FEDERAL TRADE COMMISSION
WASHIN1iT<..N.D.C. 20580
BUREAU OF COMPETITION
Member
House 	of 	Delegates
American 	Bar 	Association
750 	N. 	Lake 	Shore 	Drive
Chicago, 	Illinois 	60611
Dear 	Delegate:
February 	6, 	1987
A number 	of 	delegates 	have 	indicated 	that 	the 	views 	of 	the
st~ff of 	the 	Federal 	Trade 	Commission 	would 	be 	helpful 	in
considering 	the 	proposed 	amendment 	to 	Rule 	7.3 	of 	the 	American
Bar 	Association's 	Model 	Rules 	of 	Professional 	Conduct. 	The
Federal 	T:ade 	Commission's 	Bureaus 	cf 	Competition, 	Consumer
Protection 	and 	Economics l are 	pleased 	to 	submit 	these 	comments.
7he 	proposed 	amendment 	wou:d 	eliminate 	the 	current 	broac
restrictions 	on 	mailing 	letters 	to 	persons 	known 	to 	need 	legal
services. 	We 	SUP90rt 	this 	aspect 	of 	the 	proposal 	because 	it
would 	allow 	lawyers 	to 	provide 	truthf~l, nondeceptive 	infor~ation
to 	consu~ers who 	may 	be 	in 	the 	greatest 	need 	of 	information 	about
the 	availability 	of 	legal 	services. 	The 	proposed 	ame~dment would
not 	eliwinate 	the 	existing 	restrictions 	on 	telephone 	and 	in-
person 	solicitation, 	however. 	Retaining 	those 	restrictions
appears 	undesirable 	because 	telephone 	and 	in-person 	solicitation
may 	also 	be 	used 	to 	disseminate 	truthful, 	non-deceptive
information 	in 	circumstances 	that 	pose 	little 	risk 	of 	harm 	to
consumers. 	Therefore, 	we 	urge 	the 	House 	of 	Delegates 	to 	a~end
Rule 	7.3 	to 	prohibit 	only: 	(a) 	uninvited, 	in-person 	solicitation
of 	persons 	who, 	because 	of 	their 	particular 	circumstances, 	are
vulnerable 	to 	undue 	infl~ence; and 	(b) 	communications 	with
prospective 	clients 	who 	have 	made 	known 	to 	the 	lawyer 	a 	desire
not 	to 	receive 	communications 	from 	the 	lawyer.
The 	beneficial 	effects 	of 	advertising 	are 	widely
recognized. 	Truthful, 	nondeceptive 	advertising 	communicates
information 	about 	the 	individuals 	or 	firms 	offering 	services 	that
co~sumers may 	wish 	to 	purchase. 	Such 	information 	helps 	consumers
make 	purchasing 	decisions 	that 	reflect 	their 	true 	preferences 	and
promotes 	the 	efficient 	delivery 	of 	services. 	Empirical 	evidence
suggests 	that 	the 	removal 	of 	restrictions 	on 	the 	dissemination 	of
truthful 	information 	about 	lawyers 	and 	legal 	services 	will 	tend
1 This 	letter 	represents 	the 	views 	of 	the 	Bureaus, 	and 	not
necessarily 	those 	of 	the 	Commission. 	The 	Commission 	has,
however, 	authorized 	submission 	of 	these 	comments.

Member, 	House 	of 	Delegates 	-2-
to 	enhance 	competiti011 	and 	10w0r 	prices. 2 Although 	some 	concern
has 	bLen 	voiced 	that 	advertisil.g 	may 	lead 	to 	lower 	quality 	leaal
services, 	the 	empirical 	evidence 	suggests 	that 	the 	quality 	of
legal 	services 	provided 	by 	firms 	that 	advertise 	is 	at 	least 	as
high 	as, 	i5 	not 	higher 	than, 	t~~: provided 	by 	firms 	that 	do 	not
advertise.
More 	personalized 	forms 	of 	contact 	may 	provide 	many 	of 	the
same 	benefits 	as 	advertising. 	Truthful, 	nondeceptive 	telephone
and 	in-person 	solicitation 	may 	assist 	consumers 	in 	learning 	about
the 	availability 	of 	legal 	services. 	Both 	telephone 	and 	in-person
solicitation 	may 	have 	some 	potential 	for 	abuse 	if 	a 	lawyer
contacts 	an 	injured 	or 	emotionally 	distressed 	consumer. 	In 	other
circumstances, 	however, 	such 	adverse 	effects 	are 	unli~ely.
Therefore, 	a 	comprehensive 	ban 	on 	solicitation 	is 	unnecessarily
broad 	~nc 	may 	harm 	consumers.
~arget~d Mailings
~irst, 	~e 	support 	the 	proposal 	to 	per~it 	targeted
mailings. 	Written 	communication 	with 	prospective 	clients 	known
to 	need 	legal 	services 	may 	help 	them 	select 	a 	lawyer. 	Spencer 	v.
Eonorable 	Justices 	of 	the 	Supreme 	Court 	of 	P3., 	579 	F. 	Supr· 	°80
(E.D. 	Pa. 	1984), 	aff'd 	mem., 	760 	F.2d 	261 	(3-:] 	Cir. 	1985). 	See 	In
re 	Von 	Niegen, 	63 	N.Y. 	2d 	163, 	470 	N.E. 	2d 	838, 	481 	N.Y.S. 	~4o
(~t. 	~pp. 	1984), 	cert. 	denied 	sub 	nom. 	Committee 	on 	Professional
Standards 	v. 	Von 	Wiegen, 	105 	S. 	Ct. 	2701 	(1985). 	By 	targeting
letters 	to 	a 	particular 	audience, 	the 	lawyer 	can 	provide
information 	to 	those 	consumers 	who 	are 	most 	likely 	to 	need 	legal
services 	and 	to 	~enefit from 	information 	about 	what 	services 	are
available, 	Spencer, 	579 	F. 	Supp. 	at 	891, 	and 	who 	may 	need 	to 	have
a 	lawyer 	take 	action 	expeditiously 	on 	their 	behalf. 	As 	the 	court
stated 	in 	Koffler 	v. 	Joint 	Bar 	Ass'n, 	51 	N.Y. 	2d 	140, 	146, 	412
2
3
Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Improving 	Consumer 	Access 	to 	Legal
Services: 	The 	Case 	for 	Removing 	Restrictions 	on 	Truthful
Advertising 	(1984). 	See 	also 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Effects 	of 	Restrictions 	on 	Advertising 	and
Commercial 	Practice 	in 	the 	Professions: 	The 	Case 	of
Optometry 	(1980); 	Benham 	and 	Benham, 	Regulating 	Through 	the
Professions: 	A Perspective 	on 	Information 	Control, 	18 	J. 	L. 	&
Econ. 	421 	(1975); 	Benham, 	The 	Effects 	of 	Advertising 	on 	the
Price 	of 	Eyeglasses, 	15 	J. 	L. 	& 	Econ. 	337 	(1972).
Muris 	and 	McChesney, 	Advertising 	and 	the 	Price 	and 	Quality 	of
Le 	al 	Services: 	The 	Case 	for 	al 	Clinics, 	1979 	Am. 	B.
Foun 	• 	Researc

Member, 	House 	of 	Delegates
N.E. 	2d 	927,931,432 	N.Y.S. 	2d 	Wi2, 	875-76 	(Ct. 	App. 	1980),
cert. 	denied, 	450 	u.s. 	1026 	(198_1:
To 	outlaw 	the 	use 	of 	letters 	• 	• 	• 	addressed
to 	those 	most 	likely 	to 	be 	in 	need 	of 	legal
services 	..• 	ignores 	the 	strong 	societal
and 	indivicual 	interest 	in 	th~ 	free
dissemination 	of 	truthful 	price 	information 	as
a 	means 	of 	assuring 	informed 	and 	reliable
decision 	making 	in 	our 	free 	enterprise
system 	. 	• 	. 	•
-3-
The 	Seventh 	Circuit 	reasoned 	similarly 	in 	Adams 	v. 	Attorney
Re 	istration 	and 	Disci 	linar 	Comm'n, 	801 	F. 	2d 	968, 	973 	(7th
Cir. 	1986), 	that 	"[p 	rohibiting 	direct 	mailings 	to 	those 	who
might 	most 	desire 	and 	might 	most 	benefit 	from 	an 	attorney's
services 	runs 	afoul 	of 	the 	concerns 	for 	an 	informed 	citizenry
that 	lay 	at 	the 	heart 	of 	Bates." 	WLchout 	truthful 	information,
consumers 	are 	not 	able 	to 	select 	t~e 	quality 	and 	price 	of 	legal
services 	that 	best 	suit 	their 	needs.
Lawyers 	may 	be 	able 	to 	communicate 	with 	prospective 	clients
more 	efficiently 	by 	l1sing 	targeted 	mailings 	than 	by 	using 	other
forms 	of 	advertising. 	Targeted 	mailings 	may 	be 	costly, 	but
because 	they 	are 	sent 	to 	consumers 	who 	have 	the 	greatest 	need 	for
legal 	services 	they 	are 	likely 	to 	have 	a 	higher 	response 	rate
than 	other 	forms 	of 	advertising. 	And 	consumers 	who 	choose 	to
respond 	to 	such 	mailings 	incur 	lower 	search 	costs 	because 	they
need 	not 	contact 	numerous 	lawyers 	to 	find 	one 	able 	to 	handle 	a
legal 	problem.
Targeted 	mail 	advertising, 	as 	long 	as 	it 	is 	truthful 	and
nondeceptive, 	poses 	little 	danger 	of 	consumer 	harm. 	It 	is
unlikely 	that 	written 	communications 	will 	be 	intrusive 	or
coercive, 	or 	involve 	intimidation 	or 	duress. 	In 	re 	Von 	wiegen,
63 	N.Y. 	2d 	at 	170, 	470 	N.E. 	2d 	at 	841, 	481 	N.Y.S. 	2d 	at 	43;
Koffler, 	51 	N.Y. 	2d 	at 	149, 	412 	N.E. 	2d 	at 	933, 	432 	N.Y.S. 	2d 	at
877-78. 	When 	a 	consumer 	receives 	a 	letter 	in 	the 	mail 	from 	an
attorney 	offering 	legal 	services, 	no 	immediate 	response 	is

Member, 	House 	of 	Delegates 	-4-
required. 	The 	consumer 	~an qive 	th~ 	letter 	careful 	co~sideration
and 	make 	a 	reasoned 	decision 	about 	3electing 	a 	lawyer.
We 	urge 	the 	Delegates 	to 	vote 	in 	favor 	of 	that 	portion 	of
the 	proposed 	amendment 	that 	would 	remove 	the 	prohibition 	of
targeted 	mail 	advertisi~g.
Telephone 	and 	In-Person 	Solicitation
Second, 	we 	urge 	the 	delegates 	to 	amend 	Rule 	7.3 	further 	to
permit 	a 	wider 	range 	of 	telephone 	and 	in-person 	solicitation.
The 	proposed 	modification 	of 	Rule 	7.3 	would 	retain 	the 	existing
prohibition 	of 	t~lephone and 	in-person 	solicitation 	of
prospective 	cli~nts with 	whom 	the 	lawyer 	has 	no 	family 	or 	prior
professional 	relationship. 	This 	provision 	would 	still 	restrict
the 	f]ow 	of 	information 	more 	than 	is 	necessary 	to 	protect
consumers, 	because 	it 	would 	preclude 	truthful, 	nondeceptive
~ommun:cations in 	circumstances 	tha~ pose 	little 	cr 	no 	risk 	of
undue 	influence.
Ljke 	advertising, 	in-person 	solicitation 	may 	provide
information 	to 	consumers 	that 	will 	help 	them 	select 	a 	lawyer. 	As
the 	Supreme 	Court 	observed 	in 	Ohralik 	v. 	Ohio 	State 	Bar 	Ass'n,
436 	u.S. 	447, 	457 	(1978), 	in-person 	contacts 	can 	convey
information 	about 	the 	availability 	and 	terms 	of 	a 	lawyer's 	or 	law
firm's 	legal 	services 	and 	serve 	the 	same 	function 	in 	this 	respect
as 	print 	advertisements.
We 	recognize 	that 	abuses 	may 	result 	from 	in-person
solicitation 	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 	found 	in
Ohralik, 	436 	u.S. 	at 	465. 	We 	do 	not 	believe, 	however, 	that 	this
is 	a 	justification 	for 	a 	broad 	prohibition 	on 	in-person
solicitation. 	The 	Federal 	Trade 	Commission 	considered 	the
con8erns 	that 	underlie 	the 	Ohralik 	opinion 	when 	it 	decided
American 	Medical 	Ass'n, 	94 	F.T.C. 	701 	(1979), 	aff'd 	sub 	nom.
~~erican Medical 	Ass'n 	v. 	FTC, 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	aff'd
mem. 	by 	an 	equally 	divided 	court, 	455 	U.S. 	676 	(1982). 	After
weighing 	the 	possible 	harms 	and 	benefits 	to 	consumers, 	the 	FTC
4 See 	Standing 	Committee 	on 	Ethics 	and 	Professional
Responsibility 	and 	Commission 	on 	Advertising, 	Report 	to 	the
House 	of 	Delegates 	6 	(1987) 	for 	a 	discussion 	of 	the 	benefits
to 	consumers 	and 	the 	absence 	of 	significant 	potential 	for
abuse 	arising 	from 	written 	communications. 	Pages 	7-10 	of
the 	Report 	address 	the 	constitutional 	issues, 	which 	we 	do 	not
discuss.

Member, 	House 	of 	Delegates
ordered 	A~ 	to 	cease 	and 	desist 	fr)m 	banning 	solicitation, 	but
permitttd 	AMA 	to 	proscribe 	uninvited, 	in-person 	solicitation 	of
persons 	who, 	because 	of 	their 	particular 	circumstances, 	are
vulnerable 	to 	undue 	influence.
-5-
In-person 	solicitation 	by 	lawyers 	usually 	does 	not 	involve
the 	exercise 	of 	undue 	influence. 	Lawyers 	encounter 	potential
clients 	at 	meetings 	of 	political 	and 	business 	organizations 	and
at 	social 	events. 	Indeed, 	lawyers 	traditionally 	have 	built 	their
law 	practices 	through 	such 	contacts. 	If 	a 	lawyer 	discusses 	his
or 	her 	legal 	services 	with 	a 	potential 	client 	under 	such
circumst3nces, 	no 	undue 	influence 	is 	likely 	to 	be 	involved. 	In
such 	a 	situation, 	the 	potential 	clie~t need 	not 	respond
immediately, 	and 	can 	subsequently 	select 	a 	lawyer 	should 	a 	need
for 	legal 	services 	a~ise.
Accordi~gly, we 	urge 	that 	Rule 	7.3 	be 	modified 	to 	prohibit
only 	uninvited, 	in-person 	solicit2tion 	of 	persons 	who; 	because 	of
their 	particular 	circumstances, 	are 	vulnerable 	to 	undue
influence. 	False 	or 	deceptive 	solicitation 	should 	also 	be
prohibited. 	Such 	rules 	would 	protect 	consumers 	while, 	at 	the
same 	time, 	allowing 	them 	to 	receive 	information 	about 	available
legal 	services.
Telephone 	solicitation 	similarly 	can 	convey 	useful
information 	to 	consumers, 	and 	it 	may 	present 	even 	less 	risk 	of
the 	exercise 	of 	undue 	influence 	than 	does 	in-person
solicitation. 	In 	most 	circumstances, 	telephone 	solicitation
appears 	unlikely 	to 	result 	in 	consumer 	harm. 	Consumers 	are
accustomed 	to 	telephone 	marketing. 	They 	receive 	calls 	from
persons 	offering 	the 	sale 	of 	various 	goods 	and 	services,
conducting 	surveys 	about 	the 	products 	and 	services 	consumers 	use,
seeking 	contributions 	to 	charities, 	and 	requesting 	support 	for
political 	candidates. 	Consumers 	can 	easily 	terminate 	such
conversations 	if 	they 	wish.
Telephone 	solicitation 	is 	in 	some 	respects 	similar 	to 	in-
person 	solicitation; 	a 	lawyer 	might 	be 	able 	to 	persuade 	a
vulnerable 	person 	to 	hire 	the 	lawyer. 	But 	there 	are 	also
differences 	between 	the 	two 	forms 	of 	solicitation. 	A telephone
solicitor 	may 	be 	less 	able 	to 	exercise 	undue 	influence 	than 	an
in-person 	solicitor, 	and 	it 	may 	be 	easier 	for 	the 	recipient 	of 	a
telephone 	solicitation 	to 	terminate 	a 	conversation 	than 	it 	is 	for
a 	potential 	client 	who 	is 	solicited 	in 	person. 	Certainly, 	false
and 	deceptive 	telephone 	solicitation 	may 	appropriately 	be
prohibited. 	Although 	the 	AMA 	standard 	may 	be 	appropriate, 	we 	are
not 	yet 	ready 	to 	conclude tnat 	it 	should 	be 	applied 	to 	telephone
solicitation. 	But 	the 	broad 	ban 	on 	telephone 	solicitation
contained 	in 	Rule 	7.3 	is 	unnecessarily 	restrictive.

Member, 	House 	of 	Delegates
New 	Regulatory 	Standards 	for 	Permisible 	Communications 	With
Prospecti,e 	Clients
-6-
The 	proposed 	amendment 	would 	also 	add 	new 	regulatory
standards 	for 	the 	forms 	of 	solicitation 	that 	would 	be 	permitted,
i.e., 	written 	communications 	with 	prospective 	clients 	and 	~n
person 	and 	telephone 	solicitation 	of 	family 	members 	and 	former
clients. 	Even 	these 	forms 	of 	solicitation 	would 	be 	prohibited
if: 	(1) 	the 	prospective 	client 	has 	made 	known 	to 	the 	lawyer 	a
desire 	not 	to 	receive 	communications 	from 	the 	lawyer; 	or 	(2) 	the
communication 	involves 	coercion, 	duress 	or 	harassment. 	The 	first
restriction 	is 	reasonable. 	Whether 	the 	second 	restriction 	is
reasonable 	depends 	upon 	the 	interpretation 	of 	its 	terms.
Licensing 	boards 	and 	private 	associations 	in 	other 	professions
have 	sometimes 	interpreted 	such 	terms 	broadly 	and 	have 	applied
them 	to 	ban 	solicitaticd 	under 	circumstances 	that 	pose 	no 	danger
of 	harm 	to 	consumers.
Conclusion
We 	support 	that 	portion 	of 	the 	proposed 	amendment 	to 	Rule
7.3 	that 	would 	permit 	lawyers 	to 	mail 	information 	about 	legal
services 	to 	consumers 	known 	to 	need 	such 	services. 	We 	also 	urge
that 	the 	House 	of 	Delegates 	further 	amend 	Rule 	7.3 	to 	prohibit
only 	in-person 	solicitation 	of 	persons 	who, 	because 	of 	their
particular 	circumstances, 	are 	vulnerable 	to 	undue 	influence, 	and
communications 	with 	prospective 	clients 	who 	have 	made 	known 	to
the 	lawyer 	a 	desire 	not 	to 	receive 	communications 	from 	the
lawyer.
Sincerely,
C;;lz~Bureau 	of 	Competition