FTC Staff Comment Before the Supreme Court of Kentucky Concerning Proposed Guidelines for Certification of Specialists in Kentucky
us-ftc-advocacy-filings-79c2a2d893370fa94584ea91e024f73cFTC Staff Comment Before the Supreme Court of Kentucky Concerning Proposed Guidelines for Certification of Specialists in KentuckyAdvocacy Filing
Matter Number
P874691
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FEDERAL TRADE CO\t\1I5510:"
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June 8, 1987
Honorable Robert F. Stephens
Chief Justice
Supreme Court of Kentucky
Ne~ Capitol Building, Room 231
Frank~ort, Kentucky 40601
Dear Chief Justice Stephens:
The Federal Trade Commission staff is pleased to submit
these comments respecti~g the proposed Kentucky Rules of
Professional Conduct, Supreme Court Rule 3.135, and the proposed
Guidelines for Certification of Specialists in Kentucky
("Guide1ines").1 It is our understanding that the"Court ~ill
hold a pUblic hearing on the proposed rules and guidelines on
June 11 and that the Court is interested in receiving our vie~s
before that date.
!n this letter, we focus ~n the proposed rules regarding
fees, practice with non1awyers'~' advertis ing, and solicitation.
In addition, we address existing Rule 3.135,2 ~hich deals with
attorney advertising, and some of the proposed Guidelines
relating to advertising of specialty. We are concerned that some
of the proposed rules and the existing rule may harm consumers by
restraining price competition, discouragi~g referrals and
associations between attorneys, restricting the develo?men~ of
innovative and efficient forms of legal practice, and
un~ecessarily limiting the information available to consumers.
We also believe that the proposed Guidelines may restrain
advertising more than is necessary to protect consumers.
As is discussed in more detail below, we urge the Court to:
(1) clarify in the commentary to proposed Rule 1.5(a) that only
fees that are so high as to suggest a br~ach of fiduciary duty to'
! the ~lient would be unreasonable; (2) dele~e proposed Rule 1.5(e)
1 These comments re~resent the views of the Federal Trade
Commission's Bureaus of Competition, Consumer Prote=tion, and
Economics, and not necessarily those of the Commission itself.
The Commission has, however, voted to authorize us to sub~it
these comments for your consideration.
2 We conment on the existing Supreme Court rule in t~e
event that the Court does not adopt the proposed Kentucky Rules·
of Professional Conduct a~d because, even if the Court adc~ts the
proposed Rules, portio~s of the existing rule may re~ai~ i;
effect.
Honorable rtc~e~~ F. S~ephe~s--Page 2 so as no~ to discou~age referrals and associations of at~orneys in different law firms for particular cases; (3) eliminate the restrictions in proposed Rule 5.~ on prac~ice with nonlawye~s, and on lawyers influencing the p~ofessional jUdgment of othe~ lawyers; (4) amend proposed Rule 7.1 to clarify that t~uthful, nondeceptive endorsements and experience, success, and comparison claims are permitted; (5) delete proposed Rule 7.2(a) to permit advertising in any media; (6) delete Rule 3.135(6) (a) (i) to allow attorneys to advertise all truthful, nondeceptive in~ormation; (7) amend Rule 3.135(4) to eliminate the restrictions on the use of self-laudatory statements and the requirement that statements in advertisements be "informative," and to clarify what the Cou~t interprets as "unfair"; (8) modify proposed Rule 7.2(b) to allow the payment of refer~al fees to attorneys and the use of for- profit referral services; (9) modify proposed Rule 7.3 to remove the broad ban on solicitation; (10) modify proposed Rule 7.4 to allow express and implied claims of specialty, and delete Rule 3.135(5) (b) (2) and proposed Guideline VII.A.2 and B so as not to discourage specialty adve~~ising; and (11) delete proposed Guideline IV.E to promote competition between Board certified specialists and referring attorneys. Interest and Exoerience of the Fede~al T~ade Commission For more than a decade, the Commission has investigated the effects of restrictions on the ~usiness practices of state- licensed professionals, inclUding lawyers, accountants, dentis~s, physicians, non-physician health-care providers, and others. The goal of the Commission has ~een to identify and seek the removal of restrictions that prevent professionals'from advertising or providing services ~hat consume~s want without providing . countervailing benefits. We believe that Supreme Cour~ rtule 3.135, and certain of the proposed Guidelines and proposed Kentucky Rules of Professional Conduct, may result in such adverse effects. ' ! Prooosed Rule 1.5: Fees ?rooosed Rule 1.5(a): rteasonableness of Tee Proposed Rule 1.5(a) states that a "lawyer's fee shall ~e reasonable," and SUbparagraph (3) provides that "the fee customa~ily charged in the locality fo~ similar legal services" is ~o be considered in dete~ining ~easonableness. We suppc~t "h B ' 1 . f . .. . . ""h ... d' ~ e ar s c a~~ ~ca~~on ~n ~.e co~entary ~o p~opose Ru_e 1.5(a) enti~led "Disputes ove~ Fees" that subparag~aph (3) is inte~ded "to prohi'bit unreasona~ly high fees and does not p::event a la;.;ye~ from sharing (sic] fees ~ha~ a~e less than' custor..ary. '" This commenta~ will avoid lawyers' in~e~p~eting t~is language to ~ar "un~easonably" low fees. I~ will ~hus allow price co:npetition
Hono~able ~obe~~ F. S~ephens--?age 3 among t~aditional practitioners and also might prc~ote competition f~om legal clinics and other nont~adi~:onal providers of legal services. Although proposed Rule l.S(a) would permit mo~e price competition in certain respects, it nevertheless is undesirable insofar as it may set a ceiling on fees. We do no~ believe that consumers of legal services benefit from price regulation, whether a minimum or maxi~um price is imposed. Setting a minimum price may increase prices and set~ing a maximum price may reduce the quality of services offe~ed. For that reason, we believe that proposed Rule l.S(a) should be applied only in extreme cases where an attorney's fee is so high that it represents a clear abuse of the client or suggests a possible breach of fiduciary duty. We there~ore suggest.that the commentary make clear that fees may be found to be unreasonably high only if, under the circumstances, the attorney appears to be exploiting the client. P~c~osed Rule I.See): Fee-Snlitting Proposed Rule l.S(e), apparently derived from Rule l.S(e) of the ABA's Model Rules of Professional Conduct, states that division of fees between lawyers who are not in the same fi~ may be made only ,in two alternative circumstances. ;irst, division of fees is pe~itted if the division is in proportion to the' services performed by each lawyer. Alternatively, division of .fees is permitted according to the allocation agreed on by the lawyers if, by written agreement with the client, each lawyer assumes joint ~esponsibility for the representation. In either case, the client must be advised of and not object to the participation of all the lawye~s involved and the total fee must be "reasonable." We are concerned that the proposed rule might unnecessarily discourage both referrals and associations between lawyers in diffe~ent law firms under ci~cumstances in which such . activity may benefit consumers. Division of fees can provide incen~ives for at~orney refe~rals and associations that are desi~able for the client . . . Unlike lawyers in large firms, who can refer matte~s to thei~ partne~s and receive a share of the fees, when lawye~s in small firms receive a matte~ tha~ is. outside thei~ normal expertise, they ~ay not forward it ~o a more qualified attorney and still partici?a~e in the fee. Consequently, they have leps incentive to ~efe~ matters to more cualified counsel. [Division of fees] will benefit clients because it ~akes it mo~e likely t~at
Honorab:e Robe=~ F. S~ephens--Page ~ their ma~te=s will be forwarded to the most appropriate counsel •...3 Proposed Rule 1.5(e) would inhibit referrals by lawyers. First, the requirement that a division of fees be "in proportion to the services performed by each lawyer ll might be interpreted to prohibit referral fees, because it is unclear whether giving a prospective client the name and telephone number of another lawyer competent to handle that client's legal problems constitutes compensable Ilservices ll under the language of the proposed rule. 4 Even if this provision were interpreted to permit referral fees, it might be interpreted to allow only a very small portion of the total fees to be paid to the referring attorney. Second, the alternative re~~irement that a referring attorney assume responsibility for the independent professional jUdgmen~s of the attorney who is actually handling the case is likely to deter referrals. Because of the liability for malpractice that joint responsibility might entail,~ the referring at~orney probably would be compelled to review the o~her attorney's work. This could result in costly duplication of effort. It would seem that the referring attorney and the .3 Report of the Special Committee to Consider Adoption of the ABA Mocel Rules of Professional Conduct or to Consider Revisions of the 1969 Code at 8-9 (March 1986) . .. 4 A referral may be a valuable service. But according to state cou=t and ABA opinions, a Ilmere ll referral does not constitute a "service" and therefore an at~orney is not entitled 'to any portion of the fee when he or she has merely referred a clien~ ~o another. See Corti v. Fleisher, 93 Ill. App.3d 517, 417 N.E.2d 764, 772 (1981); Palmer v. Breyfogle, 217 Kan. 128, ~35 P.2d 955, 958 (1975); McFarland v. George, 316 S.W.2d 662 (Mo. 1968); Note, Referral Fees and the Effect of Disciolinarv Rule 2-107, 8 J. Legal Prof. 225, 228-29 (1983); Note, Division of ?ees Between Attornevs, 3 J. Legal Prof. 179, 186 (1978) (citing ABA Opinions). 5 The comment to orooosed Rule 1.5 on divis~on of fees states tha~ "[j)oint responsibility for the representation en~ails the obliga~io~s stated in Ru~e 5.1 fer purposes of the ma~~er involved." Proposed Rule 5.1 governs r~sponsibilities of ao par~ner for ~he ethical conduct of another at~orney in the sa~e law fi=m, as well as responsibilities of supervisory lawyers. Because it focuses on thes~ relationshios, its aoolication in the context of a "joint responsibility" si~~ation is-~nclear.
Ho~o~a~le Rc~e~~ F. Step~ens--?age 5 attorney handling the case should be able to determine among themselves how to divide the total legal fee. Two justifications have been offered to support bans 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, however, the referring lawyer typ~cally receives one-third of any fee recovered by the lawyer who handles the case. 6 ThUS, it is probable that the referring a~torney will select the lawyer who he or she believes is the most likely to ~ecover the largest awa~d for the prospective client. Clearly, 20% of an attorney's recovery in a contingent fee case is better than 40% of nothing; to this extent, the attorney's and the client's interests are the same. Even When no contingency fee is involved,. a lawyer referring a client to a specialist has every incentive to make suitable referrals in order to maintain 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 does not aooear to be a valid concern. First, the attorney could not raise his or her fees ~ithout losing some clients who are price-sensitive. 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, expe~ts may be a~le to reduce costs and pass on such savings to clients. Associations of two or more lawyers in different firms may also benefit consumers. The corwment to orooosed Rule 1.5 entitled "Division of Fee" correctly rec~gnlzes that such associations may benefit a client in cases in which neither attor~ey alone could se=ve the client as well. For example, one lawyer may not have SUfficient time, resources, or expertise to handle all aspects of a particular client's case. An attorney from Firm X might se=ve as chief trial attorney, while his or her co-counsel from· Firm Y might perform the bulk of the pretrial preparation. Prooosed Rule 1.5(e) might discourage such associations. The provlsion that a division of fees between attorneYS in different law firms be proportional to the services perfo~ed by 6 Referral Fees: ~verv~odv Does It, But Is It OK?, A. B • A. J'., Feb. 1985, at 40.
Honora~le Robe~~ F. S~ephe~s--?age 6 each lawyer would impose rigidity on the alloca~ion of the fee. I! lawye~s we~e allowed to negotiate their respective shares of the total legal fee, they could allocate the fee according to the !acto~s they deem important, including nu~~er of hours spent, prior knowledge of the facts, relationship with the client, o~ deg~ee of expertise. The alternative provision, imposing joint responsibility on one attorney for the independent professional jUdgments of another, also appears likely to deter associations of attorneys in different law firms, just as joint responsibility would deter attorney referrals. For the reasons s~ated above, we urge the Court to delete proposed Rule 1.S(e) in its entirety. It is not clear that any regulation of fee division is necessary. Should the Court deem it to be necessary, the les~ restrictive alternative of re~iring disclosure might be imposed. If consumers are not generally aware of the practice of paying referral fees, disclosure may be necessary so that consumers can assess referrals effectively. If the ~ourt decides to require disclosure, however, the requirement should be devised carefully to avoid imposing unnecessary costs. Prooosed Rule 5.4: Professional !ndeoendence of a Lawver Proposed rtule 5.4 prohibits a lawyer from forming a partnership or sharing legal fees with a nonlawyer, except under limited circums~ances, or from practicing in an organization authorized to practice law for a profit if a nonlawyer owns an interest in the organization. This proposed rule would limit the ability of lawyers to establish mUlti-disciplinary practices with other professionals, such as psychologists or accou~tants, to deal efficiently wi~h both the legal and nonlegal aspects of .specific problems. Proposed Rule 5.4 also would appear to bar lawyers from inclUding any lay persons, such as marketing cirec~ors, as partners in their law fi=ms. Finally, such a restric~ion would appear to prohibit corporate prac~ice, and ~hereby preven~ the use of potentially efficient business formats. The Commission has examined similar =es~rictions on associations between physicians and nonphysicians and concluded that they restrain competition unnecessarily. In Arne~ican Medical Association, 94 F.T.C. 701, 1017-18 (1979), a:f'd, 638 :.2d 443 (2d ci~. 1980), atf'c me~. bv an e~allv div:ced Court, 455 U.S. 676 (1982), the :ederal Trade Commission found tha~ the AY~'s ethical restric~ions on the for~rr.ation of o~ofessional associations with no~=hvsicia~s had an acverse ~ffect on competition. The A¥~is-form of practice res~rictions prec~uded a wide variety of professional ventures and potentially efficient business formats, such as health rnain~enance orcanizations and prepaid health care plans. The co~~ission concluded that ~he
Hono~able Rc=e~~ F. Stephens--?age 7 prohibi~ions were much broader than needed ~o prevent non~hvsician influence over medical ~rocedures or consumer deception about the skills of a nonphysician partner or associate. The co~~ission staff has studied the benefits to consumers of associations between professionals and lay persons. The staff of the Federal Trade Commission's Bureau of ~conomics concluded from a study of the optomet~ic profession that the price of optometric services is lower in jurisdic~ions in which business associations between p~ofessionals and lay persons are permitted. 7 Restrictions on such business associations impede the forma~ion of chain firms and other volume operations and thus make it difficult to achieve economies of scale. Proposed Rule 5.4 might limit potentially procompetitive professional ventures, innovative business forma~s, and perhaps some :o~s of prepaid legal services. By imposing restric~ions on business associations between lawyers and nonlawyers, proposed Rule 5.4 might prevent lawyers from achieving savings in ~arketing that could be passed 'on to consumers. For example, the proposed rule would no~ permit a retailer such as Sea~s to employ attorneys to provide legal services to the public. If attorneys were permitted to enter into such an arrangement, it would be feasible for them to adver~ise on a national scale and share adver~ising time wi~h other Sears service providers, such as its .insurance, stock brokerage, and realty subsidiaries. Nonlawyer officers and directors may provide law firms with managerial or marketing expertise. Proposed Rule 5.4 would permit nonlawyers to be corporate directcrs and officers in law firms, which would enable law firms to secure ~heir exper~ise. We are concerned, however, that the p~oposed rule would discourage nonlawyers from seeking such positions, since paragraph (a) and subparagraph (d) (1) would prohibi~ nonlawyers ~ from sharing the profits or owning an interest in ~he law firm. Subparagraph (d) (2) provides that a lawyer shall not practice with a for-profit organization if a nonlawye~ has the right to direct or control the lawyer's professional jUdgment. That subparagraph alone should adequately prese=ve the lawye~'s indepe~dent p~ofessional jUdgment which, acco~ding to the co~~entary to proposed Rule 5.4, was the purpose of this disciplinary ~le. 7 Bureau of Economics, Feceral Trade Co~~ission, ~::ects 0: Res~ric~ions on Advertising and Corr~ercial ?rac~ice in ~he ?ro:essions: The Case of Optome~ry 25-26 (1950).
Honora~le Ro~er~ F. S~e?hens--Page 8 Proposed Rule 5.4(c) is apparently intended as a further guaran~ee of the lawyer's independent professional jUdgment. Th~ proposed rule provides that "(a] lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional jUdgment in renderi:-.g such legal services." The word "person" in the proposed rule appears to encompass bo~h lawyers and nonlawyers. 8 If so, the proposed rule, in effect, would prOhibit an at~orney handling a case based on a referral from allowing his or her professional judgment to be directed or regulated by the referring attorney. The attorney accepting a referral would be unable to base a decision concerning a partiCUlar legal issue on a consultation with the referring attorney, even when that consultation might be beneficial to the partiCUlar client. Furthermore, proposed Rule 5.4(c) appears to conflict with proposed Rule 1.5(e). One circumstance under which proposed Rule 1.5(e) would permit attorneys from different firms to divide fees is where "each lawyer assumes joi,nt responsibility for the ' representation. ,,9 Proposed Rule S.4(C), on the other hand, would prohibit the referring attorney from directing or regulating the professional jUdgment o! the attorney who received the referral. Thus, the proposed rules would leave the referring attorney in the predicament where he or she might be liable for the other attorney's handling of the case, but still could not influence that attorney's professional jUdgment. We therefore urge the Court to delete all of proposed Rule 5.4, except paragraph (c) and subparagraph (d) (2), and to amend paragraph (c) so that it applies only where a nonlawyer directs a lawyer's professional jUdgment. Pronosed R~le 7.1: coremunications Concern ina a ~awver's Services The beneficial effects of advertising are widely recognized. TruthfUl, nondecep~ive advertising communicates information about individuals or fi=ms offering the services that consumers may wish to nurchase. Such information helns consumers make decisions that reflect their true preferences and promotes the efficient delivery of services. Before advertising by attorneys 8 A literal reading of pro?osed Rule 5.4 (c) would prohibit an associate a~~orney from allowing his or her professional jUdgment to be influenced by a par~ner in the same fi~. This undoubtedly was no~ the in~ention of the Bar. 9 Proposed Kentucky Rule of Professional Conduc~ 1.5(e) (1) (b).
11 Hono~able Rcber~ F. S~~phens--?age 9 ~as permitted, many Americans failed to obtain the se~ices of an attorney, even ~hen t~ey had serious legal problems,10 primarily because t~ey feared that legal representation ~ould cos~ too muc~ or they ~ere unable to locate a lawyer sUfficiently skilled at handling their particular problems.~l A recent empirical study suggests that the removal of restrictions on the dissemination of truthful information about lawyers and legal services ~ill tend to enhance competition and lo~er prices. 12 Although concern has been voiced that advertising may lead to lo~er quality legal services, the empirical evidence suggests that the quality of legal services provided by firms that advertise is at least as high as, if not higher than, that provided by firms that do not advertise. 13 We fully endorse the view that false and deceptive advertising should be prohibited. Nonetheless, as set forth belo~, ~e believe that the definition of "false or misleading" contained in proposed Rule 7.1 may prohibit much truthful, no~deceptive advertising. Prooosed Rule 7.1(b): "Unjustified Exnectations" The State Bar of Kentucky proposes that the Court adopt, in connection with proposed Rulp- 7.1(b), the comments drafted by the American Bar Association ~ith respect to the identical provisions in ABA Model Rule 7.1. The ABA comments state: The prohibition in paragraph (b) of statements that may create "unjustified 10 For example, a nation~ide survey in 1974 by the American Bar Foundation and the American Bar Association found that only nine percent of the people ~ho had property damage problems, ten . percent of those ~ho had landlord problems, and one percent of those ~ho felt that they ~ere the victims of employment discrimination sought t~e services of an attorney after the most recent occurrence. B. Curran, The Legal Needs of the Public: The Final Report of a National Survey 135 (1977). rd. at 228, 231. 12 Cleveland Regional Office and Bureau of Economics, Federal Trace Commission, Improving Consumer Access to Legal Services: The Case =or Removing Res~rictions on Truthful Advertising (1984). 13 Muris & McChesney, Advertisina and the Pri=e and Qualitv o~ Lecal Services: The Case ~or Le=al Clinics, 1979 Am. B. Found. Research J. 179.
Hono~able Rober~ :. S~ephens--Page 10 expecta~ions" would ordinarily preclude adve~~isements 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 advertisements containing client endorsemen-:.s. The comments suggest that information about past results "may c~eate the unjustified expec~ation that similar results can be obtained for othe~s 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 cou~d chill the use of much adve~tising that is truthful and beneficial to consumers. For example, consumers may wish to consider an atto~ney's past results as one of several factors in selecting a lawyer.: While it may be impossible to provide complete information about prior cases in an advertisement, there is no reason to believe an advertisement of prior experience could not be p~esented in a way ~hat is not deceptive. Information that is less than complete may, nonetheless, not be misleading as long as it does not omit ~aterial facts. "[I)t seems peculiar to deny the consumer, on the ground that the information is incomplete, at least some of the relevant information needed to reach an informed decision." Bates v. S~ate 5ar of A~izona, 433 U.S. 350, 37'4 (1977). Advertising by means of testimonials and endorsements has t~aditionally been recognized as effective by sellers of goods ahd se~ices. For example, the listing of certain clients such as major banks or corporations in the Martindale-Hubbell dir.ectory suggests that a firm can han~le complicated legal ?r9blems in which large sums of money may be at risk. . Adve~tising in which clients attest tru~hfully that they use a firm's legal services provides the general pUblic·the same information that is available to users of legal directo~ies. Advertising in which clients discuss thei~ ~easons for satisfaction with a law firm conveys even more information than do legal directo~ies. An advertisement in which a famous athlete or ac~or s~ates truthfully that he or she uses a particular firm or attorney indicates to consu~ers tha~ someone who can spend a substantial sum ~o find a good atto~ney, and who may have significant assets a~ stake, believes a part~cular law:e~ to be effective. Testi~onials are not necessarily misle;ding and may be effec-:.ive in attracting and ~etaining consume~ inte~es~ in -:.he advertiser's message. :n short " we believe that advertisements containing c2.ient endorsements or information about oast successes can be presented in ways not likely to create .unjus~ified expectations. We
Ho~o=a~le Rc=e=~ F. S~epher.s--?age 11 therefo=e urge the Cou=t to modify the ABA corr~entary with respect to proposed Rule 7.l(b) and make clear that advertisements containing tru~hful and nondeceptive endorsements, testimonials, and statements of a~torneys' prior results are permitted. 14 Proposed Rule 7.1(c): Comparative Advertising Proposed Rule 7.1(c) provides that a lawyer shall not compare "the lawyer I s services with other lawyers I service's, unless the comparison can be factually substantiated." We believe that this rule may un~ecessarily inhibit competition by prohibiting lawyers from maki~g truthful adver~ising claims that are not amenable to empirical substantiation. Information that accurately compares the par~icular qualities of competing law firms 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 of fact, either about the advertiser or a competitor, can be harmful. However, such statements already are prohibited by proposed Rule 7.1(a). We are concerned that proposed Rule 7.1(c) may deter the use of comparati~e adve=tising and preclude truthful, nondeceptive statements merely because they are not amenable to empirical testing. 1S Examples of such statements are "Friendlier service" 14 In addition, we recommend that the Court delete Rule 3.135 (5) (a) (ii), which is SUbstantially similar to proposed Rule 7.l(b), or clarify that this p=ovision does not prohibit advertisements =ontaining endorsements and testimonials. 15 In a statement of policy regarding comparative advertising, the Federal Trade Commission recognized the benefits of comparative advertising and indicated concern about s~andards set by self-regulatory bodies that might discourage the use of such advertising: On occasion, a higher standa=d of s~bstantiation by advertisers using compa=ative advertising has been required by self-=egulation entities. The Commission evaluates comparative acvertising in the same ~anner as i~ evaluates all other advertising techniques .... (I)nterpretations tha~ ir.pcse a highe= standard of subs~antiation :0= cor.para~ive clai~s than fo= unilateral claims are inappropriate and should be , ( .. • ...:l ) con ... J..nue ......
Eonorable Ro~ert F. Step~ens--Page 12 or ":!'1ore convenient hours." :::ven tl":.ou;h such sta te:nents are not readily su~ject to verifica~ion, they may be truthful and nondeceptive, and indicate the qualities that the advertiser believes are important to consumers. Moreover, such statements can attract consumers' attention to the advertising attorney. :::ven advertising that is designed only to attract attention can inform consumers of a lawyer's presence in a community, which is itself useful information. Proposed Rule 7.1 (c) 's requirement of factual substantiation appears to ~e broader than necessa=y 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 claim i~?lies some basis fo~ it, and consumers would be deceived if a reasonable level of support were lacking. 16 However, "pUffery" and SUbjective claims do not similarly imply that sUbs~antiation exists,'and so may be used without it. We therefore recommend that' "the Court modify proposed Rule 7.1(c) to require only that an attorney have a reasonable basis for any material, objective claims, and that such claims be t~thful and nondeceptive. 17 Prooosed Rule 7.2(a): Permissi~le Advertisi~cr Media Attorneys may interpret the list of media in proposed Rule 7.2(a) as exclusive and conclude that advertising in media not listed is prohibited. The listing of specific media that may ~e used in advertising could also discourage innovation in ways not ,intended by the Cour't., especially since the ph::'~se "pu~l ic media" is ambiguous. For example, the rule might be inte::,preted to prohi~it sponsorship of museum exhibits. In addition " the specificity of the rule fails to anticipate changing technologies. Thus, for example, the rule m~ght be interpreted to exclude advertising in compu't.er bulletin boards, on-line directories, or similar media that may play inc::,easingly , 5 ( .. . d) -: •.• con ... J.nue revised. 16 C.F.R. l4.15(c) (2) (1966). 16 See FTC Policy Statement Rega::'ding Advertising Su~stantiation, 104 F.T.C. 839 (1984). 17 Rule 3.135(5) (a) (iii) contains a p::,ovision similar to proposed Rule 7.l(c) and we suggest that this po::'~ion of the exis't.ing ~~le be deleted.
Ho~o~able ~~~e~~ F. S~ep~er.s--?a;e 13 important roles as elec~ronic communication becomes more common. The~efore, we recommend that the Court delete proposeq Rule 7.2(a) .18 Rule 3.135 (6) (a) (i): Permiss ibl e Contents of Adver': isements Rule 3.135(6) (a) (i) specifies the types of information that attorneys may include in an advertisement. Rule 3.135(6) (b) provides that an attorney who wants to include information not specified in sUbparagraph (a) (i) must send a copy of the advertisement to the Attorneys Advertising Commission thirty days in advance of dissemination. The ABA has recognized the dange~ of imposing such restrictions: limiting the types of information that may be advertised would impede the flow of information about legal services to many sectqrs of the public and "assumes that the bar can accurately forecast the kind of information that the public would regard as relevant.,,19 We share the ABA'S concern ;and believe that only false and deceptive advertising should be prohibited. Nor is it clear that the exception provided in paragraph (b) is adequate to overcome the deficiencies of this rule. The exception contains an advance notice requirement that is likely to delay the dissemination of information and reduce lawyers' abili~y to compete through a¢vertising. Because, of the built-in delay in securing approval and the uncertainty of approval, the exception may be insufficient to overcome the rule's effect of discouraging attorneys from providing information to consumers, other than that contained in the categories specified in subparagraph (a) (i). Accordingly, we recommend that the Court delete Rule 3.135(6). 18 We agree with the Bar's decision not to propose that the Court adopt ABA Model Rule 7.2(b) and (d). ABA Model Rule 7.2(b)' ! sta~es that a "copy or recording of an advertisement or wri~ten co~~unication shall be kept for two years after its last dissemination along with a record of when and where it was used." ~~is recordkeeping requirement would entail administrative costs and thus might discourage attorney advertising. ABA Model Rule 7.2(d) requires that lawyers include in their advertisements "t~e name of at least one lawyer responsible for its content." Inclusion of a lawyer's name might distrac~ ~onsumers' atte~~ion from the informa~ion ~~e lawyer or firm wants to communicate in the advertisement and thus reduce the effectiveness of the advertisement. 19 Comment to A3A Model Rule of Professional Conduct 7.2 (Aug. 2, 1983).
Eono~able Robe~~ F. Stephe~s--?age 14 Rule 3.!35(~): Un:~i; a~d Sel:-Lau~atc;v Clair.s Rule 3.135(~) p~ohibits at~or~eys f~o~ including in their adve~tisements "a s~atement o~ claim which is false or tends to be misleading, deceptive, or unfair, or which is self-laudatory rather than designed to inform the pUblic." We do not question the need to prohibit the use of "unfair" statements or claims in attorney advertisements. In fact, Section Five of the Federal Trade Commission Act prohibits "(u)nfair methods of competition ... and unfair. . acts or practices .... ,,20 We are concerned, however, that without an explanation of what constitutes an "unfair" statement or claim, the term "unfair" might be interpreted by some attorneys to prohibit advertising that poses little risk of consumer injury. In a statement of policy, the Federal Trade Commission set forth a test for determining whether a consumer injury is legally "un~air."21 To justify a finding of unfairness, the injury must: (1) -be s-..:bstantia1 22 ; (2) not be outweighed by any countervailing benefits to consumers or competition that the practice produces 23 ; and (3) be an injury that consume~s themselves could not reasonably have avoided.~~ We suggest that the Court consider this interp~etation of "unfair" and ensu~e that the 20 15 U.S.C. § 45(a) (1). 21 Letter from Federal Trade Commission to Senators Wendell H. Ford and John C. Danforth 5 (Dec. 17, 1980). 22 In most cases, a substantial inju~y involves moneta~y 'harm, as when selle~s coerce consumers into purchasing unwanted goods or services. "Emotional impact and other more SUbjective types of ha~, on the other hand, will not ordinarily make a practice u~fair. ThUS, for example, the Commission will not seek to ban an advertisement merely because it offends the tastes or social beliefs of some viewers .... " rd. at 5-6. 23 Most business oractices involve a mixture of costs and benefits to purchasers.· The Commission recognizes these tradeoffs and will not find a practice unfair unless its net effects are injurious. The cor.~ission also considers the costs that a remedy would entail. rd. at 6. 24 Normally consumers' purchase decisions control the market without regulatory intervention. Certain types of sales techniqu~s, however, may prevent consume~s from effectively making their own decisions, in which case corrective action may be neoessary. Id. at 7.
commenta~y clea~ly conveys to lawye~s what advertising is permitted. The prohibition of self-laudatory advertising may p~eclude virtually all supe~iority claims. This prohibition ~ay also ~est~ict many forms of comparative advertising, which, as we stated above in our discussion of proposed Rule 7.1 (c), can be a highly effective means of informing a~d attracting clients. When at~orneys cannot truthfully compare the attributes of their se~ices to those of their competitors, their incentive to improve their se~ices or reduce their prices is likely to decrease. Bans on self-laudatory claims are particularly likely to injure competition and consumers when they are interpreted to prohibit a wide range of factual statements. For example, virtually all statements about an attorney's qualifications, experience, or performance can be considered to be self- laUdatory. Bans on all· such claims would make it very difficult for attorneys to provide consumers with truthful information about their services. By prohibiting. attorneys from engaging in advertising that is "self-laud~tory rather than designed to inform the public," Rule 3.135(4) could c~ill attorney advertising. !t may be difficult for attorneys to predict what statements or claims the Court might regard as informative rather than self-~audatory. Attorneys may interpret the rule to pro~ibit advertising of any category of information not listed in Rule 3.135(6) (a) (i). For these reasor-s, we urge the Court to amend Rule 3.l35(~) to eliminate the restrictions on self-laudatory statements and the requirement that sta~ements be designed to 'inform the pU~lic, and to clarify ~~at s~atements or claims the Court considers to be "unfair." ?rooosed Rule 7.2(b): La~~er Referral Services Prooosed Rule 7.2(b) appears to preclude the use of for- prOfit lawyer referral se~ices or other legal service organizations. such organizations enable law~ers to pool their advertising resources while mai~taining independent practices. Consumers in need of legal advice on a particular sUbj~~t may benefit from the knowledge such se~ices possess abou~ ~he parti~ular expertise of each member attorney. For-profit referral se~ices may be able to provide more useful info~ation to consumers than no~profit bar a5socia~ion referral services, which may be o~liged ~o give referrals on an equal basis to all at-torneys.
Propose~ Rule 7.2(b) also appears to prohibit the paymen~ of fees to lawyers who refer prospective clients to other lawyers. As we mentioned above in our discussion of proposed Rule l.5(e), such a prohibition could have substantial anticompetitive ef~ects. For these reasons, we urge the Court to delete the requirements in proposed Rule 7.2(b) that lawyers not pay referral fees ~o other lawyers, and that lawyer referral services and similar legal service organizations be not-for-profit. Prooosed Rule 7.3: Direct Contact with Prosoec~ive Clients Proposed Rule 7.3 would prohibit virtuall y 25 all forms of direct client solicitation because, according to the comment to the proposed rule, th~re is a "potential for abuse inherent in direct solicitation."..:: 6 We j::)elieve that solicitation can provide consumers with helpful informa~ion about the na~ure and availability of legal services, and that any potential abuses can be ef£ectively prevented through more limited and specific . regUlatory provisions. We urge the Court, therefore, to modify orooosed Rule 7.3 and adoot more 'limited restric~ions on ~ollcitation. . Written co~unications from lawyers may provide useful information to prospective clients. For example, by targeting let~ers to a particular audience, the lawyer can provide information to those consumers who are most likely to need legal services and to benefit from information about what services are available, Soencer v. Honorable Justices of the Suoreme Court of ?ennsvlva~~a, 579 F. Supp. 880, 891 (~.D. Pa. 198~), aff'd mem., 760 F.2d 261 (3d eire 1985), and who may need to have a lawyer take action expeditiously on their behalf. As the court stated 'in Koffler v. Joint Bar Association, 51 N.Y.2d 140, 1~6, 412 N.~.2d 927, 931, 432 N.Y.S.2d 872, 875-76 (1980), cert. de~ied, ~50 U.S. 1026 (1981): ! 25 The proposed rule family members or of those professional relationship, significant motive for the would not apply to the solicitation with whom the lawyer had a prior or where pec~niary gain was not a ,. ' ' SO_1.c~ a,-~on. of 26 We understand that t~e Court's order in Shaoero v. Ke~tuckv Bar Association, 86-SC-335-K3 (Ky. March 27, 1987), modified Rule 3.135(5) (b) (i) as to mail advertising, using language virtually identical to proposed ~ule 7.3. Our comments on proposed Rule 7.3 would ~herefore apply e~~ally to the curre~~ rule.
Hcno~a~le ~o~er~ F. Step~ens--?age 17 To o~tlaw t~e use of letters. . addressed to t~ose most likely to be in r.eed of legal services . . . ignores t~e strong societal and individual interest in the free dissemination of truthful price information as a means of assuring infor:ned and reliable decision making in our free enterprise system The Seventh Circuit reasoned similarly in Adams v. Attornev Recistration and Disciolinarv Commission, 801 F.2d 968, 973 (7t~ Cir. ~986), that "(p]rohibiting direct mailings to those who might most desire and might most benefit from an attorney's services ~ns afoul of the concerns for an informed citizenry t~at lay at the heart of Bat.es." Without truthful information, consumers are not able to select the quality and price of legal" services that best suit their needs. Lawyers may be able to communicate with prospective clients more efficiently by using targeted mailings and te~egrams than by using other forms of advertising. Targeted mailing and telegrams may be costly. Because they are sent to consumers who have the greatest need for legal services, however, they are likely to have a higher, response rate than other forms of advertising. Consumers who choose to res~ond to such written communications incur lower search costs because they need not contact numerous ~awyers to find one able to hancle a legal problem. Targeted mail and telegraph advertising, as long as it is truthful and nondeceptive, poses little danger of consumer harm. Although it is not impossible, it is unlikely that written communications will be intrusive or coercive, or involve intimidation or duress. In ~e Von Wiecren, 63 N.Y.2d 163, 170, 470 N.~.2d 63o, 841, 481 N.Y.S.2d 40, 43 (1984), cert. denied sub . nQID. Co~~ittee on Professional Standards v. Von Wie=en, 105 S. ct. 2701 (1985); Koff~er, 51 N.Y.2d at 149, 412 N.E.2d at 933, ~32 N.Y.S.2d at 877-78. A letter or a telegram from an attorney offering legal services requires no immediate response. The cons~mer can give the communication careful consideration and make a reasone~ decision about selecting a lawyer. In-person contact may also provide consumers wit~ truthful, nondeceotive information that will hel~ them select a laWYer. As the Sup=eme Court stated in Ohralik v.·Ohio State Bar • Association, 436 U.S. 447, 457 (1978), in-person contacts can convey information about t~e availability and terms of a lawyer's legal services-and, in this respect, serve much t~e same f~nction as ac.vertising.
?ono~able ~~be~~ F. S~e~ta~s--Page 13 In-pe~son solicita~ion by lawyers in many ins~ances does not involve coercion or the exercise of undue influence. Lawye~s o~~en encounter prospec~ive clients at meetings of political a~d business organizations and at social events .. Indeed, many lawyers traditionally have built their law practices th~ough such contacts. Under such circumstances, the possibility of abuse seems minuscule. Similarly, lawyers present speeches and seminars to prospective clients that establish goodwill and help attendees to understand the law and identify situations in which they might need a lawyer. Such personal contacts present little risk of undue influence, bu~ do provide the benefit of enabling prospective clients to assess the personal qualities of attorneys. Since lay persons might find aggressive solicitation to be offensive, lawyers have an incentive not to engage in such solicitation. We recognize that abuses may result from in-person solicitation by lawyers. Injured or emotionally distressed peop·le may be vulnerable to the exercise of u:1due influence when face to face with a lawyer, as the Supreme Court reasoned in Ohralik, 436 U.S. at 465. We do not believe, however, that this justifies a broad prohibition on all in-person solicitation. The Federal Trade Commission considered the concerns that underlie the Ohralik opinion when it d~cided American Medical Association, 94 F.T.C. 701 (1979), aff'd, 638 F.2d 443 (2d Cir. 1980), aff'd memo bv an e~allv divided Court, 455 U.S. 676 (1982). After weighing the possible harms and benefits to consumers, the FTC ordered 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 .. Telephone solicitation can also provide useful information, and it may present less risk of harm to consumers than does in- person solicitation. We recognize, of course, that telephone sales can be used to injure consumers. Consequently, we would not oppose a prohibition on false or deceptive telephone solicitation. However, the use of the telephone to sell goods and services has become relatively common in our society. It is not clear to us that telephone solicitation by lawyers is necessarily likely to harm consumers. For exarn;le, a lawyer may call an acquaintance who owns a business and offer a legal service, or a lawyer may hire a telephone marke~ing fi~ to call all reside:1ts of a neighborhood a:1d offer t~e lawyer's services to wri~e a will. In bo~h cases, consumers w~ll be ~rovided useful info~ation and the likelihood of ha~ seems· small. Thus, we oppose t~e proposed broad ~an on solicitation. We would not oppose more limited restrictions O~ solicitatio~ di=e=~ed a~ ac~ual abuses. :o~ example, we believe i~ would be
app~opriate fo~ the Court to prohibit false or deceptive solicitation~7 and solicitation directed to any person who has made it 'known that he or she does not wish to receive c~mmunications from the lawye~. In addition, the Court may wish to prohibit solicitation involving, in the language of the comment to proposed Rule 7.3, "undue influence, intimidation, (or] overreaching.,,28 If the Court concludes that such a prohibi~ion is necessary, we urge that its te=ms be interpreted na~~owly. Some licensi~g boards and p~ivate associations i~ othe~ p~ofessions have i~~erpreted these or similar te~s broadly and have applied them t~ ban solicitation under circumstances that pose no danger of abuse. So long as these terms are interpreted fairly and objectively, such a provision would adequ~tely pr~tect consumers and simUltaneously allow them to receive helpful information about legal se=vices. Advertisincr of Fields of Practice Prooosed Rule 7.4 , Proposed Rule 7.4 and its accompanying comment would prohibit the use of the te:=:m "specialist," or any othe::- claim "implying" that a lawye::- is a specialist, unless the a:;torney practices patent law or admiralty, or has been certified as a specialist th::-ough a state certification p~og~am. While the proposed =ule would allow a lawyer to indicate fields of practice,29 we believe that it is overly b~oad in restricting an 27 P::-oposed Rule 7.l(a) already prohibits false or deceptive corr~unications. 28 Different kinds of solicitation may present diffe~ent '::-isks of abuse, so the proper interpretation of these te~s may !depend on whether the solicitation at issue involves mail, telephone, or in-person contact. As noted above, written communication seems to present little danger of coercion or undue influence. Telephone solicitation may present less potential for abuse than in-person solicitation because telephone calls are easier to te:=:minate tha~ face-to-face c~nversations. 29 If the orooosed Guidelines f~r Certification of S "'" . .." .. " k . "" d ""h ' d....' "" d pec~a_~s~s ~n ~en_uc y a~e acop_e , ~.ey wou_ ~e ~nco~pora_e into proposed R~le 7.4(c). They would prOhibit an attor~ey who is not Board certified f::-om advertising fields of practice without includi~g a prescribed disclaimer, which might discourage advertising of areas 0= practice. We discuss the pr~posed Guidelines below.
Honorable Rober~ F. S~ephens--?age 20 attor~ey's ability to make truthful claims that he or she has developed dis~inct skills in a specific area of the law. A true statement that an attorney is a" member of an organization of trial lawyers, for example, misht be outlawed as an implied claim of specialization, even though it info~s consumers that the attor~ey has sufficient interest in trial advocacy to joi~ such an organization and has access to the organization's training and materials. There are many ways to obtain expertise, and information that an attorney has experience or special skills in a particular field is clearly useful to consumers needing help in that field. Furthermore, the use of the tenn "specialist" may be the clearest, most efficient way to communicate such infonnation. We do not believe that advertising oneself as a "specialist" in a particular field of law implies-that the attorney is certified as a specialist by the state. Nor do we believe that advertising as a "specialist" would create an unjustified expectation about the results that a lawyer can achieve, any more than identifying oneself as a surgeon generates an expectation that every procedure that the surgeon performs'will be a success. Therefore, we recommend that the Court remove all prOhibitions against truthful, nondeceptive claims, express or implied, that a laWyer is a specialist . .. Rule 3.135 (5) (b) (ii) 30 Rule 3.135(5) (b) (ii) requires all advertisements that list or suggest areas of an attorney's practice to state, in print of e~~al size and character to the print used in listing the areas of practice, "This is an adve:.-tisen:ent. Kentucky law does not ce:.-tify specialties of legal practice." This disclosu::e requirement appears to in:pose unne=essa:.-y burdens on atto:.-neys who wish to inform the pUblic of t~e a:.-eas of law i~ wh~ch they prpvide se:.-vices, and might discourage lawye:.-s from advertising their areas of practice. . The rule is likely to reduce the effectiveness of advertisemer.~s of areas of practice because the disclaime:.- might c:.-eate a negative impression in consume:.-s' minds. The disclaimer may suggest to some consumers that it is improper to mention a oa:.-ticula:.- area of orac~ice in an adve:.-tiseme~t if the State of Kentucky does not t~st the p:.-actitione:.-'s expe:.-tise. The disclosure mig~~ also c::eate the erroneous impression that the lawyer la=ks expertise in the area of law reentioned in the adve:.-tisement. Consequently, some attorneys"may refrain from 30 It is ou:.- uncerstanding that proposed Guideline VII., if adopted, would supersede existing Rule 3.135(5) (b) (ii), but we ofter ou:.- views on the :.-ule because the Court may not adopt the proposed Guidelines.
adve=~ising t=uthful, nondeceptive in:o~ation abo~t thei= expe=~ise. The rule also would increase the cost of advertising by requi=ing lawyers to pu=chase additional adve=tising time and space ~o include ~he p=esc=ibed statement. ?ar~icularly for an attorney with a limited adver~ising budget, such as one who can afford only a two- or three-line advertisement in the classified section of a daily newspape=, the additional costs imposed by the ~~le could be significant. The conce=n expressed in subpa=agraph (5) (b) (ii) appears to be that consume=s will mistake adve=tising claims concerning a=eas of practice fo= claims of Boa=d certification of specialties. We have no evidence indicating that a me=e statement of area of p=actice connotes ce=tification cf specialty. We believe it is undesirable to impose a disclosure =equi=ement that may deter t~thful, nondeceptive advertising absent evidence or a =easonable belief that advertising without the disclosure is likely to mislead consume=s. We therefore . recommend that the Cou=t delete. Rule 3.135(5) (b) (ii). P=coosed G~ideline VTI 3l The proposed Guidelines for ce=tification of Specialists in ~entucky might disco~rage atto=neys from advertising their experience or even tha fact that they offer services in a particular field of law. Proposed Guideline VII.A p=ovides that attorneys certified in a particular field of law by the sta~e's Specialization commission may advertise "Soard Certi:ied as a Specialist" i~ that a=ea, but that attor~eys not so certified by the Commission who wish to advertise services in a particular field of law must include in their advertisements a disclaime= sta~i~g, "Not Soard Certi:ied as a specialist" in tha~ area. In addition, proposed Guideline VII.B provides that, "[w)here the 'co~ission has not yet designated an area of law and has not yet ! certified attorneys in that a=ea, any attorney wishing to advertise that he or she renders legal services in that area must include in such advertising [the disclaimer] 'Kentucky does not presently certify specialists in '" 31 We o::er our co~~ents only on proposed Guidelines :or Certi:ication of Specialists in Kentucky VI! and IV.E, and do not ~ake a position on other aspects of the proposed Guidelines, such as the merits of the certi:ication program.
Eono=able rtcbe=~ .. Step~er.s--?age 22 The s~ated purpose of these guidelines is to "(lJi~it misleading and deceptive adver-cising of legal services.,,32 We ag=ee that adve='Cising should not be false, ~isleadi~g, or deceptive. Clea=ly, it ~ould be deceptive for an attorney to advertise that he or she is "Board cer-cified ll in a field of la~ if no Board certification for that field exists, or if the attorney has not obtained such Board certification. Advertising of that sort, ho~eve=, ~ould be prohibited by proposed Rule 7.l(a). Absent evidence or a reasonable belief that consumers ~ould be misled by truthful advertisemen~s of areas of prac~ice, it does not appear that any additional regUlation on special~y advertising, such as one imposing disclosure requirements, is necessary. Advertising Board certLfication in a partiCUlar field of law can provide consumers ~ith beneficial information about attorneys' special skills if certification requirements are reasonably related to assuring p=oficiency in the SUbject area certified. On the other hand, ~hen attorneys ~ho are not Board certified are deterred by a re~~ired disclaimer from truthfully advertising their training and skills, consumers ~ill be dep=ived of information to help them choose among qualified practitioners. 3,3 A statement in an advertisement of a field of la~ that the advertising attc=ney is llnot Board certified as a specialist ll has a negative connotation. Consumers could be led t~.believe erroneously that that attorney is incompetent to handle their legal needs in a partiCUlar field ~hen the attorney may actually have such expertise but merely has not completed the certification procedures •. The potential consumer misunderstanding engendered by this proposed guideline could, by reducing the number of practitioners that the pUblic ~ill 'patronize, lessen competition in fields for ~hich Board cer~ification is available, and could thereby raise legal s.ervices costs in those sUbj ect areas. Proposed Guideline VII.B requires attorneys who wish to advertise that they render legal services in a partiCUlar field for which no Board certification exists to include a statement in their acvertisements ,that Kentucky does not presently certify specialists in that field. As discussed with respect to the 32 See Kentucky Bar Association Board of Governors, Guidelines for Certification of Specialists in Kentucky 2 (March 13, 1987). 33 As we stated above in our discussion of Rule 3.135(5) (b) (ii), such disclosure require~ents also increase the cost of advertising by ~andating that lawyers purcr.ase additional time and space to include the disclaimer.
similar disclaimer required by Rule 3.135(5) (b) (ii), co~s~~ers ~igh~ be led ~o believe erroneously that the lawyer lacks exper~ise or should not list an area of practice for which there is no cer~ification program. This disclaimer requirement could ha~ consumers who need to obtain legal services in a particular field by deterring attorneys from adver~ising an area of prac~ice. For these reasons, we urge the Court to dele~e proposed Guideline VII.A.2 and B. Prooosed Guideli~e IV.;: Li~:tatio~s on Soecialization Proposed Guideline IV.E would provide that "[w]here a client is referred by an attorney to a certified specialist for representation in the specialist's area of law, the specialist may not enlarge the scope o~ services beyond the area. The specialist shall encourage the client to return to the referring attorney for handling fu~ure legal needs or referral in another area." We are concerned that this proposed guideline would reduce competition between referring lawyers and certified sp~cialists. T~e proposed guideline would appear merely to protec~ referring attorneys from competi~ion and not to protec~ consumers in any way. In fact, it would reduce consumer c~oice by requiring the'specialist to s~eer the client ~ack to the referring lawyer. hccording to the proposed guideline, the specialis~ is not supposed to offer services outside the specialty even under circumstances in which ~he specialist has more time, resources, or ,expertise than the referring attorney to perform the necessary legal services. Since consumers of legal se=vices could ~e ha~ed if proposed Guideline IV.E were ado?~ed, we recommend that the Court delete i~. Conclusion Certain features of the proposed Kentucky Rules of !Professional Conduct might injure consumers by imposing unnecessa=y restric~ions on price competition, referrals and associa~ions, efficient forms of practice, and dissemination of info~ation about legal services. Rule 3.135 may prohibit the dissemination of truthful, nondeceptive advertising. The orooosed Guidelines miaht deorive consumers of useful informa~ion ~bo~~ at~orneys' exp~rfise a~d areas of prac~ice, and reduce competition between referring attorneys and certified specialists. We urge that the Court eliminate u~necessary res~rictions on competition among attorneys by: (1) clarifying in the cc:me~tary to proposed Rule 1.5(a) tha~ only fees tha~ are so high as to suggest a breac~ of fiduciary duty to the client would be unreasonable; (2) deleting ~ropcsed ~ule 1.5(e) so as not to discourage referrals and associatio~s of attorneys in
Eo~orab~e Ro=e~~ •. S~ephe~s--?age 24 differe~t law fi=ms for particular cases; (3) elimina~ing the rest=ic~ior.s in proposed Rule 5.4 on practice with nonlawyers, and on lawyers influencing the professional judgment of other lawyers; (4) amending proposed Rule 7.1 to clarify that tr~~hful, nondeceptive endorsements and experience, success, and compariso~ claims are pe=mit~ed; (5) deleting proposed Rule 7.2(a) to permit advertising in any media; (6) deleting Rule 3.135(6) (a) (i) to allow attorneys to advertise all ~ruthful, nondeceptive in~o=mation; (7) amending Rule 3.135(4) to elimina~e the restrictions on the use of self-laudatory statements a~d the recr..li::-ement that statements in advertisements be "informative," and clarifying what the Court interprets as "unfair"; (8) modifying proposed Rule 7.2(b) to allow the payment of refer::-al fees to attorneys and the use of for-profit referral se=vices; (9) modifying proposed Rule 7.3 to remove the broad ban en solicitation; (10) modifying proposed Rule 7.4 to allow express and implied claims of specialty, and deleting Rule 3.1~5(5) (b) (2) and proposed Guideline VII.A.2 and B of the proposed Guidelines for Certification of Specialists in Kentucky ~o encourage specialty advertising; and (11) deleting proposed Guideline IV.E so as not to discourage competition between Board certified specialists and referring attorneys. We hope th~t this letter is helpful in assessing how particular rules and guidelines may rest::-ict competition and injure consumers. We appreciate this opportunity to present our views. Respectfully submitted, Jeffre I~J::~Director
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