FTC Staff Comment to the American Bar Association Concerning the Use of Targeted Direct Mailings by Attorneys

V~'t0005
UNITLD STATES Of AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
BUREAU OF COMPETITION
~ov 23 1988
George 	A. 	Kuhlman, 	Esq.
Ethics 	Counsel
American 	Bar Association
Center 	for 	Professional 	Responsibility
750 	North 	Lake 	Shore 	Drive
Chicago, 	Illinois 	60611
Dear Mr. 	Kuhlman:
COMMiSSION AUTHORIZED
I 	am 	writing 	in 	response 	to 	Mr. 	Brad 	Hoffman's 	lette= 	of
October 	20, 	1988, 	which 	invited 	our 	comments 	on 	proposed
revisions 	to 	the 	Model 	Rules 	of 	Professional 	Ccnduct. l 	The 	Model
Rules 	currently 	prohibit 	the 	use 	of 	targeted 	direct 	mailings, 	a ..
marketing 	technique 	in 	which 	solicitation 	letters 	are 	sent 	to 	'
people 	who 	are 	known 	to 	need 	a 	particular 	legal 	service. 	In 	a
decision 	earlier 	this 	year, 	however, 	the 	Supreme 	Court 	held 	that
such 	letters 	are 	protected 	from 	state 	interference 	by 	the 	First
Amendment. 	Shapero 	v, 	Kentucky 	Bar Association, 	108 	S. 	Ct. 	1916
(1988). 	The 	Ethics 	Committee 	has 	therefore 	drafted 	amendments 	to
bring 	the 	model 	rules 	into 	conformity with 	this 	decision. 	These
changes 	are 	centered 	on Rules 	7.2 	and 	7.3, 	which 	govern,
respectively, 	advertising 	and 	direct 	contact 	with 	prospective
clients. 	Though 	the 	proposed 	changes 	relax 	restrictions 	on
promotional 	activity 	by 	attorneys, 	we 	believe 	that 	some 	of 	the
modified 	rules 	would 	continue 	to 	restrain 	such 	activity
unnecessarily.
As 	you 	know, 	this 	Bureau 	has 	long 	been 	interested 	in 	the
process 	of 	competition 	among 	professionals, 	including 	lawyers.
We 	have 	submitted 	commen~s to 	over a 	dozen 	states 	that 	were
1 	These 	comments 	are 	the 	views 	of 	the 	staff 	of 	the 	Bureau
of 	Competition 	of 	the 	Federal 	Trade 	Commission. 	They 	are 	not
necessarily 	the 	views 	of 	the 	Commission 	itself 	or 	of 	any
individual 	Commissioner. 	Our 	comments 	on 	these 	issues 	will 	reach
you 	later than 	we 	would 	wish, 	and 	after 	your 	preferred 	deadline
of 	October 	19. 	The 	FTC's 	original 	copy 	of 	the 	proposed 	changes
was 	unfortunately 	sent 	to 	Steven A. 	Stack, 	Jr., 	rather 	than 	to 	a
member 	of 	the 	agency's 	st~ff, 	and 	so 	we 	did 	not 	receive 	a 	text 	of
the 	proposals 	until 	after 	the 	deadline 	had 	passed.
• •• - "-,"-_. ~. '-~'-:-'":'O"-,.

George A. 	Kuhlman, 	Esq. 	Page 	2
considering 	reV~S10ns to 	their 	own 	rules 	of 	attorney 	conduct,2 	as
well 	as 	to 	the 	American 	Bar Association's 	House 	9f 	Delegates 	when
that 	body was 	considering 	an 	earlier proposed 	amendment 	of 	the
Model 	Rules. 3 	Our 	interest 	in 	the 	issues 	raised 	by 	rules 	of
professional 	conduct 	stems 	from 	our 	responsibility 	to 	enforce 	the
Federal 	Trade 	Commission Act, 	which 	prohibits 	un=air methods 	of
competition 	and unfair 	and 	deceptive 	acts 	and 	practices 	in 	or
affecting commerce. 	15 	U.S.C. 	§ 	45 	(Supp. 	IV 	1986).
Based on 	our 	experience, 	we 	believe 	that 	the 	proposed
revisions 	of 	the 	Model 	Rules 	represent 	substantial 	progress
toward 	providing 	consumers 	with 	the 	benefits 	of 	a 	competitive
market 	in 	legal 	services. 	In 	particular, 	we 	applaud 	the 	effort
to 	permit 	additional 	modes 	of 	advertising 	and 	forms 	of
solicitation. 	At 	the 	same 	time, 	however, 	we 	believe 	that 	the
amended 	rules, 	if 	adopted, 	would 	continue 	unduly 	to 	restrict 	some
forms 	of 	live 	telephone 	solicitation, 	to 	the 	detriment 	of
consumers. 	Further, 	we 	believe 	that 	the 	rules 	could 	stimulate
beneficial 	competition 	if 	they 	defined more 	precisely 	the 	term
"recorded 	communication," 	and 	if 	the 	official 	comment 	did 	not
suggest 	that 	merely 	sending 	a 	second 	solicitation 	letter, 	when
the 	lawyer 	has 	not 	received 	a 	response 	to 	the 	first, 	could
constitute 	impermissible 	harassment. 	These 	points 	will 	be
discussed 	in 	sequence 	below.
Telephone 	solicitation
Although 	the 	proposed 	new 	rules 'permit 	targeted 	mailings 	--
as 	ShaperQ 	requires 	-- 	they 	absolutely prohibit 	most 	telephone
solicitation. 	This 	restriction 	can harm 	consumers 	by 	raising 	the
costs 	of 	locating 	an 	attorney 	and may 	not 	be 	consistent 	with 	the
constitutional 	principles-set 	out 	by 	the 	Supreme 	Court 	in 	the
relevant 	cases. 	In 	Shapero, 	the 	Court 	held 	that 	bans 	on 	written
2 	For a 	sampling of 	recent 	correspondence, 	see 	the 	letters
from 	me 	to 	Harold 	L. 	Rubenstein, 	Esg.,·Secretary, 	New 	Jersey
Supreme 	Court's 	Committee 	on Attorney Advertising 	(Nov. 	9, 	1987);
to 	the 	Hon. 	David 	Prager, 	Chief 	Justice, 	Supreme 	Court 	of 	Kansas
(Aug. 	28, 	1987); 	to 	the 	Hon. 	Darrell V. 	McGraw, 	Jr., 	Chief
Justice, 	Supreme 	Court 	of 	Appeals 	of 	West 	Virginia 	(May 	1, 	1987);
to 	G. 	Robert 	Oliver, 	Chairperson, 	Code 	of 	Professional
Responsibility 	Committee, 	State 	Bar of 	Georgia 	(March 	31, 	1987);
and 	to 	the 	Honorable 	John B. 	Doolin, 	Chief 	Justice, 	Oklahoma
Supreme 	Court 	(March 	24, 	1987).
3 	Letter 	from 	Jeffrey 	I. 	Zuckerman, 	Director, 	Bureau 	of
Competition, 	to 	the 	Members 	of 	the 	House 	of 	Delegates 	of 	the
American 	Bar Association 	(Feb. 	6, 	1987).

George 	A. 	Kuhlman, 	Esq. 	Page 	3
conducted
Because
that 	the
rules 	might
telephone
solicitation 	are 	constitutionally 	invalid. 	In 	Ohralik V, 	Ohio
State 	Bar 	Association, 	436 	U.S. 	447 	(1978), 	on 	the 	other 	hand, 	it
held 	that 	bans 	on 	in-person 	solicitation 	are 	permissible.
Telephone 	solicitation 	appears 	to 	fall 	somewhere 	between 	these
two 	modes 	of 	contact. 	Telephone 	solicitation 	is 	more 	troublesome
than 	written 	communications 	since 	it 	involves 	a 	live 	interchange
with 	a 	trained 	advocate,4 	who 	may 	pressure 	the 	potential 	client
for 	an 	immediate 	decision, 	and 	since 	individual 	conversations 	are
not 	likely 	to 	be 	recorded 	for 	subsequent 	review. 	On 	the 	other
hand, 	telephone 	solicitation 	does 	not 	involve 	the 	more 	coercive
circumstances 	of 	a 	face-to-face 	meeting 	and 	the 	prospective
client 	can 	more 	easily 	terminate 	it 	by 	the 	simple 	act 	of 	hanging
up-the 	phone.
The 	proposed Model 	Rules 	would 	resolve 	these 	divergent
interests 	by 	distinguishing 	between 	two 	different 	types 	of
telephone 	solicitation. 	The 	rules 	apparently 	would 	permit
pre-recorded messages 	of 	the 	sort 	used with 	automatic 	dialing
machines, 	evidently 	on 	the 	theory 	that 	this 	format 	presents
relatively 	little 	risk 	of 	overbearing or 	high-pressure
salesmanship.S 	At 	the 	same 	time, 	however, 	the 	rules 	would
continue 	to 	proscribe 	live 	telephone 	solicitation, 	presumably 	in
the 	belief 	that 	its 	interactive 	nature makes 	this 	format
essentially 	identical 	to 	in-person 	solicitation.
We 	note 	first 	that 	the 	proposed ban 	on 	live 	telephone
solicitation 	appears 	to 	be 	inconsistent with 	the 	official 	Comment
on 	Rule 	7.3. 	The 	rule 	itself 	prohibits 	all 	live 	telephone
solicitation, 	while 	the 	Comment 	justifies 	the 	rule 	solely 	by
reference 	to 	the 	narrower 	circumstances 	of 	soliciting 	a 	potential
client who 	is 	already 	known 	to 	need 	legal 	services.
Moreover, 	the 	line 	drawn 	in 	the 	draft 	rules 	may 	not 	be 	the
most 	desirable 	one. 	We 	be~ieve 	that 	the 	complete 	prohibition 	of
live 	telephone 	solicitation might 	not 	serve 	the 	interests 	of
consumers. 	Other 	regulatory 	approaches 	could 	protect 	potential
clients 	from 	abusive 	tact~cs while 	allowing 	them 	to 	enjoy 	the
benefits 	that 	live 	telephone 	solicitation 	offers. 	Indeed,
4 	Sometimes, 	however, 	phone 	solicitation may 	be
by 	an 	agent 	of 	the 	lawyer 	rather 	than by 	the 	lawyer.
these 	individuals 	may 	not 	possess 	the 	same 	influence
Supreme 	Court 	has 	attributed 	to 	atto=neys, 	the 	model
usefully 	permit 	such 	agents 	some 	leeway 	to 	engage 	in
solicitation.
5 	Rule 	7.3(a), 	with 	certain 	qualifications 	not 	relevant
here, 	bans 	"in-person or 	telephone 	contact." 	However, 	Rule
7.2(a) 	explicitly 	authorizes 	the 	use 	of 	advertising, 	including
"recorded 	communications."

George 	A. 	Kuhlman, 	Esq: 	Page 	4
consumers 	might 	best 	be 	served, 	on 	balance, 	if 	live 	telephone
solicitation 	is 	treated 	like 	written 	solicitatio~, so 	that 	both
forms 	are 	subject 	merely 	to 	a 	general 	prohibition 	of 	solicitation
that 	involves 	"coercion, 	duress 	or 	harassment."
Other 	measures 	are 	also 	available 	to 	respond 	to 	the 	danger
of 	abusive 	telephone 	solicitation. 	For 	instance, 	lawyers 	and
their 	agents 	might 	be 	required 	to 	omit 	from 	their 	telephone
message 	any 	request 	for 	an 	immediate 	decision, 	or 	to 	allow
prospective 	clients 	to 	rescind 	any 	agreement 	without 	obligation
within 	a 	set 	period 	of 	time. 	Alternatively, 	lawyers 	and 	their
agents 	might 	be 	required 	to 	preserve 	copies 	of 	their 	telephone
scripts. 	A rule 	that 	embodied 	any 	of 	the 	suggested 	alternative
restrictions, 	alone 	or 	in 	combination, 	would 	be 	likely 	to 	benefit
consumers 	more 	than 	would 	an 	absolute 	ban 	on 	telephone
solicitation.
We 	believe 	that 	any 	rule 	adopted 	should 	clearly 	authorize
attorneys 	to 	solicit 	by 	telephone 	prospective 	members 	of 	prepaid
legal 	service 	plans. 	The 	Comment 	to 	Rule 	7.3 	now 	states 	that
lawyers 	may contact 	prospective 	organizers 	of 	such 	plans, 	but, 	by
not 	mentioning 	prospective members, 	seems 	to 	imply 	that 	these
individuals 	may 	not 	be 	solicited. 	Prepaid 	legal 	service 	plans
may 	offer 	consumers 	important 	advantages, 	however, 	as 	~he Comment
appears 	to 	recognize, 	yet 	not 	every person 	belongs 	to 	a 	group
that 	is 	likely 	to 	subscribe 	to 	one. 	In 	addition, 	prepaid 	legal
plans 	rarely 	involve 	immediate 	legal 	need, 	and 	so 	solicitation
for 	participation 	in 	them 	is 	unlikely 	to 	raise 	a 	question 	of
impaired 	consumer 	judgment.
Definition 	of 	"recorded 	communication"
Regardless 	of 	your 	final 	treatment 	of 	live 	telephone
solicitation, 	we 	suggest 	that 	you 	provide 	a 	more 	explicit
definition 	of 	the 	"recorded communications" 	that 	are 	permitted 	by
Rule 	7.2(a). 	As 	discussed 	above, 	this 	term 	apparently refers 	to
prerecorded and 	autodialed 	phone 	messa~es. 	That 	con~truction
seems 	to 	correspond 	best 	to 	the 	overall 	structure 	of 	the 	rules.
Since 	this 	is 	not 	clear on 	the 	face 	of 	the 	rules, 	however, 	a
formal 	definition 	or 	explanatory comment 	might 	stave 	off 	future
uncertainty.
Warning 	against 	multiple 	contacts
A final 	problem 	with 	the 	new 	rules 	involves 	their 	possible
effect 	of 	discouraging 	the 	use 	of 	multiple 	or 	follow-up 	letters.
Proposed 	section 	7.3(b)(2) 	prohibits 	the 	use 	of 	solicitation

George 	A. 	Kuhlman, 	Esq. 	Page 	5
involving 	"coercion, 	duress 	or 	harassment." 	This 	prohibition 	is
reasonable 	enough 	on 	its 	face. 	The 	official 	Comment 	then
suggests, 	however, 	that 	this 	standard 	can be 	easi1y violated 	by
written 	solicitations: 	"Moreover, 	if 	after 	sending 	a 	letter 	or
other 	communication 	to 	a 	client 	as 	permitted 	by 	Rule 	7.2 	the
lawyer 	receives 	no 	response, 	any 	further 	effort 	to 	communicate
~ith the 	prospective 	client may violate 	the 	provisions 	of 	Rule
7.3(b) ."
This 	sentence 	is 	apparently 	premised 	upon 	the 	idea 	that 	a
repetitive 	letter-writing campaign could, 	in 	theory, 	rise 	to 	the
level 	of 	harassment. 	Even 	if 	this 	concern 	is 	well-founded,
however, 	the 	Comment 	appears 	to 	be 	overbroad. 	It 	may 	be 	read 	as
prohibiting 	attorneys 	from 	sending 	even 	a 	second 	letter 	in 	the
face 	of 	silence 	by 	the 	recipient, 	even 	though 	such 	a 	mailing
would 	probably be 	more 	informative 	than 	abusive. 	Because 	the
Comment 	might 	have 	an 	unnecessary 	chilling 	effect, 	therefore, 	we
suggest 	that 	it 	be 	deleted.
Conclusion
We 	believe 	that 	the 	changes 	you 	propose 	would 	amend 	the
Model 	Rules 	in ways 	that 	would 	benefit 	consumers. 	We 	do 	suggest,
however, 	that 	you 	adopt 	a 	less 	restrictive 	approach 	to 	live
telephone 	solicitation 	and 	that 	you make 	two 	other 	specific
drafting 	changes 	relgting 	to 	"recorded communications" 	and
"harassing 	conduct."b
We 	appreciate 	this 	opportunity 	to 	give 	you 	our 	thoughts 	on
the 	proposed 	amendments. 	Please 	get 	back 	in 	touch 	if 	you 	would
like 	to 	discuss 	our 	comments, 	or 	if 	I 	can 	help 	in 	any 	ether way.
Sincerely yours,
Iiu/u. d tI~ tfe I;;,J
rJeffJ;ey 	I. 	Zuckerman
Director
6 	Our 	comments 	here 	are 	limited
proposed 	by 	the 	Ethics 	Committee. 	We
on 	other 	aspects 	of 	the 	Model 	Rules.
to 	some 	of 	the 	revisions
have 	previously commented
~ 	n.2 	supra.