FTC Staff Comment Before the American Bar Association Concerning Guidelines Respecting Dignity in Advertising

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L SITED ST.'" TES OF .... ~ERll '"
FEDERAL TRADE CO~1MISSIO'<
WASHI~GTO". DC 	20580
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~r. 	Thomas 	S. 	Johnson, 	Chairman
Commission 	on 	Advertising
American 	Bar 	Association
750 	N. 	Lake 	Shore 	Drive
Chicago, 	Illinois 	60611
Dear 	Mr. 	~ohnson:
., .\
The 	Federal 	Trade 	Co~~ission's Bureaus 	of 	Competi:~on,
Consumer 	Protection 	and 	Economics l appreciate 	this 	opportc~ity to
comment 	on 	the 	proposal 	of 	the 	American 	Bar 	Association's
Commission 	on 	Advertising 	to 	prepare 	and 	issue 	guidelines
respecting 	dignity 	in 	advertising. 	We 	urge 	the 	Commission 	not 	to
engage 	in 	this 	exercise. 	We 	understand 	that 	the 	Commission 	has
not 	yet 	developed 	guidelines 	and, 	therefore, 	we 	cannot 	comment 	on
specific 	language. 	Nonetheless, 	no 	matter 	how 	guidelines 	are
~hrased, 	they 	may 	harm 	consumers 	by 	reducing 	the 	availability 	of
truth!ul, 	nondeceptive 	information 	without 	providing 	any
cour.tervailing 	benefit. 	Furthe:more, 	such 	guidelines 	appear 	to
be 	unnecessary 	as 	i~dividual consumers 	may 	decide 	for 	themselves
which 	advertisements 	they 	consider 	to 	be 	undignified 	and 	~ay, 	if
they 	choose, 	refuse 	to 	patronize 	lawyers 	whose 	aavertising 	they
find 	offensive.
The 	Federal 	Trade 	Comr..ission, 	a~ 	a 	part 	0: 	its 	ef:ort 	to
e"sure 	that 	consumer? 	receive 	the 	benefit 	of 	competition 	among
licensed 	professionals, 	has 	examined 	the 	effects 	of 	pub:ic 	and
private 	restrictions 	that 	limit 	the 2 ability 	of 	professionals 	to
engage 	in 	nondeceptive 	advertising. 	Studies 	have 	shown 	that
prices 	for 	profession~_ goods 	and 	services 	are 	~Jwer 	where
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This 	le:~er 	repr~sents the 	views 	of 	the 	Bureaus, 	and 	not
necessar:ly 	those 	of 	the 	Commission. 	The 	Commission,
however, 	has 	authorized 	submission 	of 	these 	cJmments.
See, 	e.o., 	American 	Medical 	Association, 	94 	:.T.C. 	701
(1979), 	affld, 	638 	F.2d 	443 	(2d 	Cir. 	2.980), 	a::'d 	memo 	!::>v 	cn
eaua2.1v 	divided 	Cou:-t, 	455 	U.S. 	6i6 	(1382). 	TOle 	thrus~ 	c:
the 	AMA 	decision 	-- 	that 	professionals 	may 	restrain 	only
false 	or 	deceptive 	advertising 	(94 	F.T.C. 	at 	1009-10, 	lC~9
:J) 	-- 	is 	consistent 	with 	the 	reasoning 	of 	recent 	Supreme
Court 	~ecisions involving 	re~u1ation 0: 	prcfessior.a1
adver~ising. 	See, 	e.o., 	Zaucerer 	v. 	Office 	0: 	~isciplinary
Counsel 	of 	the--sLi"preme 	Court 	of 	Ohio, 	105 	S. 	C_. 	2265 	(1985:
1:1 	Re 	R.M.J., 	.;55 	U.S. 	191 	(1982) 	(under 	the 	:-'irs": 	Amencme;-.·~,
advertising 	may 	!::>e 	prohi~ite~ 	only 	if 	it 	is 	inherent:!
deceptive 	0: 	where 	the 	recJr~ 	Est~~lish85 :~~t 	it 	ha:, 	in
fa~t, 	been 	dE::::e?tive).

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Mr. 	Thomas 	S. 	Johnson, 	Chairman 	-2-
advertising 	exists 	than 	where 	it 	is 	restricted 	or 	prohibited. 3
Studies 	have 	also 	provided 	evidence 	that 	restri:tions 	on
advertising 	r~ise prices 	but 	do 	not 	increase 	the 	quality 	of 	goods
a~d 	services. 	Therefore, 	to 	the 	extent 	that 	nondeceptive
ccvertising 	is 	restricted, 	higher 	prices 	and 	a 	decrease 	in
consumer 	welfare 	may 	result.
The 	Federal 	Trade 	Commission 	has 	examined 	various
justifications 	offered 	for 	restrictiJns 	on 	advertising 	and 	has
concluded 	that 	these 	arguments 	do 	not 	justify 	restrictions 	on
truthful 	advertising. 	For 	this 	reason, 	the 	Commission 	staff
believes 	that 	only 	advertising 	that 	is 	false 	or 	dece~tive should
be 	prohibited. 	Any 	other 	standard 	is 	likely 	to 	sUPt~ess the
dissemination 	of 	potentially 	useful 	information 	and 	may
contribute 	to 	an 	increase 	in 	prices 	and 	a 	reduction 	in 	the 	range
and 	quality 	of 	services.
The 	American 	Bar 	Association, 	in 	promulgating 	the 	Model
Rules 	of 	Professional 	Conduct, 	abandoned 	its 	restriction 	on
advertising 	that 	is 	not 	"dignified." 	The 	Model 	Rules 	of
Professional 	Conduct 	omitted 	t~e 	requirement, 	previously
con~ained in 	Discipli~ary Rule 	2-10l(B) 	of 	t~e 	Model 	Code 	of
3
4
Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Improving 	Consumer 	Access 	to 	Legal
~ervices: 	The 	Case 	for 	Removing 	Restrictions 	on 	Tr~thful
Advertising 	(1984): 	Bureau 	of 	Economics, 	Federal 	Trade
\.omIT.ission, 	Effects 	of 	Restrictions 	on 	Advertising 	and
Comme~ci2l Practice 	in 	the 	Professions: 	The 	Case 	of
Optometry 	(1980): 	Benham 	and 	Benham, 	Regulating 	~hrough the
Professions: 	A Perspective 	on 	Information 	Contrc~, 18 	J.L. 	&
Econ. 	421 	(1975): 	Benham, 	The 	Effects 	of 	~dvertising o~ 	the
Price 	of 	Eveo1asses, 	15 	J.L. 	& 	Ecor.. 	3:7 	(1972).
Muris 	and 	McChesney, 	Advertising 	and 	the 	Price 	and 	Q~alitv of
Leqal 	Services: 	The 	Case 	for 	Lega: 	Clinics, 	1979 	~~. 	3.
?ound. 	r.-=search 	J. 	179 	'::"979j. 	Set:: 	also 	Cady, 	Res::ic:'ed
Advertising 	a~d 	Competition: 	The 	Case 	of 	Retail 	Drugs
(1976). 	Acco~d, Bureau 	o~ 	Economics, 	Federal 	Trade
Conmission, 	Effects 	of 	Restrictions 	on 	Advertising 	and
Co~mercial Practice 	in 	the 	Professions: 	The 	Case 	of
Optometry 	(1980). 	The 	report 	of 	the 	presiding 	c~:icia1 in
the 	Federal 	Trade 	Comrrission's 	Ophthalrric 	Practice 	Rulemaking
Proceeding, 	50 	Fed. 	Reg. 	598 	(1985), 	wa:o 	critical 	of 	c?rtc:..in
aspects 	of 	the 	Bureau 	of 	Economics 	study, 	but 	did 	not 	adcress
the 	conclt.:sion 	of 	the 	study 	thet 	restrictiGrls 	on 	ac:er:isirlg
resul~ 	in 	:ncreased 	prices 	and 	~rovide no 	q~2:_:ty-:~:ated
!:>ene::ts 	t-: 	consumers. 	Federal 	Trade 	COID.-:.issi.on, 	:t',:::: ::ort 	of
the 	?r~sic_~g Officer 	on 	?roposed 	Trade 	Regu:at:on 	R~le:
Oph~halmic Practice 	Rules 	(:986).

Mr. 	Thomas 	S. 	Johnson, 	Chairman 	-3-
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Professional 	Responsibility, 	that 	advertising 	be 	"presented 	in 	a
dignified 	manner." 	The 	Model 	Rules 	contain 	no 	provisio~ on
dignity. 	The 	issuance 	of 	guidelines 	on 	dignified 	advertising,
however, 	would 	signal 	a 	return 	to 	restrictions 	on 	some 	types 	of
truthi~l, 	nondeceptive 	advertising.
Pu~lication of 	guidelines 	on 	dignity 	in 	advertising 	may 	harm
consumers 	by 	depriving 	them 	of 	information 	that 	would 	be 	useful
i~ 	selecting 	a 	lawyer. 	We 	understand 	that 	the 	purpose 	of 	such
guidelines 	would 	be 	to 	persuade 	lawyers 	to 	eschew 	advertising
that 	the 	drafters 	deem 	to 	be 	undignified. 	But 	advertising 	that
is 	not 	false 	or 	deceptive, 	even 	though 	viewed 	by 	some 	as 	lacking
in 	dignity, 	nonetheless 	may 	assist 	consumers 	in 	choosing 	legal
services 	that 	best 	suit 	their 	needs. 	For 	example, 	during 	the
hearings 	held 	by 	the 	Commission 	on 	Advertising 	in 	Washington,
D.C. 	on 	October 	10, 	1986, 	some 	witnesses 	indicated 	that 	they
considered 	the 	advertisement 	of 	holiday 	discounts 	on 	legal
services 	and 	the 	use 	of 	bill~oard advertising 	to 	be
undignified. 	An 	advertisement 	of:ering 	a 	reduced 	price 	on 	legal
services 	provides 	information 	that 	consumers 	concerned 	about 	the
cost 	of 	legal 	services 	might 	find 	very 	useful. 	Similarly,
billboards 	may 	~e 	an 	effective 	medium 	for 	a 	lawyer 	to 	communicate
his 	or 	her 	name, 	phone 	number, 	and 	areas 	of 	practice. 	Guidelines
on 	dignity 	may 	have 	the 	effect 	of 	(1) 	excluding 	information 	from
advertisements 	that 	consume~s wish 	to 	consider 	in 	selecting 	a
lawye~, 	and 	(2) 	deterring 	~3wyers from 	using 	media 	that 	are
effective 	in 	communicating 	their 	message.
Guidelines 	on 	dignity 	may 	also 	discourage 	lawyers 	from
including 	pictures 	and 	sounds 	or 	using 	techniques 	that 	are
effective 	in 	attracting 	viewers· 	attention 	and 	increasing
aGjjence 	retention 	of 	the 	information 	in 	the 	advertise~ent. 	For
example, 	in 	Zauderer 	v. 	Office 	of 	Disciplinary 	Counsel 	of 	the
SUDreme 	Co~~t 	of 	Ohio, 	105 	S. 	Ct. 	2265 	(1985), 	the 	Supreme 	Court
reversed, 	on 	First 	Amendment 	grounds, 	a 	state 	court 	decision
i~posi~g discipline 	for 	violating 	a 	disciplinary 	rule 	requiring
that 	adver:ising 	"be 	presented 	in 	a 	dignified 	manner 	without 	the
use 	0: 	drawings, 	[or] 	illustrations. 	• 	Attorney 	Philip
Zauderer 	had 	?laced 	a 	newspaper 	adve~tisement including 	a 	dr2wing
of 	the 	Dalko~ Shield 	intra~terine device 	and 	the 	question 	"Did
you 	use 	this 	:UO?" 	The 	Supreme 	Court 	pointed 	out 	that
il:ustrations 	or 	drawings 	in 	advertisements 	serve 	"i~?ortant
communicative 	functions: 	[they 	attract] 	the 	attention 	of 	the
audience 	to 	the 	~dvertiser·s message, 	and 	..• 	may 	also 	se:ve 	to
impart 	information 	directly." 	Ie. 	at 	2280. 	The 	Court 	ruled 	that
commercial 	illustrat:'ons 	enjoy ITrst 	Amendment 	protections 	and
the 	tJrden 	is 	on 	the 	state 	to 	present 	a 	government 	interest
sufficient 	to 	justify 	a 	restriction 	o~ 	the 	use 	of

Mr. 	Thomas 	S. 	Johnson, 	Chairman 	-4-
illustrations. 	The 	Court 	held 	that 	the 	state's 	interes: 	in
promoting 	dignity 	in 	attorneys' 	communications 	with 	the 	public
was 	insufficient 	to 	justify 	such 	a 	restriction. 	Similarly, 	under
antitrust 	precedent, 	an 	association 	of 	competitors 	faces
substantial 	antitrust 	risks 	if 	it 	seeks 	to 	impose 	on 	~he 	market
the 	association's 	view 	of 	what 	is 	dignified, 	thereby 	depriving
consumers 	of 	the 	benefits 	of 	tr~thful, 	nondeceptive 	advertising.
Although 	we 	understand 	that 	the 	Commission 	on 	Advertising
intends 	the 	guidelines 	to 	be 	voluntary, 	they 	may 	become 	m~~datory
nr 	be 	regarded 	by 	lawyers 	as 	mandatory. 	First, 	,any 	state 	courts
have 	followed 	the 	ABA's 	guidance 	in 	promulgatins 	mandatory 	state
disciplinary 	rules 	for 	lawyers. 	As 	of 	July 	18, 	1986, 	fourteen
states 	had 	adopted, 	withssome 	modifications, 	the 	ABA 	Model 	Rules
of 	Professional 	Conduct. 	State 	courts 	might 	similarly
incorporate 	dignity 	guidelines 	into 	disciplinary 	rules. 	Second,
even 	if 	the 	guidelines 	are 	not 	adopted 	as 	disciplinary 	rules,
the 	ABA 	has 	traditionally 	been 	an 	authoritative 	voice 	of 	the
fcofession, 	and 	its 	guidelines 	may 	therefore 	have 	an 	adverse
effect 	on 	lawyers' 	advertising 	because 	of 	moral 	suasion 	and 	peer
pressure.
Guidelines 	on 	dignity 	may 	also 	have 	a 	chilling 	effect 	on
advertising 	beyond 	the 	intent 	of 	the 	drafters. 	Because 	dignity
is 	a 	vague, 	subjective 	concept, 	it 	cannot 	be 	defined 	precisely.
To 	the 	extent 	that 	the 	guidelines 	descri~e undignified
advertising 	in 	general 	terms, 	attorneys 	may 	not 	be 	able 	to
determine 	whether 	a 	particular 	advertisement 	would 	be 	considered
undignified. 	Even 	if 	the 	guidelines 	are 	relatively 	specific,
their 	~romulgation may 	nonetheless 	convey 	the 	message 	that 	the
ABA 	encourages 	lawyers 	to 	avoid 	a 	broader 	range 	of 	undignified
advertising. 	Thus, 	attorneys 	may 	abandon 	a 	pro?oses
advertisement 	that 	they 	fear 	would 	violate 	the 	guidelines 	ev~n
though 	the 	Commission 	on 	Advert:sing 	would 	not 	regac: 	the
advertisement 	as 	undignified.
Finally, 	the 	guidelines 	do 	not 	appear 	to 	be 	ne~essary,
because 	consumers 	can 	decide 	for 	themselvt5 	whether
advertisements 	are 	dignified 	an~ withhold 	their 	business 	from
lawyers 	w~ose 	advertisements 	they 	regard 	as 	offensive. 	The
purpose 	o~ 	advertising 	is 	to 	attract 	c~nsumers to 	a 	particular
lawyer 	or 	law 	firm. 	An 	advertisement 	that 	offends 	consumers 	will
not 	achieve 	its 	purpose 	and 	the 	lawyer 	can 	be 	expected 	to 	reac~
appropriately.
5 Letter 	from 	!,~ichael Frank, 	Chairman, 	S:..:::~ial Committee 	on
Im?lernen~ation of 	the 	AB~ Model 	Rules 	~~ 	Professional 	Conduc~
to 	Chai:;·ersons 	of 	Model 	Rule.=, 	Stud~' 	Comrr.ittee 	(July 	18,
1986).

In 	sum, 	the 	Commission 	on 	Advertising 	should 	not 	issue
guicelines 	on 	dignity 	in 	advertising, 	because 	they 	may 	harm
consumers 	and 	are 	unnecessary 	to 	protect 	consumers 	from
deception.
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Mr. 	Thomas 	S. 	Johnson, 	Chairman 	-5-
Sincerely,
C1/'C~ 	~ 	r
1'/~ 0u- 	"~l~
Ji~r~ I. 	Zuck~rman
Birector 	'
Bureau 	of 	Competition