Bates v. State Bar of Arizona
Encyclopedia
In Bates v. State Bar of Arizona, , the Supreme Court first allowed lawyers to advertise their services. By holding that lawyer advertising was a kind of commercial speech
protected by the First Amendment
, the Court upset the tradition among lawyers that it demeaned the profession as a whole for lawyers to advertise their services.
William C. Canby, Jr., argued for the appellants John Bates and Van O'Steen in the Supreme Court. At the time, Canby was a professor of law at Arizona State University
. He currently serves as a judge on the United States Court of Appeals for the Ninth Circuit
. John P. Frank argued for the appellee State Bar of Arizona. Frank was a partner in the prominent Phoenix law firm of Lewis and Roca
, and argued for the defendant
in the seminal case of Miranda v. Arizona
. Solicitor General Robert Bork
argued on behalf of the U.S. government.
College of Law in 1972. They were licensed to practice law in Arizona that same year. Two years later, they formed a legal clinic whose aim was to "provide legal services at modest fees to persons of moderate income who did not qualify for governmental legal aid." They accepted simple cases—uncontested divorces, uncontested adoptions, simple bankruptcies, and changes of name—and relied heavily on paralegals and automated typewriters in order to keep their overhead low. Their business model depended on volume of cases, and in order to generate an adequate volume, they placed an advertisement in the Arizona Republic on February 22, 1976.
The ad read:
The ad was clearly labeled as an advertisement, and gave the downtown Phoenix address and phone number of the clinic.
In 1976, the State Bar of Arizona categorically forbade lawyers in that state from advertising their services. The State Bar initiated disciplinary proceedings against Bates and O'Steen, beginning with a hearing at which the validity of the rule would not be decided, but at which the pair could introduce evidence in support of overturning the rule. The disciplinary committee that conducted the hearing recommended that Bates and O'Steen be suspended for not less than six months. The pair asked the Arizona Supreme Court
to review the proceedings, and specifically contended that the absolute ban on lawyer advertising violated the Sherman Antitrust Act
and the First Amendment
. The court rejected both claims. The Sherman Act did not apply, the court ruled, because regulating the practice of law was an act inherent to the State of Arizona as sovereign. Although the U.S. Supreme Court had recently ruled that, under the First Amendment, pharmacists could not be forbidden from advertising the prices of prescription drugs, the court reasoned that lawyer advertising was entitled to special considerations that took such speech out of the realm of First Amendment protection. Nevertheless, the court reduced the sanction against Bates and O'Steen to censure only because it felt that the advertising was "done in good faith to test the constitutionality" of the ban on lawyer advertising. A dissenting justice on the court believed that the ban on lawyer advertising, while repugnant, impinged on the public's right to know about the activities of the legal profession, and concluded that the ban violated the First Amendment.
The U.S. Supreme Court concluded it had appellate jurisdiction over the case, and set it for oral argument.
The Court's decision in this case cast this tradition aside.
, , the Court had held that a minimum-fee schedule enforced by the state bar was a "classic example of price fixing
" that the Supreme Court of Virginia, exercising its sovereign power to regulate the practice of law, was not required to undertake. By contrast, Arizona's ban on lawyer advertising was "compelled by the direction of the state acting as a sovereign" because it was promulgated by the state supreme court. Accordingly, the Court affirmed the Arizona Supreme Court's rejection of the Sherman Act claim.
These reasons were central to the Court's rejection of a ban on advertising the prices of prescription drugs in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council
, . The Court held that the citizen's interest in knowing the price of certain prescription drugs at various pharmacies outweighed the desire to maintain "professionalism" among pharmacists; to prevent customers from price-shopping, which necessarily would take them away from the care of one particular pharmacist who could monitor the patient for dangerous drug interactions; and to perpetuate the image of the pharmacist as a "skilled and specialized craftsman," which was crucial for recruiting new pharmacists.
By describing the holding in Virginia Pharmacy Board in this way, the result in Bates appeared a foregone conclusion. Nevertheless, the Court in the Virginia pharmacy case expressly reserved judgment on how that same balance might be struck with respect to other professions, as to which different constitutional considerations might come into play.
Nevertheless, the Court did characterize Arizona's ban on lawyer advertising as serving to "inhibit the free flow of information and keep the public in ignorance." It emphasized the advertisement Bates and O'Steen published was the most basic one possible — listing various services, the prices charged, and an address and telephone number. The central point of contention in this case was the fact that the lawyers were advertising the prices they charged for particular services.
Like the Virginia Pharmacy Board, the State Bar of Arizona appealed to a desire to maintain a certain air of "professionalism" among lawyers as justifying its ban on lawyer advertising. Advertising, the State Bar asserted, would "undermine the attorney's sense of dignity and self-worth," "erode the client's trust in the attorney" by exposing an economic motive for representation, and "tarnish the dignified public image of the profession." But the public understands that attorneys make their living at the bar, and few attorneys deceive themselves by thinking otherwise. "Bankers and engineers advertise, and yet these professions are not regarded as undignified. In fact, it has been suggested that the failure of lawyers to advertise creates public disillusionment with the profession." A lack of information about the price of legal services tends to dissuade people of modest means from seeking legal representation, even when it is in their best interest to engage such representation. Finally, insofar as the "belief that lawyers are somehow 'above' trade has become an anachronism, the historical foundation for the advertising restraint has crumbled."
Nor is advertising by lawyers inherently misleading. The Court speculated that the "only services that lend themselves to advertising are the routine ones," precisely the services that Bates and O'Steen were advertising. "Although the precise service demanded in each task may vary slightly, and although legal services are not fungible, these facts do not make advertising misleading so long as the attorney does the necessary work at the advertised price. The argument that legal services are so unique that fixed rates cannot meaningfully be established is refuted by the record in this case: The State Bar itself sponsors a Legal Services Program in which the participating attorneys agree to perform services like those advertised by the appellants at standardized rates." And although advertising for legal services is necessarily incomplete — responsible lawyers will, of course, disclaim that all cases are "simple" ones — a rough estimate of the cost is more useful to the public than keeping them in the dark entirely.
Justice Powell pointed out that a lawyer's primary task, even in a "routine" divorce case, is one of diagnosis and advice: to point out to the client concerns of which he might not be aware, and ensure that the client addresses those concerns. Powell thought it difficult to value this aspect of legal representation, and hence for consumers to sense how much diagnosis and advice they could expect for a fixed, advertised price. Consequently, it is impossible to know whether Bates's and O'Steen's assertion that their fees are "reasonable" is an accurate one. "Whether a fee is 'very reasonable' is a matter of opinion, and not a matter of verifiable fact as the Court suggests. One unfortunate result of today's decision is that lawyers may feel free to use a wide variety of adjectives — such as 'fair,' 'moderate,' 'low-cost,' or 'lowest in town' — to describe the bargain they offer to the public."
To the extent that lawyer advertising might be said to encourage frivolous lawsuits, the Court countered that the American Bar Association
had observed that the "middle 70% of our population is not being reached or served adequately by the legal profession," suggesting that a vast number of meritorious cases are being stifled for want of a lawyer willing and able to assist the client in bringing suit. Bans on advertising, moreover, are ineffective means of reducing lawyer overhead and of maintaining the quality of legal services provided. Finally, there was no reason to believe that allowing lawyers to advertise would result in a tidal wave of disingenuous claims for the state bar to investigate and prosecute, as Justice Powell feared would happen. "For every attorney who overreaches through advertising, there will be thousands of others who will be candid and honest and straightforward."
Having disposed of the arguments against allowing lawyer advertising, the Court ruled that Arizona's total ban on lawyer advertising violated the free speech guarantee of the First Amendment, such that the discipline imposed on Bates and O'Steen had to be set aside. But that did not mean that states were powerless to regulate lawyer advertising at all. The Court reiterated that states may still ban "false, deceptive, or misleading" advertising by lawyers; regulate the manner in which lawyers may solicit business in person; require warnings and disclaimers on lawyer advertising in order to assure that the public is not misled; and impose other reasonable restrictions on the time, place, and manner of lawyer advertising.
Commercial speech
Commercial Speech is speech done on behalf of a company or individual for the intent of making a profit. It is economic in nature and usually has the intent of convincing the audience to partake in a particular action, often purchasing a specific product...
protected by the First Amendment
First Amendment to the United States Constitution
The First Amendment to the United States Constitution is part of the Bill of Rights. The amendment prohibits the making of any law respecting an establishment of religion, impeding the free exercise of religion, abridging the freedom of speech, infringing on the freedom of the press, interfering...
, the Court upset the tradition among lawyers that it demeaned the profession as a whole for lawyers to advertise their services.
William C. Canby, Jr., argued for the appellants John Bates and Van O'Steen in the Supreme Court. At the time, Canby was a professor of law at Arizona State University
Sandra Day O'Connor College of Law
Sandra Day O'Connor College of Law is one of the professional graduate schools at Arizona State University, located in Tempe, Arizona. Founded in 1964, the law school has held American Bar Association accreditation since 1969. The school is currently located in , adjacent to the architecturally...
. He currently serves as a judge on the United States Court of Appeals for the Ninth Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
. John P. Frank argued for the appellee State Bar of Arizona. Frank was a partner in the prominent Phoenix law firm of Lewis and Roca
Lewis and Roca
Lewis and Roca LLP is a large U.S. law firm based in Phoenix, Arizona. In 2007, The National Law Journal ranked the firm the 198th largest in the United States and second-largest in the state of Arizona .-History:...
, and argued for the defendant
Ernesto Miranda
Ernesto Arturo Miranda was a laborer whose conviction on kidnapping, rape, and armed robbery charges based on his confession under police interrogation resulted in the landmark U.S. Supreme Court case Ernesto Arturo Miranda (March 9, 1941 – January 31, 1976) was a laborer whose conviction on...
in the seminal case of Miranda v. Arizona
Miranda v. Arizona
Miranda v. Arizona, , was a landmark 5–4 decision of the United States Supreme Court. The Court held that both inculpatory and exculpatory statements made in response to interrogation by a defendant in police custody will be admissible at trial only if the prosecution can show that the defendant...
. Solicitor General Robert Bork
Robert Bork
Robert Heron Bork is an American legal scholar who has advocated the judicial philosophy of originalism. Bork formerly served as Solicitor General, Acting Attorney General, and judge for the United States Court of Appeals for the District of Columbia Circuit...
argued on behalf of the U.S. government.
Facts
John Bates and Van O'Steen graduated from the Arizona State UniversityArizona State University
Arizona State University is a public research university located in the Phoenix Metropolitan Area of the State of Arizona...
College of Law in 1972. They were licensed to practice law in Arizona that same year. Two years later, they formed a legal clinic whose aim was to "provide legal services at modest fees to persons of moderate income who did not qualify for governmental legal aid." They accepted simple cases—uncontested divorces, uncontested adoptions, simple bankruptcies, and changes of name—and relied heavily on paralegals and automated typewriters in order to keep their overhead low. Their business model depended on volume of cases, and in order to generate an adequate volume, they placed an advertisement in the Arizona Republic on February 22, 1976.
The ad read:
Do you need a lawyer?
Legal services at very reasonable fees
- Divorce or legal separation — uncontested (both spouses sign papers)
$175.00 plus $20.00 court filing fee
- Preparation of all court papers and instructions on how to do your own simple uncontested divorce
$100.00
- Adoption — uncontested severance proceeding
$225.00 plus approximately $10.00 publication cost
- Bankruptcy — non-business, no contested proceedings
Individual
$250.00 plus $55.00 court filing fee
Wife and Husband
$300.00 plus $110.00 court filing fee
- Change of Name
$95.00 plus $20.00 court filing fee
Information regarding other types of cases furnished upon request
Legal Clinic of Bates & O'Steen
The ad was clearly labeled as an advertisement, and gave the downtown Phoenix address and phone number of the clinic.
In 1976, the State Bar of Arizona categorically forbade lawyers in that state from advertising their services. The State Bar initiated disciplinary proceedings against Bates and O'Steen, beginning with a hearing at which the validity of the rule would not be decided, but at which the pair could introduce evidence in support of overturning the rule. The disciplinary committee that conducted the hearing recommended that Bates and O'Steen be suspended for not less than six months. The pair asked the Arizona Supreme Court
Arizona Supreme Court
The Arizona Supreme Court is the state supreme court of the U.S. state of Arizona. It consists of a Chief Justice, a Vice Chief Justice, and three associate justices. Each justice is appointed by the governor of Arizona from a list recommended by a bipartisan commission. Justices stand for...
to review the proceedings, and specifically contended that the absolute ban on lawyer advertising violated the Sherman Antitrust Act
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
and the First Amendment
First Amendment to the United States Constitution
The First Amendment to the United States Constitution is part of the Bill of Rights. The amendment prohibits the making of any law respecting an establishment of religion, impeding the free exercise of religion, abridging the freedom of speech, infringing on the freedom of the press, interfering...
. The court rejected both claims. The Sherman Act did not apply, the court ruled, because regulating the practice of law was an act inherent to the State of Arizona as sovereign. Although the U.S. Supreme Court had recently ruled that, under the First Amendment, pharmacists could not be forbidden from advertising the prices of prescription drugs, the court reasoned that lawyer advertising was entitled to special considerations that took such speech out of the realm of First Amendment protection. Nevertheless, the court reduced the sanction against Bates and O'Steen to censure only because it felt that the advertising was "done in good faith to test the constitutionality" of the ban on lawyer advertising. A dissenting justice on the court believed that the ban on lawyer advertising, while repugnant, impinged on the public's right to know about the activities of the legal profession, and concluded that the ban violated the First Amendment.
The U.S. Supreme Court concluded it had appellate jurisdiction over the case, and set it for oral argument.
Analysis
As Professor Thomas Morgan has put it,
The organized bar traditionally took the position that a lawyer was not permitted to actively publicize his services. In effect, it was presumed that every lawyer had an established clientele, or that a lawyer's reputation for good work would inevitably lead others to seek out the lawyer's services. Under this approach, direct publicity for lawyers was strictly controlled.
The Court's decision in this case cast this tradition aside.
The Sherman Act Claim
The Court agreed with the Arizona Supreme Court that the sovereign acts exception to the antitrust laws applied to Arizona's ban on lawyer advertising. This was so even though the Court had, in the two previous Terms, held that the Sherman Act did apply to other lawyer-regulation activities of state bar associations. In Goldfarb v. Virginia State BarGoldfarb v. Virginia State Bar
Goldfarb v. Virginia State Bar, 421 U.S. 773 was a U.S. Supreme Court decision. It stated that lawyers engage in "trade or commerce" and hence ended the legal profession's exemption from antitrust laws.- Background of the case :...
, , the Court had held that a minimum-fee schedule enforced by the state bar was a "classic example of price fixing
Price fixing
Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand...
" that the Supreme Court of Virginia, exercising its sovereign power to regulate the practice of law, was not required to undertake. By contrast, Arizona's ban on lawyer advertising was "compelled by the direction of the state acting as a sovereign" because it was promulgated by the state supreme court. Accordingly, the Court affirmed the Arizona Supreme Court's rejection of the Sherman Act claim.
The First Amendment Claim
Speech does not escape protection under the First Amendment merely because it "proposes a mundane commercial transaction." The listener's interest in receiving information regarding potential commercial transactions is "substantial," for "the consumer's concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue." Furthermore, commercial speech serves significant societal interests in that it informs the public of the availability, nature, and prices of products and services, allowing them to act rationally in a free enterprise system.These reasons were central to the Court's rejection of a ban on advertising the prices of prescription drugs in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council
Virginia State Pharmacy Board v. Virginia Citizens Consumer Council
Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748 , was a case in which the United States Supreme Court held that a state could not limit pharmacists’ right to provide information about prescription drug prices...
, . The Court held that the citizen's interest in knowing the price of certain prescription drugs at various pharmacies outweighed the desire to maintain "professionalism" among pharmacists; to prevent customers from price-shopping, which necessarily would take them away from the care of one particular pharmacist who could monitor the patient for dangerous drug interactions; and to perpetuate the image of the pharmacist as a "skilled and specialized craftsman," which was crucial for recruiting new pharmacists.
By describing the holding in Virginia Pharmacy Board in this way, the result in Bates appeared a foregone conclusion. Nevertheless, the Court in the Virginia pharmacy case expressly reserved judgment on how that same balance might be struck with respect to other professions, as to which different constitutional considerations might come into play.
Nevertheless, the Court did characterize Arizona's ban on lawyer advertising as serving to "inhibit the free flow of information and keep the public in ignorance." It emphasized the advertisement Bates and O'Steen published was the most basic one possible — listing various services, the prices charged, and an address and telephone number. The central point of contention in this case was the fact that the lawyers were advertising the prices they charged for particular services.
Like the Virginia Pharmacy Board, the State Bar of Arizona appealed to a desire to maintain a certain air of "professionalism" among lawyers as justifying its ban on lawyer advertising. Advertising, the State Bar asserted, would "undermine the attorney's sense of dignity and self-worth," "erode the client's trust in the attorney" by exposing an economic motive for representation, and "tarnish the dignified public image of the profession." But the public understands that attorneys make their living at the bar, and few attorneys deceive themselves by thinking otherwise. "Bankers and engineers advertise, and yet these professions are not regarded as undignified. In fact, it has been suggested that the failure of lawyers to advertise creates public disillusionment with the profession." A lack of information about the price of legal services tends to dissuade people of modest means from seeking legal representation, even when it is in their best interest to engage such representation. Finally, insofar as the "belief that lawyers are somehow 'above' trade has become an anachronism, the historical foundation for the advertising restraint has crumbled."
Nor is advertising by lawyers inherently misleading. The Court speculated that the "only services that lend themselves to advertising are the routine ones," precisely the services that Bates and O'Steen were advertising. "Although the precise service demanded in each task may vary slightly, and although legal services are not fungible, these facts do not make advertising misleading so long as the attorney does the necessary work at the advertised price. The argument that legal services are so unique that fixed rates cannot meaningfully be established is refuted by the record in this case: The State Bar itself sponsors a Legal Services Program in which the participating attorneys agree to perform services like those advertised by the appellants at standardized rates." And although advertising for legal services is necessarily incomplete — responsible lawyers will, of course, disclaim that all cases are "simple" ones — a rough estimate of the cost is more useful to the public than keeping them in the dark entirely.
Justice Powell pointed out that a lawyer's primary task, even in a "routine" divorce case, is one of diagnosis and advice: to point out to the client concerns of which he might not be aware, and ensure that the client addresses those concerns. Powell thought it difficult to value this aspect of legal representation, and hence for consumers to sense how much diagnosis and advice they could expect for a fixed, advertised price. Consequently, it is impossible to know whether Bates's and O'Steen's assertion that their fees are "reasonable" is an accurate one. "Whether a fee is 'very reasonable' is a matter of opinion, and not a matter of verifiable fact as the Court suggests. One unfortunate result of today's decision is that lawyers may feel free to use a wide variety of adjectives — such as 'fair,' 'moderate,' 'low-cost,' or 'lowest in town' — to describe the bargain they offer to the public."
To the extent that lawyer advertising might be said to encourage frivolous lawsuits, the Court countered that the American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
had observed that the "middle 70% of our population is not being reached or served adequately by the legal profession," suggesting that a vast number of meritorious cases are being stifled for want of a lawyer willing and able to assist the client in bringing suit. Bans on advertising, moreover, are ineffective means of reducing lawyer overhead and of maintaining the quality of legal services provided. Finally, there was no reason to believe that allowing lawyers to advertise would result in a tidal wave of disingenuous claims for the state bar to investigate and prosecute, as Justice Powell feared would happen. "For every attorney who overreaches through advertising, there will be thousands of others who will be candid and honest and straightforward."
Having disposed of the arguments against allowing lawyer advertising, the Court ruled that Arizona's total ban on lawyer advertising violated the free speech guarantee of the First Amendment, such that the discipline imposed on Bates and O'Steen had to be set aside. But that did not mean that states were powerless to regulate lawyer advertising at all. The Court reiterated that states may still ban "false, deceptive, or misleading" advertising by lawyers; regulate the manner in which lawyers may solicit business in person; require warnings and disclaimers on lawyer advertising in order to assure that the public is not misled; and impose other reasonable restrictions on the time, place, and manner of lawyer advertising.