A. INTRODUCTION
11.1 It is apparent from the recent developments described in chapter 9 that there is a widespread trend towards relaxation of restrictions on advertising by lawyers. In some places, such as Australia and the United Kingdom the movement is slow and tentative, but in North America there have been substantial changes in the last few years. Moreover, four official commissions or committees in the United Kingdom and Canada have recommended major relaxation in the restrictions. 1 In this chapter we consider various advantages and disadvantages which may arise from relaxation of the present restrictions in New South Wales. The issues were canvassed at greater length in our Discussion Paper. 2
B. ADVANTAGES OF RELAXING THE RESTRICTIONS
I. Improved Access to Legal Services
11.2 Submissions made to us in the course of our Inquiry convince us that many clients or would-be clients face substantial difficulties at present in identifying appropriate lawyers for their work. 3 Sometimes the difficulties may be, or may appear to be, so great that, in the result, no lawyer is engaged. It seems that the types of information for which there is the greatest unmet need relate to fields of practice and fees. Other matters of interest to potential clients include speed of service, length of experience in practice, office hours, languages spoken and size of practice. Similar conclusions to ours have been drawn by professional associations and official inquiries in various parts of the world. 4
11.3 The need for more readily available information about lawyers is greater in metropolitan areas, where it is less easy than in country towns to tap community knowledge about local lawyers. It is also particularly likely to be felt by people who read little, do not speak English well, have legal problems which few lawyers handle (for example, social security problems), or whose financial position makes it essential that they find the cheapest service of an adequate standard.
11.4 Some of these needs may be met to some extent by the Law Society’s new Legal Services Directory, and by newspaper advertising of the kind which would be permissible under the Society’s proposed new regulations. But severe limitations on the range and style of will remain. For example, many of the people most in need of assistance in choosing lawyers read very little; radio and television are the most effective media for engaging their attention. Many people are unlikely to hear of the Legal Services Directory, let alone locate a copy and utilise it effectively. Moreover, the types of information which can be advertised in the newspapers or the Directory, even under the proposed new regulations. are very limited. One example is that nothing can be said about fees, save in relation to a standard fee for initial consultations.
II. Innovation, Efficiency and Lower Prices
11.5 Advertising by individual practitioners can stimulate innovation and improve efficiency within the profession. 5 Practitioners are more likely to be willing to provide a new service, and to be able to make it economically viable, if they can publicise it effectively. This applies, for example, to services such as remaining open in the evening, employing a solicitor who speaks a foreign language, or specialising in the legal problems of, say, mentally ill people. It applies also, of course, to the provision of services at lower prices. By helping to attract business, advertising of particular services or of lower fees helps practitioners to achieve economies of scale. Lawyers and non-legal staff become more knowledgeable and efficient, routine officer, procedures can be streamlined, capital investment in more efficient technology becomes economically Justifiable, and so on. In many areas, economies of scale can enable cheaper service to be provided without any reduction in lawyers standards or net incomes; indeed, standards and incomes may become higher. Moreover, advertisements about fees may attract business even though they do not offer reduced fees; for example, many clients may be attracted by the offer of a fee which although not especially low, is fixed in advance.
11.6 Some of the beneficial effects of relaxing the rules against advertising can be seen in recent United States experience. We have referred earlier to the substantial relaxation effected by a decision of the Supreme Court of the United States in 1977. 6 Two years later, the Chairman of the American Bar Association’s Commission on Advertising said that there was clear evidence that prices for routine legal services drop when some lawyers in a market advertise. 7 He added that it appears that the quality of services in those areas has improved. Other evidence and opinion to a similar effect was referred to in our Discussion Paper. 8
III. New Practices and Small Practices
11.7 Tight restrictions on advertising strike particularly at practitioners who are newly-admitted or are setting up in new localities. These practitioners would be assisted in seeking to build up a practice and a reputation if they could widely publicise their existence, location, some biographical material, and the types of services which they provide. Established practitioners may have less use for advertising because this sort of information about them may already be known to a considerable degree within the local community. In our view, the present restrictions adversely affect the geographical spread of legal practices, especially in socially disadvantaged areas where a high volume of work is essential in order to offset the necessity of charging low fees.
11.8 Restrictions can place small practices at an unfair disadvantage by comparison with large practices. The high overall volume of work in a large practice may include sufficient work in a particular field to enable a member of the firm to specialise in it. This is less likely to be possible in a small practice, unless it can advertise its interest in particular fields. Moreover, large practices may benefit because clients who lack information about which practices handle their particular types of work may choose a large firm in the belief that its size makes it likely to have someone skilled in the relevant field.
IV. Other Methods of Attracting Business
11.9 The present restrictions on advertising increase the importance of other methods of attracting business, such as involvement in social and sporting clubs, speaking engagements, and friendships with, for example, estate agents and bank managers. These avenues may be more open to some well-connected lawyers than to other lawyers who are at least as competent They may help members of golf or service clubs, for example, to find out about individual lawyers, but may leave socio-economically disadvantaged sectors of the community without comparable sources of information. 9
11.10 The realisation that these indirect methods of attracting business can be used to evade the prohibition on individual advertising has led to restrictions on public comment and other participation in community activities, by lawyers. 10 But in the words of a Deputy Executive Director of the Law Institute of Victoria, these restrictions are “very difficult to police” and a “strict interpretation ... would often be contrary to common sense and unduly restrictive of lawyers’ ordinary activities”. 11
V. Greater Utilisation of the Profession’s Services
11.11 Individual advertising can contribute to a higher level of utilisation of the profession’s services generally. The profession may become less likely to be seen as austere and unapproachable. Advertising about fees may help to allay exaggerated fears amongst the public about legal fees being excessively high or unpredictable.
11.12 A further consideration is that in some fields, such as conveyancing or taxation advice, the legal profession is under increasing competition from non-lawyers who are entitled to advertise. Lawyers may feel unreasonably disadvantaged if they are denied a similar freedom to inform the public about their services in those fields.
11.13 Institutional advertising can play a valuable role in these respects. We discuss it in chapter 16. But individual advertising may penetrate some sectors of the community more effectively and more economically than centralised advertising campaigns by the profession as a whole.
C. DISADVANTAGES OF RELAXING THE RESTRICTIONS
I. Commercialism and Shoddy Work
11.14 It is argued by many lawyers that individual advertising by solicitors would lead to excessive commercialism in the profession, with undue emphasis on attracting extra business and making more money, rather than on providing the best possible service to each client. 12 In some instances, the pressures of increased competition may lead some lawyers to set too much store on achieving success for their clients, ignoring their ethical duties to the courts. Moreover, lawyers may have to devote substantial time and resources to advertising and systems management, diverting them from developing their legal skills and using those skills for the benefit of their clients. Another possibility is that if lawyers resort to advertising, clients may have less confidence in them as being willing to put service above profit, and may be less inclined to trust their advice or even to resort to them. The dangers to which we have referred would be particularly acute, it is said, if lawyers were to advertise about their fees. In those circumstances, lawyers and clients might be more likely to emphasise cost rather than quality, and in order to provide cheap service lawyers would be tempted to cut corners and lower their standards.
11.15 Many of these arguments were advanced by the Law Society in its original submission to us about advertising, and were re-iterated in its response to our Discussion Paper. 13 In our view, they are substantial and they justify some control over advertising. But we do not consider that they justify the present degree of restriction, nor that which is proposed by the Society. For example, many of the suggested dangers would be avoided is as was recommended by the Monopolies and Mergers Commission in the United Kingdom, 14 advertising was required to be dignified and not to claim superiority over other practices. Fee advertising could be controlled more rigorously than other advertising; this is presently the case in many parts of North America. 15
11.16 In our view, however the dangers of harm to the quality of service and to the reputation of the profession are over- estimated by many opponents of advertising. We have pointed out earlier that the ability to advertise can encourage competition, innovation and efficiency, and we consider that the consequential improvements in quality and speed of service are likely to be substantially greater than any increased incidence of shoddy service or corner-cutting which might occur. This view is supported by evidence, some of which we mentioned in our Discussion Paper, about the experience in the United States since the recent relaxation of advertising restrictions. 16 As to the effect of advertising on the public image of the profession and on the degree of trust between lawyers and clients, the advent of advertising may reduce the extent to which lawyers are perceived as aloof, unapproachable, and concerned only with well-to-do sectors of the community. If, as we anticipate, greater competition between lawyers were to reduce delay and expense in the delivery of legal services, it would also ameliorate two of the major causes of public dissatisfaction with the legal profession.
II. Excessive Cost
11.17 It is often argued that the advent of advertising by lawyers would substantially increase their overheads and that this cost would have to be passed on to the client. 17 In addition, it is said that small practices and new practices would not have the financial resources to match the level of advertising by wealthier firms. These arguments are put especially in relation to advertising in the mass media, where rates are likely to be high In both its initial submission and its response to our Discussion Paper, the Law Society has placed considerable emphasis on these dangers of excessive cost. 18
11.18 In our view, these arguments are of little strength. Broadly speaking, the forces of the market place would inhibit expenditure on unproductive advertising. And in any event, why should lawyers be prohibited from expending money on advertising but be free to spend large sums of money on other means of attracting and retaining business, such as lavish office premises? Moreover, as we pointed out earlier in this chapter, 19 the competition induced by advertising can increase efficiency and reduce excessive profit margins. We referred in our Discussion Paper to North American studies which suggest that relaxation of restrictions on advertising can significantly decrease the cost of goods or services to the consumer. 20
11.19 It is true that large well-established firms are likely to be able to afford extensive advertising campaigns more readily than most other practices. In the United States, however, large firms have tended not to be very interested in advertising. 21 This is not surprising, since the clients or potential clients of large firms tend not to need, or to be much affected by, advertising about lawyers. Even if these firms did advertise, they would not be competing for the sectors of the community in which many small or new practices would be interested. Moreover, for reasons explained earlier in this chapter, the prohibition of advertising can operate to the disadvantage of small and new practices by comparison with those which are larger and well-established. 22
11.20 Nevertheless, if there were to be a substantial relaxation of restrictions on advertising, there might be a case, at least initially, for some restrictions aimed at preventing excessive expenditure on advertising. They might apply, for example, to the size and frequency of advertisements, to the media in which advertisements could appear, or directly to the level of expenditure.
III. False or Misleading Claims
11.21 An important set of arguments raised against relaxing restrictions on advertising relates to the possibility that false or misleading claims will be advertised. 23 Even if the making of such claims is prohibited, it may be difficult in many instances for their false or misleading nature to be detected and proved by the responsible authorities, let alone by clients. Policing of the rules may be expensive and intrusive, and it may not be sufficiently rapid to prevent considerable damage being caused before the advertisements are stopped. These arguments are put especially in relation to advertising of fees, fields of practice, and speed of service. 24
11.22 There can be no doubt that false or misleading advertising should be prohibited. In assessing the justification for additional restrictions, however, it is important not to overestimate public gullibility, especially in relation to “ mere puff’. Moreover, the possibility that relaxation of the restrictions may lead to some false or misleading claims being advertised must be weighed against the substantial damage which arises from the present restrictions on public access to information about lawyers. The present rules in New South Wales, and the Law Society’s proposed new regulations, exclude a wide range of information which raises little if any danger of being false or misleading, yet which may reasonably be regarded as helpful by clients. An example is where a practitioner is willing to commit himself or herself to charging a standard specified fee for a particular service which is clearly defined in the advertisement.
11.23 Nevertheless, the arguments referred to in paragraph 11.21 have some strength, and it may well be desirable to impose restrictions going beyond a mere rule against false or misleading advertisements. Possible approaches include specifying some types of advertisement which would be regarded as false or misleading, such as advertising a minimum fee (“from $50”) rather than a fixed or maximum fee.
IV. Unnecessary or Ineffective Advertising
11.24 Some lawyers argue that individual advertising is unnecessary and ineffective. 25 Most clients, they say, will rely on personal references rather than on advertisements. Moreover, most members of the public use lawyers very rarely, and it is said that when the time comes, uncoordinated and sporadic advertising by individual practitioners will not provide these people with a convenient basis for selection. Legal services directories and institutional advertising, it is argued, are more likely to be useful to the public because they are more widely disseminated, more comprehensive, and more reliable than individual advertising. In its response to our Discussion Paper, the Law Society referred to the fact that only a small percentage of lawyers have taken advantage of the greater scope for advertising which has developed in the United States in the last few years. 26
11.25 But the likelihood that many practitioners will not wish to advertise does not justify prohibiting them or other practitioners from doing so. And for many practitioners, especially those seeking to meet needs which are presently unmet or to develop practices more suited to their capabilities and preferences, the right to advertise may be of crucial significance. As we indicated in our Discussion Paper, there are ways in which individual advertising can be economical without being sporadic or ephemeral. 27 There can be no doubt that since the recent relaxation of restrictions in the United States some lawyers have already obtained substantial benefits from individual advertising of their services. 28
11.26 Legal services directories, institutional advertising, and personal evaluations by friends can be of value to many people seeking an appropriate lawyer. But many people do not have ready access to informed personal evaluations of lawyers, and individual advertising can be more effective than directories or institutional advertising in reaching particular sectors of the community and in publicising innovative services offered by individual lawyers.
V. Stirring up Litigation
11.27 Some opponents of advertising fear that it would stir up unmeritorious or unnecessary litigation thus harming members of the public and the judicial system. We do not consider that any significant increase in the incidence of such litigation is likely to occur. In any event, a possibility of a slight increase cannot justify preservation of restrictions which in our view, substantially impede access to appropriate lawyers, and to justice, for many people who have problems calling for judicial resolution This is especially so since the restrictions particularly affect the information available to people who are socio-economically disadvantaged.
FOOTNOTES
1. In the UK the two Royal Commissions on Legal Services and the Monopolies and Mergers Commission (see para.9.26): in Canada. the Professional Organisations Committee (see para.9.27).
2. See chapter 9 of that Paper.
3. For a fuller discussion of the issues raised in paras.11.2-11.4, and for relevant Sources, see our Discussion Paper, Advertising and Specialisation, pp.122-124 and 220.
4. See eg. the sources cited in Advertising and Specialisation, pp.123, 220.
5. For a fuller discussion of the issues raised in paras.11.5-11.6, and for relevant Sources, see Advertising and Specialisation, pp.124-126 and 220.
6. See para.9.28.
7. See comments by R Brosnahan quoted in American Bar Association Journal (1979), vol.65, p.232.
8. See pp.125-126.
9. On this point see A Nicoll, “Advertising our Wares” Australian Law Journal (1979). vol.53. p.438.
10. On these restrictions, see chapter 14.
11. See Nicoll (note 9 above), at p.443.
12. For a fuller discussion of the issues raised in paras.11.14-11.16. and for relevant sources, see our Discussion Paper, Advertising and Specialisation, pp.128-130 and 221.
13. See “Advertising” (Submission No.218). p.1-3, 10; and “Advertising and Specialisation” (Submission No.412). pp.2-3 and 17-18.
14. See the Commission’s report (note 9.26.2. above), at p.40.
15. See L Andrews, Birth of a Salesman (American Bar Association, Chicago, 1980), and our Discussion Paper, Advertising and Specialisation, pp.111-118.
16. See p.129.
17. For further discussion of the issues raised in paras.11.17-11.20, and for relevant sources, see Advertising and Specialisation, pp.130-131 and 221.
18. See “Advertising” (Submission No.218), p.2, and “Advertising and Specialisation” (Submission No.412). pp2-3 and 18-19.
19. Paras.11.5-11.6.
20. See p.131.
21. See eg. American Bar Association Journal (1981), Vol.67, p.1618, Table 1.
22. See paras.11.7-11.8.
23. For a fuller discussion of the issues raised in paras.11.21-11.23, and for relevant sources, see our Discussion Paper, Advertising and Specialisation, pp.132-133 and 221.
24. See eg. Law Society of New South Wales, “Advertising and Specialisation” (Submission No.412), p.20.
25. For a fuller discussion of the issues raised in paras.11.24-11.26, see our Discussion Paper, Advertising and Specialisation, pp133-134.
26. See “Advertising and Specialisation” (Submission No.412), p.18.
27. See p.134.
28. See eg. The survey reported in the American Bar Association Journal (1980), vol.66, p.705.
