Washington Bar Suspends Ethics Opinions, Cites Antitrust Fears

By Samson Habte

Dec. 15 — The Washington State Bar Association has temporarily suspended its ethics committee's authority to issue advisory opinions that could be interpreted as having anticompetitive effects in the legal services market.

A WSBA spokesperson told Bloomberg BNA the move was motivated by concerns about the potential antitrust liability of ethics committee members in the wake of the U.S. Supreme Court's eye-opening ruling in N.C. State Bd. of Dental Exam'rs v. FTC, 2015 BL 48206, 31 Law. Man. Prof. Conduct 108 (U.S. Feb. 25, 2015).

“[I]t's correct that the WSBA has temporarily suspended the [Committee on Professional Ethics'] authority to issue certain advisory ethics opinions that might be interpreted as having a restraint on trade,” Debra Carnes, the bar's chief communications officer, said in an e-mail to Bloomberg BNA.

“We recognize the importance and value of the ethics advisory opinions for WSBA members,” Carnes wrote. “That is why this is a temporary suspension on the CPE as we proceed very deliberately in the wake of the Dental Examiners decision,” she said.

Dental Probe

The Supreme Court ruled in Dental Examiners that the Federal Trade Commission could pursue antitrust enforcement action against the North Carolina State Board of Dental Examiners, a panel dominated by dentists, for its allegedly anticompetitive efforts to prevent nondentists from offering teeth whitening services in the state.

Saying that “active market participants cannot be allowed to regulate their own markets free from antitrust accountability,” the court rejected the dental board's attempt to invoke the state action doctrine to insulate its members from antitrust liability.

That doctrine applies only when the state actively supervises the regulators' actions, which the court said wasn't the case with the dental board.

Some experts predicted the Dental Examiners ruling could trigger claims accusing other professional regulatory boards of monopolistic behavior.

Those predictions proved prophetic. Several consumer groups immediately sent letters urging state attorneys general to investigate the practices of licensing boards in their jurisdictions that regulate the activities of professionals such as lawyers, accountants and architects. See 31 Law. Man. Prof. Conduct 293.

“Many of the decisions these entities make on a regular basis necessarily ‘restrain trade,'” the consumer groups said in their letters. “For example, they decide who is allowed to practice a trade or profession and who is excluded, with the force of law. They revoke licenses, and specify how the licensees are to practice. These acts, if committed by a cartel—or any private grouping of competitors—would be per se antitrust.”

For How Long?

The consumer advocacy groups said in a media release that under Dental Examiners, “Either the composition of [professional] boards must be changed to a supermajority of non-conflicted ‘public members,' or all actions of a board dominated by active market participants must be subject to a state supervision mechanism that ‘provide[s] “realistic assurance” that a nonsovereign actor’s anticompetitive conduct ‘promotes state policy, rather than merely the party’s individual interests.’”

The WSBA acknowledged that Dental Examiners was the impetus for its decision to temporarily suspend its ethics committee's authority “to issue certain advisory ethics opinions that might be interpreted as having a restraint on trade.”

The bar gave no indication how long the suspension of the ethics committee's authority will last. “We are currently engaged with outside counsel on an extensive review of [the committee's] work,” Carnes said.

Trouble Spots

Three months after Dental Examiners was announced, the online legal services provider LegalZoom.com Inc. filed a federal lawsuit alleging that the “North Carolina State Bar, by and through its agents and Council members, has engaged in unsupervised anticompetitive activity under the guise of regulating the ‘unauthorized practice of law.'” See 31 Law. Man. Prof. Conduct 357.

That lawsuit was recently settled through a consent decree that permits LegalZoom to offer legal services through North Carolina lawyers if the company adopts certain consumer protection measures. See 31 Law. Man. Prof. Conduct 676.

Although that litigation has terminated, the issues it raised suggest states' efforts to curb the unauthorized practice of law are among the types of activities most likely to trigger antitrust complaints.

Bar authorities told the authors of a recent law review article (predating Dental Examiners) that targets of UPL enforcement efforts often complain about what they view as the monopolistic motivations underlying the actions taken against them:

A Colorado Bar counsel noted, “Nobody wants to see someone taken in a scam, but the public doesn't want lawyers out there policing their own turf.” … A bar staff counsel in Indiana thought that “a lot of the public has the perception that lawyers are trying to financially benefit off their hardship and a UPL-type company helps them more than a lawyer could or would and would be less expensive.” The executive director of the Maryland State Bar similarly believed that the “perception is that the lawyers want to protect their own turf.” Nebraska's counsel for the Unauthorized Practice Commission noted, “Some people … think the bar is concerned about competition.”

Deborah L. Rhode & Lucy Buford Ricca, Protecting the Profession or the Public? Rethinking Unauthorized-Practice Enforcement, 82 Fordham L. Rev. 2587, 2596 (2014).

Thomas D. Morgan, a George Washington University law professor emeritus who taught both antitrust law and legal ethics, recently told Bloomberg BNA it's possible that antitrust claims could be lodged against lawyer-controlled boards that issue opinions or take other actions that could be construed as restricting attorney advertising or deterring price competition. See 31 Law. Man. Prof. Conduct 653.

To contact the reporter on this story: Samson Habte in Washington at shabte@bna.com

To contact the editor responsible for this story: Kirk Swanson at kswanson@bna.com

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

Copyright 2015, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.