FTC and Justice Department Urge Massachusetts Bar Association to Reject Proposal Restraining Competition Between Lawyers and Nonlawyers

Proposal Likely to Harm Massachusetts Consumers

For Release

The Federal Trade Commission and the U.S. Department of Justice's (DOJ) Antitrust Division today released a joint letter urging the Massachusetts Bar Association to narrow substantially or reject a proposal that, if adopted by the Massachusetts Supreme Judicial Court, would unnecessarily reduce or eliminate competition between nonlawyers and lawyers to provide many services. The FTC and the Department said that the proposal likely would lead to higher prices and a reduction in competitive choices for consumers.

According to the letter, signed by FTC Chairman Deborah P. Majoras and the Department's Assistant Attorney General for Antitrust R. Hewitt Pate, the proposal, a model definition of the practice of law, could be interpreted to prevent real estate agents from explaining smoke detector or lead laws to clients; prohibit software makers from selling will-writing and other software; and prevent many advocacy organizations and individual advocates from competing with lawyers to provide citizens with information about legal rights and issues and to help them negotiate solutions to problems. The proposed definition also could prohibit income tax preparers, accountants, investment bankers and other business planners from providing advice to their clients that includes information about various laws.

Many states permit nonlawyers to provide such services in competition with lawyers, and there has been no demonstration that consumers are hurt by this, the FTC and the Justice Department stated. To the contrary, competition between lawyers and nonlawyers has promoted consumer benefit, they explained.

Chairman Majoras noted, "Without evidence that nonlawyer services would actually harm consumers, the restriction on lay competition is unjustified. Competition itself is an important form of consumer protection because it leads to lower prices, more convenient services, and greater choices for consumers. Thus, the proposed definition, which restricts competition, may ultimately harm consumers rather than protect them."

Assistant Attorney General Pate observed, "This proposal to define the practice of law to restrain competition between lawyers and nonlawyers will likely raise prices and harm consumers. Those who would not pay for a lawyer would be forced to do so, and, traditionally, lawyers charge more than lay providers for such services. Further, without competition from nonlawyers, lawyers' fees are likely to increase."

The Massachusetts Bar Association has appointed a task force to draft a proposed definition of the practice of law. If a proposal is adopted by the Association's House of Delegates, the Association's House of Delegates would ask the Massachusetts Supreme Judicial Court adopt it as a rule.

The FTC and DOJ previously submitted comments to the Massachusetts House of Representatives in support of HB 180, a bill that would amend the General Laws of Massachusetts to authorize nonlawyers to perform real estate closing services. The bill is currently pending in the Massachusetts House of Representatives.

Copies of the documents mentioned in this release are available from the FTC and DOJ. The FTC's Web site is http://www.ftc.gov. The DOJ's Web site is http://www.usdoj.gov/atr. For more information on the letter at the FTC, contact Maureen K. Ohlhausen, Acting Director, Office of Policy Planning, at 202-326-2632. For more information on the letter at the DOJ, contact Renata B. Hesse, Chief of the Networks and Technology Section, at 202-307-6200.

Paper copies of the documents are also available from the FTC's Consumer Response Center and the DOJ Antitrust Division's Documents Group. The FTC's Consumer Response Center can be contacted at Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP. The DOJ Antitrust Division's Documents Group can be contacted by phone: 202-514-2481, fax: 202-514-3763, or e-mail: atrdocs.grp@usdoj.gov.

The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

(FTC File No. V050000)

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