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Competition at the Bar and the Proposed Code of Professional Standards Stephen K NORTH CAROLINA LAW REVIEW Volume 57 | Number 4 Article 5 5-1-1979 Competition at the Bar and the Proposed Code of Professional Standards Stephen K. Huber Follow this and additional works at: http://scholarship.law.unc.edu/nclr Part of the Law Commons Recommended Citation Stephen K. Huber, Competition at the Bar and the Proposed Code of Professional Standards, 57 N.C. L. Rev. 559 (1979). Available at: http://scholarship.law.unc.edu/nclr/vol57/iss4/5 This Article is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North Carolina Law Review by an authorized administrator of Carolina Law Scholarship Repository. For more information, please contact [email protected]. COMPETITION AT THE BAR AND THE PROPOSED CODE OF PROFESSIONAL STANDARDS STEPHEN K. HUBERt The genesis of formal rules of professional behavior for lawyers in this country is Judge George Sharswood's Essay on ProfessionalEthics, published in 1854.1 The principles set out therein were closely followed in a code of professional ethics adopted by the State Bar of Alabama, which in turn became the basis for the Canons of Professional Ethics promulgated in 1908 by the American Bar Association. The Canons, admittedly with some additions and amendments, survived for more than sixty years until superseded in 1969 by the Code of Professional Responsibility.' The Canons were thought to have been defective in four principal particulars: (1) There are important areas involving the conduct of lawyers that are either only partially covered in or totally omitted from the Canons; (2) Many Canons that are sound in substance are in need of editorial revision; (3) Most of the Canons do not lend themselves to practical sanctions of violations; and (4) Changed and changing con- ditions in our legal system and urbanized3 society~require new state- ments of professional principles. t Associate Professor of Law, University of Houston. B.A. 1963, Earlham College; J.D. 1966, University of Chicago; LL.M. 1974, Yale University. The author worked for the Office of Economic Opportunity's Legal Services Program from 1969 to 1972, primarily as Director of the Program Development and Training Division. 1. G. SHARSWOOD, ESSAY ON PROFESSIONAL ETHICS (Philadelphia 1854). The essay was initially presented as a series of lectures at the University of Pennsylvania Law School. It still makes good reading according to a former chairman of the ABA Committee on Professional Ethics: It is surprising how well Sharswood reads, even today. His division of the lawyer's.du- ties into those which he owes his client, the public, the state, the court, and his profes- sional brethren still has validity. The ethical principles he establishes are eternal and therefore just as pertinent today as they were more than a century ago. It is in their application to specific cases that the difficulties lie. Armstrong, A/ Century of Legal Ethics, 64 A.B.A.J. 1063, 1063 (1978). 2. Both the Canons and the Code were adopted in every state, generally with few if any modifications. Three forms of adoption were utilized: by legislation, by a unified bar, or by order of the highest state court. The effect in each instance was the creation of rules of positive law for the violation of which lawyers could be punished. 3. ABA CODE OF PROFESSIONAL RESPONSIBILITY, Preface. The Canons, including amendments, consisted of 47 serially numbered provisions. Sanctions NORTH CAROLINA LAW REVIEW [Vol. 57 Five years were devoted to preparation of the Code.4 Less than a decade after completion it has proven to be so unworkable that, despite the adoption of several major amendments, the Code is being scrapped and will be replaced by a new document, the Code of Professional Standards.' Why did the Code, a product of years of concerted effort by many diligent and able people, become outmoded so rapidly? This question requires careful consideration if the Standards are to have a longer and more useful existence than their predecessor. This article will argue that one important reason the Code proved unserviceable is that it did not permit the delivery of legal services to be organized in an efficient and cost-minimizing manner. In recent years the Supreme Court of the United States has decided that a number of rules in codes of professional behavior served primarily to increase profits for members of those professions. Among those cases are some in which the Court has determined that competition in the delivery of legal services would serve the public better than government-imposed restraints. Making these determinations required the invalidation of state laws regulating economic behavior. The legal vehicles for reach- ing this result were the antitrust laws and the first amendment, rather than substantive due process, which had been utilized earlier in this century. Attention will first be addressed to four "group legal services" cases, which involved efforts by potential purchasers of legal services to obtain assistance on behalf of their members, and to several cases de- cided by the Court since 1975, which have permitted, if not mandated, substantial competitive activity among professionals, particularly law- yers. After considering these cases and some contemporaneous devel- opments in the social organization of the practice of law, the discussion ranged from a private reprimand to disbarment. The Code contains three types of provisions: canons, ethical considerations and disciplinary rules. The canons, of which there are nine, state axiomatic norms. They are too general to merit analysis, and will not receive further mention. Disciplinary Rules (DR) are mandatory in character, and punitive sanctions can be imposed for violations. Ethical Considerations (EC) are aspirational in character, adherence to them is recom- mended but not mandatory. 4. The House of Delegates of the ABA, at the behest of its then President, Lewis Powell, created a Special Committee on Ethical Standards at its annual meeting in August 1964. The Committee's work product was adopted in its final form by the House of Delegates in August 1969. ABA CODE OF PROFESSIONAL REsPONSIBILITY, Preface. Powell thought that the Canons "were in need of major revision, particularly with respect to the relationship between the press and the bar, the representation of unpopular causes, and grievance procedures." Seymour, The First Century of the American Bar .4ssociation, 64 A.B.A.J. 1038, 1049 (1978). 5. The ABA appointed a Special Committee on Evaluation of Professional Standards in late 1977 to draft a document to replace the Code. 6. See text accompanying notes 10-19 infra. 1979] COMPETITIONAT THE BAR will turn to the Code of Professional Responsibility and an examina- tion of existing Code provisions that regulate the economic behavior of lawyers. It will be recommended that these provisions should not be retained in the Standards. Rules that operate only to control economic aspects of the practice of law have no place in a body of rules for pro- fessional behavior, especially when they serve no purpose other than to limit affordable access to lawyers. The Code and the Canons were designed for an idealized America that no longer exists. As early as 1934 Harlan Fiske Stone had ob- served that "[o]ur canons of ethics are for the most part generalizations designed for an earlier era."7 This statement is quoted in the preface to the Code, but is not reflected in its substantive provisions, which barely address the problem of getting attorneys and clients together at reason- able prices in a largely urban land. Karl Llewellyn described the prob- lem in the following manner: The canons of ethics on business-getting are still built in terms of a town of twenty-five thousand (or, much more dubiously, even fifty thousand) .... All the lawyers are known, and people who have legal work to do are moderately aware of it; and they have little diffi- culty in finding a lawyer of whose character, abilities, experience, yes, and fees, they can get some fair inkling ahead of time .... Turn these same canons loose on a great city, and the results are devastat- ing in proportion to its size .... [T]he conditions of metropolitan legal business make it no simple thing to reach into the grab-bag and pull out a lawyer who is able, experienced in the case at hand,8 not too taken up with other matters, and also reasonable in fee. Rather than heeding these admonitions, the bar insisted that the Code follow the Canons in containing detailed provisions designed expressly to ensure that lawyers could not make their availability to and desire for clients known to the public. In addition to restrictions on competi- tion among attorneys, participation by lay intermediaries in supplying legal services was prohibited. Bar associations exercised vigilance in protecting their turf from encroachment by outsiders. The definition of legal work was stated broadly to increase the scope of what constituted the unauthorized practice of law. 7. Stone, The Public Influence ofthe Bar, 48 HARV. L. REV. 1, 10 (1934). 8. Llewellyn, The Bar's Troubles, and Poultices-And Cures?, 5 LAW & CONTEMP. PROB. 104, 115-16 (1938). NORTH CAROLINA LAW REVIEW [Vol. 57 I. THE MOVEMENT FROM PROTECTION TO COMPETITION During the course of this century many job categories have be- come subject to occupational licensure. Although such licensing is al- ways undertaken in the public interest, licensure requirements are almost universally imposed at the behest of the group to be regulated and not the public.9 Licensed groups adopt codes of ethics that restrict competition among insiders and prevent encroachment on the group's domain by outsiders. Although many licensed groups have adopted restrictive rules similar to those contained in the Canons and the Code, the Supreme Court has been particularly willing to invalidate rules of ethics for lawyers, perhaps because the justices are able to recognize more clearly in their own profession than in others that rules restricting competition serve largely the interests of the profession and only inci- dentally those of the public.
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