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Archive for the ‘Your friendly state bar.’ Category

Samoan man in Hawaii | by foot fingers

Voluntary is ‘mo bettah.’

 

 Voluntary bar jurisdictions:

  1. Have a longer history than mandatory bar jurisdictions. The so-called integration movement didn’t start until 1913. That’s when the now defunct American Judicature Society‘s Herbert Harley motivated by the goals of overcoming low voluntary membership rolls; increasing revenues; reducing fragmentation; and enhancing professionalism; adopted bar unification as part of the Society’s law reform movement. According to research by Professor Theodore Schneyer, “voluntary state bar memberships in the 1920s included only 10% to 30% of the bar.” Parenthetically, predating the creation of the American Bar Association by 4 years and besting the New York State Bar Association by 2 years, the Iowa State Bar Association was formed in 1874 and claims to be “the oldest voluntary state bar association in the United States.” 18 jurisdictions in the U.S. are still voluntary. And to this day, voluntary bar membership in Iowa approaches 90%;
  2. Scandalized | by CarbonNYC [in SF!]Tend to have lower overall costs to practice; See Fact Check;

  3. Accomplish the public-protection goals of regulating discipline, managing bar admission, ensuring ethical standards, and registering lawyers, without integrating an existing bar association because these objectives are subject to statute or court rule and are not the responsibility of an integrated bar. For example, virtually every state in the country has in place court rules or statutes prescribing caretaker regulations when a lawyer disappears, dies, or is declared incompetent. And the same holds true for client protection funds, which likewise exist in both voluntary and mandatory bar jurisdictions. (The State Bar of Arizona makes much of its own lawyer caretaker conservatorship program although it budgets a mere 0.206% of a $14.5M budget to further buttress the purported necessity of a mandatory bar by virtue of having the program. But as of June 1, 2015 like almost every state in the country, Arizona has no rule requiring an attorney to designate a successor/surrogate/receiver in case of death or disability. A Rules Petition, however, was submitted in January but the matter was continued);

  4. Avoid the conflicts of interest between lawyers and the public. Voluntary state bar associations are autonomous private professional associations that unlike compulsory bar associations serve the interests of their voluntary members. They do not function like public agencies or regulatory bodies that subordinate member interests in favor of what mandatory bar leaders define as ‘the public good.’ And also unlike mandatory bar associations, the financial self-interest of voluntary associations is tied to a value proposition. Lawyers will refuse to maintain consensual membership in an association where the financial cost exceeds the value received;

  5. Without the Keller restrictions imposed on mandatory membership bar associations, voluntary state bar associations amplify the legal profession’s legislative voice in the lawmaking advocacy process. See, for example, Minnesota State Bar Government Relations and the Illinois State Bar Legislative Affairs Department;

  6. Jen, kissing the First Amendment goodbye? | by jasoneppinkProtect lawyer First Amendment rights without infringing on free speech and an individual’s freedom not to associate, which in the case of mandatory bar jurisdictions, results in the individual being compelled as a condition of earning a living in their profession, to contribute to an association which uses those fees to conduct activities to which that individual objects;

  7. Avoid recurring litigation over the use of compulsory dues for ideological activities; Most recently, see Fleck v. McDonald;

  8. Offer programs and services that favorably compare and even exceed those offered by mandatory state bar associations, including law office management practice services; insurance programs; reduced-cost and free CLE; Find-a-Lawyer member directories; Access to Justice initiatives; job hunting resources; Sections and Committees; lawyer referral services; Publications; Young Lawyer Divisions; Legal Research like Fastcase and Casemaker; Mentoring programs; leadership development programs; Annual Meetings; high school mock trial programs; community pro bono; ethics opinions and practice resources and even online practice tools. (Instead of making a good faith effort to ascertain the scope, content and quality of programs, services, and activities conducted by voluntary bars, mandatory bar proponents prefer to hide behind patent nonsense to justify compelled association);

  9. Are no different from mandatory bar associations in offering lawyer assistance resources to assist lawyers with problems with alcoholism, drug abuse and mental or emotional disorders. See, for instance, the New York State Bar Association’s Lawyer and Judges Assistance Program;

  10. Do not increase costs to the public since lawyers pay 100% of the costs of lawyer regulation in every U.S. state and territory. It is completely fallacious for mandatory bar proponents to spuriously claim that a mandatory bar has to be preserved because their programs and services could not be duplicated by a voluntary bar or that the elimination of a mandatory bar would place burdens on taxpayers. 

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Photo Credits: Samoan man in Hawaii, by Steve Bozak at Flickr Creative Commons Attribution; Jen, kissing the first amendment goodbye, by Jason Eppink at Flickr Creative Commons Attribution; Scandalized by David Goehring Flickr Creative Commons Attribution.

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(1) there’s no empirical support that mandatory continuing legal education enhances lawyer competency or professionalism and;

(2) the state bar has a financial interest in CLE marketing.

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“States that have voluntary bar associations by and large do not have lower overall bar dues,” says a footnote in the Draft Report posted by the Arizona Supreme Court’s State Bar of Arizona Mission and Governance Task Force. “They charge both a mandatory regulatory assessment and separate voluntary bar dues, which together often exceed the annual membership fee in the State Bar of Arizona.”

Sounds well and good — but too bad for the Kool-Aid guzzlers, it doesn’t pass a fact check.

Caricatures 14You can read the Draft Report here and find the above-mentioned quote at the bottom of page 13.

Fact-checking the Bar.

After the better part of a year, you’d think the Task Force would have spent a little more time fact-checking and getting its story straight. Or maybe like George Costanza, it just believes it — so it must be true.

Certainly, there’s a lot in the Task Force Report upon which to take exception, not the least being the conflated mythology again fluttered out on frayed wings that only a mandatory bar can “ensure professionalism and competence” and that only a mandatory bar can protect the public from its lawyers.

Night Shift 31This, of course, ignores the robust lawyer regulation and disciplinary regimes in 18 voluntary state bar jurisdictions. It also wrongs and misconstrues the panoply of membership benefits provided by voluntary bar associations, to name a few, like Ohio’s, Iowa’s, Colorado’s, New York’s, and Illinois.’

Indeed, many if not all the voluntary bar association programs and benefits rival and even exceed the programs, activities and services offered by the compulsory State Bar of Arizona.

And yet, the Arizona Bar likes to pretend that only mandatory bars make available client protection funds; offer law office management and lawyer assistance programs; provide continuing legal education courses; present annual bar conventions; publish monthly bar magazines or support ethics hotlines. Begging the question, the Draft Report shamelessly proclaims,These invaluable services will cease to exist with the demise of the integrated bar because no voluntary bar in Arizona offers them.”

Instead, see what happens in jurisdictions with voluntary bar associations, for example, check out: Ohio and Iowa and New York and Colorado and Illinois. Lawyers in those jurisdictions choosing to join their state’s voluntary bar associations don’t take a back seat to anything offered by the mandatory State Bar of Arizona.

Twain's Men's Room | by bump

 

morguefile.com photo

It takes two hands to put out this whopper.

As for the whopper about how both a mandatory regulatory assessment and separate voluntary bar dues, which together often exceed the annual membership fee in the State Bar of Arizona,” the facts are set out in the chart below.

The data concerning optional voluntary state bar association membership dues was obtained from readily available public online information from voluntary state bar jurisdictions. The attorney registration fee information comes from state court websites although since the Arkansas Supreme Court fee registration information was not publicly accessible, it was confirmed by a licensed Arkansas lawyer.

 

 

fees-sba-web

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The fees in the chart are the full fee maximums for lawyers practicing past the entry-level graduated fee periods. Newbie lawyer fees are typically discounted.

No MCLE in Connecticut, Maryland and Massachusetts.

And then take note of something else not mentioned in the chart. While the breathtaking $945.00 combined regulatory assessment and separate voluntary bar dues appear to make Connecticut a high cost to practice jurisdiction, the overall cost to practice is still lower than in Arizona. Why? Because unlike Arizona, Connecticut does not have mandatory continuing legal education (MCLE). This saves Connecticut lawyers anywhere from $600 to $1000 per year versus what Arizona lawyers pay to satisfy the annual 15 hour MCLE requirement.

The same is true of Massachusetts with its sizeable $761.00 combined regulatory assessment and separate voluntary bar dues. Massachusetts does not have a MCLE requirement. Nor does Maryland, which at $280.00 for both regulatory assessment and voluntary bar dues must be the lowest cost to practice jurisdiction in the United States.

Comparing overall costs to practice.

Work World 14The bottom line is two-fold: One, in voluntary bar states, lawyers can elect to pay only their court-mandated regulatory registration fees and forego joining a voluntary state bar association. This automatically reduces their overall cost to practice as compared to Arizona.

Two, the exact opposite is true of the Task Force’s claim that Arizona’s bar dues are often exceeded by the combined regulatory assessments and voluntary bar dues in voluntary bar jurisdictions. Lawyers in states that have voluntary bar associations pay lower overall bar dues, in some instances much less than the current and still escalating annual membership fee in the State Bar of Arizona, which hits $520 per year on January 1, 2018.

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Photo Credits: Pants_on_fire_1429.jpg by TV Tropes via Creative Commons Attribution-ShareAlike 3.0 Unported license ; Twain’s Men’s Room, by Robert Occhialini at Flickr Creative Commons, Attribution-NonCommercial 2.0 Generic License.

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So Friday afternoon the Arizona Supreme Court’s Task Force on State Bar of Arizona Mission and Governance posted its draft report to the sound of one-handed clapping. Anyone inclined to read the report can visit the court’s webpage.

But since the proverbial die is cast, it makes no difference that after-the-fact comments are being solicited from the hoi polloi.  Any remarks from the naked unwashed will be just in time to be too late and as inessential as a take-a-penny, leave-a-penny tray on a 7-11 counter.

The state high court will do as it pleases and it will please to keep the status quo: a compulsory state bar — just as the Task Force recommends. The rest of the recommendations are much ado about not much, such as recommending a smaller cast of characters now called “trustees” instead of “governors” to oversee policy-making and operations. As previously reported here and here, the Task Force, its report and recommendations will remain largely cosmetic and so inconsequential as to have a thimbleful’s worth of relevance to members.

Integrated not compulsory.

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The Task Force prefers dressing up the compulsory nature of the official state organization to which all attorneys must belong and where pay-to-play is the required precondition to earn a living as lawyers. Rather than “mandatory” or “obligatory” or “compulsory,” like state bar elites elsewhere, they’re partial to innocuous modifiers such as “integrated.” Other favorites include, “incorporated” or “organized” or “unified” to describe their state organizations — anything to disguise the fact that unlike physicians, architects, CPAs, dentists, engineers and tattoo artists, only lawyers are singled out for compelled dues-playing professional state association membership for ‘the privilege’ of earning a living in their chosen profession.

Clarifications.

The work of the Task Force has been mostly below-the-radar. This is typical of a state bar that treats transparency like Arizonans treat the amount of window tinting used to shield themselves from the desert sun. Unsurprisingly, one year after its creation, the odds are good most Arizona lawyers know little if anything about the Task Force. And now, they’re asked to comment about something they know little to nothing about.

morguefile.com photo

The final draft report was kicked off with a video, which I watched while wrapping up my Friday afternoon work. I’ve yet to read the 116-page report. All the same, surprises? Expect none — unless the Task Force’s risible consultation with the California State Bar counts as one.

For now, here are a couple of needed clarifications after watching the announcement video:

1) Contrary to the Task Force’s assertions, voluntary state bar jurisdictions like New York, Indiana, Illinois and Colorado amply demonstrate that lawyer regulation and discipline are not dependent on the existence of a compulsory bar. In those voluntary bar states, the state supreme courts handle those functions.

morguefile.com photo

The State Bar of Arizona, however, would like nothing better than to continue perpetuating an absurd mythology that lawyers can’t be regulated or disciplined or the public protected without a compulsory membership bar association. New York, Indiana, Illinois and Colorado and 14 other states beg to differ. Those voluntary bar jurisdictions have robust regulatory and public protection programs in place without tramping on First Amendment associational freedoms.

Apples and oranges.

Ev Williams | by Christopher.Michel

2) Captain Obvious needs to point out that voluntary bar states are by plain meaning, “voluntary.” Unlike Arizona, lawyers can choose to pay their respective supreme courts only for lawyer regulation and discipline — and forgo joining a voluntary state bar. So what’s the point of comparisons between the cost to practice in Arizona with that of voluntary bar states where membership is optional? Why make comparisons between jurisdictions that seem to share a common denominator such as payment of lawyer registration fees while ignoring the fact that the jurisdictions are distinct from one another.

Besides, in virtually all instances, lawyers practicing in voluntary bar states have lower costs to practice than in Arizona — a fact the Task Force prefers Arizona lawyers not know. Instead, the Task Force speciously plays the false analogy game.

morguefile.com photo

A more accurate comparison is to only compare the court-mandated lawyer registration fees for regulation, discipline and client protection among the jurisdictions. After all, lawyer regulation and discipline are the core public protection functions and ought not to be freighted with the bureaucratic surplusage tacked on by mandatory bar associations for non-mandatory programs and activities. Otherwise, it’s all so much nonsensical claptrap, although the apples and oranges comparisons are conveniently self-serving.

Apples and apples.

morguefile.com photo

Take the voluntary bar state of Indiana, where the supreme court charges $180 per year for regulation and discipline. Membership in the voluntary Indiana bar association is $280 (6+ years of practice). Total cost to practice in Indiana is $460 if an Indiana lawyer also saw fit to join the voluntary bar. Otherwise, the cost to practice in Indiana is a $180 registration fee payable to the Indiana Supreme Court. This is a lower cost to practice than Arizona, which is currently $475 but increasing to $520 by January 1, 2018.

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Or take Illinois where lawyers pay the court an annual registration of $382, which includes regulation and discipline but is also larded with mandatory payments to the Lawyers Trust Fund ($95) for pro bono legal aid; Lawyers Assistance Program ($7); Commission on Professionalism ($25) and Client Protection Program ($25). Voluntary membership dues in the Illinois State Bar Association run from “Free” in year one to a cap of $320 in year 20. Certainly, if you combine both the court registration fees and voluntary bar association membership dues, the total cost to practice in Illinois of $702– far more than what lawyers pay in Arizona.

But what the task force conveniently omits is that there’s more than meets the eye concerning membership in voluntary bar jurisdictions. Membership in the voluntary Illinois State Bar Association also entitles members to 15 hours of FREE CLE per year. If you factor what Arizona lawyers pay for CLE, which can run upwards of $600 per year (15 hours X $40 average), the total cost to practice in Illinois is far lower than Arizona.

Registration desk sign | by NHS Confederation

And in Connecticut, another voluntary bar state that on paper looks higher than Arizona with an attorney registration fee of $665, of that amount, $565 is a separate tax that goes to the State of Connecticut Department of Revenue Services — not to the court for lawyer regulation and discipline. Meantime, membership in the voluntary Connecticut State Bar Association runs zero in year one up to $280 for admittees prior to 7/10/10. The total, excluding the $565 state tax, is less than $400 assuming a Connecticut lawyer also opted to join the voluntary bar. Otherwise, they would just pay the hefty $665 annual fee.

In Colorado, lawyers pay an annual attorney registration fee of $325 to cover regulation and discipline. Membership in the Colorado Bar Association is voluntary. New lawyers pay $100 per year and so-called senior lawyers licensed 8+ years pay $230 annually. Assuming Colorado lawyers wanted to belong to the voluntary bar association, their total annual fees would total $555.

Payment | by GotCredit

Finally, in the voluntary bar jurisdiction of New York, the attorney registration fees of $375 payable to the court are biennial, i.e., due every two years. This amount includes $60 to the Lawyers’ Fund for Client Protection; $50 to the Indigent Legal Services Fund; and $25 to the Legal Services Assistance Fund. However, New York lawyers wanting to belong to the voluntary state bar association pay $275 annually if they were admitted prior to 2006. This means that on an annualized basis, New York lawyers pay $462 if they chose to join their voluntary state bar association along with payment to the court for regulation and discipline. This is still less than what lawyers in Arizona pay.

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Photos: Registration desk sign, by NHS Confederation at Flickr Creative Commons Attribution;Ev Williams by Christopher Michel at Flickr Creative Commons Attribution, Payment by GotCredit at Flickr Creative Commons Attribution.

 

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Photo by, John O’Neill, Creative Commons Attribution-Share Alike 3.0 Unported license

A scathing state auditor’s report released last month body slammed the State Bar of California for rushing disciplinary cases to shorten a longstanding and growing backlog; for settling cases with less severity; and for going $50 million over-budget for a building renovation. The report went on to say the Cal Bar “has not consistently protected the public through its attorney discipline process and lacks accountability.” See “Auditor blasts State Bar for inconsistent discipline of bad lawyers, shoddy finances.”

To the surprise of no one, the Cal Bar accepted the auditor’s findings and even unconvincingly claimed to have already been working on the problems — “before the audit began.” Right! And I was going on a diet when they caught me eating that pint of ice cream.

This is the same state bar Arizona Supreme Court’s on State Bar Mission and Governance inexplicably opted to consult about reforming its governance structure. Sure the California Bar was ordered by the state legislature in 2010 to create a Governance in the Public Interest Task Force. And sure that task force was charged with recommending ways to “improve the existing system so as to best advance the goals of ensuring public protection.” But why would anyone think the California Bar’s ‘reforms’ were an exemplar worth studying?

https://i2.wp.com/5.kicksonfire.net/wp-content/uploads/2015/07/Seinfeld-Newman.gifWhen I heard about it, I thought it was risibly ridiculous that Arizona’s Task Force would look to the bar bureaucrats next door for insights on structural governance reform. Only an out-of-touch legal establishment with blinders on like Arizona’s would come up with that brainstorm. That’s like asking Kim Kardashian about modesty or Donald Trump about hairdos.

A dysfunctional mess.

Stressed businessman

“A consultant is a guy with gray hair so he can appear distinguished and hemorrhoids so he can look concerned.” – Malcolm Berko

For some 30 years — and longer, the California State Bar has been a dysfunctional and deservedly criticized bureaucratic mess. No matter that California Bar leaders have paid lip service to reform for years. The criticisms are legion. In 1997, then-California Gov. Pete Wilson vetoed a two-year fee authorization for the California State Bar because its actions had confirmed the charges of disgruntled members who characterized the bar as “bloated, arrogant, oblivious and unresponsive.”

An earlier audit in 2009 was critical of the Cal Bar over“negotiated salary increases over the past five years, an increase of $12 million in the operation of the discipline system — roughly 5 percent per year — while the number of inquiries declined.” And this was also the time period when unbelievably, a former Bar employee embezzled nearly $676,000 while no one was evidently minding the store. No wonder then-Governor Arnold Schwarzenegger vetoed legislation that allowed the Bar to collect its annual dues.

So this latest critical audit report is no surprise to longtime Cal Bar watchers. One inveterate and knowledgeable critic, the legal ethicist and law professor, Richard Zitrin, even lauds the legislative oversight of the Bar — something some Arizona lawyers gag on as anathema. I’m personally glad that the legislature has a say-so over the bar. Many of the reforms to the legal system that benefit the public came from the legislature, while the bar has repeatedly protected itself rather than the public,” Zitrin commented at the Legal Ethics Forum Blog.

Office Stress 92As for Arizona Court’s Task Force, there’s more embarrassment. Just months after the Task Force consulted with the California Bar’s then-Executive Director Joseph Dunn and per the meeting minutes, not long after Dunn told Task Force members about the Cal Bar’s reforms and how the board was “less contentious” and now “unified” and how the organization was “more focused, professional, and collegial” — Dunn was fired. I guess he didn’t see that one coming.

But at least the Arizona Task Force gave Dunn a round of applause for his presentation. So much for Dunn’s happy Kumbaya talk about the “proactive” California Bar and how its reforms are “the best thing that’s ever happened to the bar.”

People 6043Indeed, according to a Los Angeles Times story, “Accusations fly as State Bar of California leader Joe Dunn fights ouster, the California Bar is “once again beset with conflict, riddled with accusations involving expense accounts and ethics.” Nothing new to longtime critics of the California Bar. One California law professor told the newspaper, “The bar is just further descending into a banana republic. It is totally dysfunctional and should be unraveled.”

And since Dunn, a former state senator and trial lawyer, is not a man to take termination lying down, he is fighting back in the court of public opinion and in county superior court. He filed suit on November 13, 2014 alleging wrongful termination and claimed whistleblower liability and retaliation for allegedly reporting illegal activities and ethical breaches by high-ranking Cal Bar officials. Also see “Five things to know about the State Bar dustup with former director.”

Busy Business Women 40Too bad the Arizona Task Force was so clueless about their next-door neighbors. Otherwise, it might have refrained from a Golden State consultation or ironically enough, according to its latest list of reform recommendations, from mirroring many of the same milquetoast ‘reforms’ adopted by the California Task Force. These underwhelmingly include maintaining compulsory membership; reducing the size of the governing board; changing the board’s name from “governors” to “trustees;” and adding new qualifications, term limits and related procedures.

Then again the legal elites around here don’t have to worry about independent state audits.

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Grape eating contest | by denverkid

Proponents also speciously called the whole thing an “authorization” to increase dues and not a dues increase. And a “kick me” sign is not an inducement for a foot to the backside.

So citing oaths, obligations, and the special snowflake status of lawyers, the petitioners hoped to add Florida to the list of jurisdictions such as Minnesota and Wisconsin where as a condition to practice, state supreme courts tax lawyers to fund civil legal services. The other states that impose mandatory civil legal aid assessments are Indiana, Illinois, Texas, Missouri and Pennsylvania. And not to be outdone, at a $100 Florida’s tax would have been the highest.

"Peel Me a Grape" | by basykesIn December, the Florida Supreme Court heard arguments on the petition. Noteworthy was this scriptural riposte courtesy of Justice James Perry, “To much who is given, much is expected.”  Of course the easiest burdens to bear are somebody else’s.

‘Don’t worry about the mule going blind, keep loading the wagon.’

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Speaking, then, of the noble obligations of the so-called privileged, just last month I read about the falling average earnings of solo legal practitioners. Solos and small firms generally represent two-thirds of most U.S. lawyers.

In the last 25 years, average solo pay has fallen from $75,000 to $50,000 according to data compiled by University of Tennessee Law School Professor Benjamin Barton and cited in Professor Paul Campos’ post, The Collapsing Economics of Solo Legal Practice. Professor Barton’s new book, Glass Half Full: The Decline and Rebirth of the American Legal Profession was published last month.

And no matter that lawyer unemployment remains a problem in Florida or that 44% of all respondents to the Florida Bar’s last lawyer economics and law office management survey reported their business/profitability had decreased the past two years. In the same survey, almost 40% said they didn’t expect things to get better in the near future.

And then there’s this. According to Law School Transparency, nearly 85 percent of law graduates financed law school through student loans. The average debt incurred for 2010 law graduates was $77,364 at public law schools and $112,007 at private institutions. See “Burdened With Debt, Law School Graduates Struggle in Job Market.”

Now don’t get me wrong. I’m well aware that legal aid programs across the country are in continual budgetary crisis. And I’m not quibbling with the need, the rationale, or the petitioners’ parade of horribles. My objection is over the means. When did fixing a longstanding societal problem become the sole obligation of lawyers? By comparison, are physicians and dentists as a condition of practicing their professions likewise required to pony up for indigent healthcare services?

Fortunately for Florida lawyers — but not so much for legal aid advocates, petition opponents prevailed. Stating that the “issue requires further study and a more comprehensive approach,” the Florida Supremes declined to adopt the proposed amendment.”

Hat tip to The Legal Watchdog  for passing along the latest moves afoot in Florida.

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Photo Credits: “grape eating contest,” by denverkid at Flickr Creative Commons Attribution; “peel me a grape,” by Bev Sykes at Flickr Creative Commons Attribution.

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mooning the neighbourhood | by Pixel Addict

In February, the U.S. Supreme Court took a bite out of dentists in North Carolina. And at the same time, the high court made state professional boards everywhere nervous, including mandatory state bars.

By a 6-3 vote in North Carolina Board of Dental Examiners v. Federal Trade Commission, the Supreme Court imposed a higher hurdle for nonsovereign licensing boards to gain the state-action immunity that shields board members from federal antitrust liability.

Coincidentally, just a few years ago, a wise-cracking dentist friend had mentioned during a golf round how dentists were becoming annoyed over the growing number of non-dentists — mostly, cosmetologists, offering teeth-whitening services to the public. Beauticians were not only beautifying hair and skin but were now traipsing onto teeth territory and offering lower cost teeth-whitening services than dentists.

I only remember his story because, as a horse-owner, several years before, horse veterinarians around the country were trying to get non-veterinary dental lay practitioners (NVDLPs) banned from floating a horse’s teeth. The “float” is the name of the file used to smooth or contour a horse’s teeth and horse-shoers, self-taught cowpokes, and self-described ‘equine dental technicians’ had been biting into horse vet incomes by offering more affordable floating services.

A license for everyone?

When it comes to protecting turf, it’s always financial self-interest at the root of it. Never mind the chest and table pounding about protecting the public. No wonder an increasing number of everyday occupations hanker for licensing ‘protection.’ They think it heightens consumer perceptions of quality and increases demand. And of course, licensing restricts supply which translates into higher prices.

But in many instances, occupational licensing offers only an illusion of quality while doing little to actually protect consumers. Instead, occupational licensing simply creates self-serving barriers to entry, which makes the provided service more expensive and more unavailable.

And because it means additional revenue while offering a public protection sop to the electorate, government bureaucrats don’t mind creating more licensing categories to feed the bureaucratic maw. No wonder some call it a plague.

 

Tooth or Consequences in North Carolina.

So what happened in North Carolina is that its 8-member dental board made up of 6 licensed dentists elected by their fellow dentists, began sending out cease-and-desist letters to individual non-dentists and even to the North Carolina Board of Cosmetic Art Examiners warning them that under North Carolina law, the unlicensed practice of dentistry was a crime. And teeth-whitening was considered the practice of dentistry.

The cease-and-desist letters totaling 47 had their intended effect, chasing out the non-dentist teeth-whiteners out of the dental temple. But they also attracted the unwanted attention of the Federal Trade Commission (FTC) who suspected the board’s actions weren’t motivated so much by high-mindedness about consumer protection as they were over non-dentist competitors gumming up revenues.

In the FTC’s view, where the regulatory agency has a “financial interest in the restraint [it] seeks to enforce” and is “controlled by private market participants who [stand] to benefit from the regulatory action,” the state action exemption required active supervision “in circumstances where the state agency’s decisions are not sufficiently independent from the entities that the agency regulates.”

As a consequence, the FTC concluded that the Board had to meet the active supervision requirement if it wanted to benefit from state-action immunity. “Because North Carolina law requires that six of the eight Board members be North Carolina licensed dentists, the Board is controlled by North Carolina licensed dentists.” Moreover, dentists perform teeth whitening.  Therefore, “Board actions in this area could be self interested.” You think? See “How a state dentistry board hounded non-dentist teeth-whiteners out of North Carolina” and Brief of Respondent Federal Trade Commission. 

A bite out of the bar. 

roger daltrey shows us why his primal scream from "won't get fooled again" is still the best in rock 'n roll | by greg westfall.

Why should lawyers care?

Because it may lead to more legal challenges given our over-regulated legal market. And it will engender more defiance against the host of anti-competitive actions taken by mandatory bar associations. Indeed, on June 3, 2015, Legal Zoom filed a $10.5M antitrust suit against the North Carolina Bar.

Some legal analysts even think it will mandate more “active supervision” of state bars by their state supreme courts. Said one, “the decision probably will lead to state supreme courts having stronger relationships with their state bars and oversight to see whether they are acting consistent with statutory authority or the authority granted by their state supreme court.” Still others think it might shake up unauthorized practice of law (UPL) restrictions and “revive challenges to UPL rules.” See PrawfsBlawg: Teeth Whitening for Lawyers

munch - it's a scream | by oddsock

Oh, woe. Oh, scream.

And claiming their work would be impaired, mandatory bars had predicted a parade of horribles in the wake of the decision. By denying them state action immunity under the Sherman Act, private regulatory boards with a controlling number of decision-makers actively participating in that profession, i.e., “market participants,” would be forced to act under a clearly articulated state policy and under active supervised by the state. “Active market participants,” the Court said, “cannot be allowed to regulate their own markets free from antitrust accountability.”  Oh, woe. Oh, scream.

 

Scream | by MooganicAs Amici Curiae in support of the North Carolina Dental Board, the North Carolina, Nevada, West Virginia and Florida State Bars had paraded the horribles in their Brief, including that “the limited resources available to prosecute lawyer misconduct and to prevent the unauthorized practice of law will be diverted to litigating whether the state bar’s action has been actively supervised in a manner sufficient to provide state action immunity.

Additionally, they predicted “State bars will have to defend expensive antitrust actions even though states explicitly authorize the state bars to regulate the conduct being challenged.” And worse, they claimed lawyers won’t want to serve on bar governing boards “for fear of being sued—and of being held individually liable—in treble-damage antitrust actions.” Last, they proclaimed those “who do agree to serve may be deterred from fulfilling their state-authorized enforcement duties against defendants who threaten antitrust claims.” 

The non-state agency state bar. 

Bite Me Bar Sign | by Sam HowzitStates are exempt from federal antitrust laws for their acts when acting in their sovereign capacities — even when those acts would violate antitrust laws if done by a private party. Not so state boards with active market participants who should now be treated like private entities and who to receive state-action immunity, must now meet the two-test requirement for private entity immunity: a clearly articulated anticompetitive statute and active supervision by the state.

The Scream | by adactio

As for the State Bar of Arizona, legal elites here have been pondering the implications of the North Carolina case, including whether or not to leaven the influence of active market participant lawyers with more non-lawyers on its governing board.

But in my opinion, there are likely more ominous reverberations than merely decreasing the number of foxes in the hen-house. As its website proclaims, the Arizona Bar proudly claims it’s “not a state agency.” So it would seem that as “a nonsovereign actor controlled by active market participants,” to avoid antitrust liability, it will have to work even harder now to satisfy the two requirements of clearly articulated state policy and active State supervision.

In Bates v. State Bar of Arizona 433 U.S. 350 (1977), the U.S. Supreme Court held that the Arizona Supreme Court’s rule restricting lawyer advertising violated the First and Fourteenth Amendments and ruled that commercial speech merited First Amendment protection. Admittedly, the nation’s high court went along with the Arizona Supreme Court’s determination in Bates that the Arizona Bar was immune from federal antitrust liability because in enforcing the Court’s then rule against lawyer advertising the Bar’s role had been “completely defined by the court” and moreover, the Bar acted “as the agent of the court under its continuous supervision.” 

After North Carolina Dental Board v. FTC, whether this will be true in every instance implicating anticompetitiveness should be worrisome for the non-state agency Arizona Bar particularly when Goldfarb v. Virginia State Bar (421 U.S. 773, 791 (1975) was also cited by the Court for the principle that while state bars are a state agency for some limited purposes, that fact does not create an “antitrust shield that allows it to foster anticompetitive practices for the benefits of its members.”

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Photo Credits: “mooning the neighbourhood,” by Pixel Addict at Flickr Creative Commons Attribution; “Roger Daltrey …” by greg westfall at Flickr Creative Commons Attribution;”Bite Me Bar Sign,” by Sam Howzit at Flickr Creative Commons Attribution;”Munch — it’s a scream,” by Ian Burt at Flickr Creative Commons Attribution;”The Scream,” by Jeremy Keith at Flickr Creative Commons Attribution;”Scream” by Mooganic at Flickr Creative Commons Attribution.

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