Warren E. Burger: We'll hear arguments next in 74-70, Goldfarb against Virginia State Bar and others. Mr. Morrison, you may proceed whenever you're ready.
Alan B. Morrison: Mr. Chief Justice, may it please the Court. In early 1962, the Committee on Economics of Law Practice of the Virginia State Bar issued its report on minimum fees. The opening sentence of that report neatly summarizes its intent and sets the background against which the activities of the respondents must be judged. “The lawyers have slowly but surely been committing economic suicide as a profession.” The remedy suggested by the State Bar, minimum fee schedules to be adopted by the local bars in the state, patterned on the suggested schedule contained in the State Bar's own fee report. Shortly thereafter, the respondent Fairfax County Bar Association, effective May 1, 1962 adopted its own fee schedule for the first time, essentially, the same fee schedules that suggested in the State Bar's report. That fee schedule continued in effect unchanged for a period of seven years until the Virginia State Bar once again issued another fee report by a similar committee to the one that issued the first one. This report reflected “a general scaling up of fees.” The report indicated it was necessary because of escalating costs and spiraling increase in the cost of living. The court -- the Committee acknowledged that there were substantial differences between some of the old schedules. And the new fees for title examinations which are the services particularly at issue in this case. The title examination charge went to 1% of the purchase price of the home up to $50,000.00 and a half of 1% thereafter. We can read through the minimum fee schedule reports of the State Bar and the minimum fees schedules of the Fairfax Bar in vain to find a single reference to any protection of the public interest or the promotion of quality legal services at a reasonable cost, but there are indications of what these fees schedules and reports were intended to do. In 1962 report, the State Bar says that fees schedule should be promulgated because it is in the best interest of the Virginia State Bar and in 1969, the Fairfax report noted that the fee schedule will enhance the prestige of the State Bar, but the State Bar here was not content merely to publish its own fee reports and to allow the local bar associations to publish their own fee schedules. It wanted to put some teeth behind these fee schedules to be sure that they would be followed and so, it issued two ethical opinions. One, in 1960 and one in 1971, opinions number 98 and 170 and in substance these two fee opinions state that any attorney in Virginia who habitually charges less than the minimum fee schedule amount shall be presumed to have acted unethically and can be subject to discipline on proceedings brought by the Virginia State Bar in the state courts of Virginia.
Warren E. Burger: Does this record show whether any such disciplinary proceedings have ever been embarked on --
Alan B. Morrison: It does Your Honor and it suggested Mr. Chief Justice that there have never been any disciplinary proceedings brought for that very reason. However, I think it's also important to note that the record does show two other factors in that regard. Number one; one of the attorneys to whom the Goldfarb's wrote suggested in its response to their letter about what kind of fees they could expect to pay that he felt that he was ethically required to adhere to the schedule. And it was also stipulated between the parties that the existence of these two opinions was a substantial influencing factor in the adherence found by the District Court to the fee schedules in Northern Virginia.
William H. Rehnquist: Is there any indication in that stipulation or any of the findings of the District Court as to whether this adherence came about because of a fear of disciplinary action or because of a desire to persuade the client that the fee had to be charged on a pecuniary motive basis?
Alan B. Morrison: I don't think there's anything that directly responds. I would refer to stipulation number 20 which is in petitioner's appendix at page -- the petition for writ of certiorari at page 19 and I think that that about says what could be found and agreed upon. I don't think there's any thing further in the findings with regard to that Mr. Justice Rehnquist. In any event, it is no small wonder based upon this history --
William J. Brennan, Jr.: May I ask Mr. Morrison, what page?
Alan B. Morrison: That's page 19 in the appendix to the petition for writ of certiorari. I'm sorry Mr. Justice Brennan.
William H. Rehnquist: What color?
Alan B. Morrison: Blue.
Byron R. White: It is in the regular appendix?
Alan B. Morrison: No Your Honor, that was one of the findings of fact that was included in the trial court's opinion. I'm sorry, it was presented in connection with our petition and was therefore not required to be reproduced.
William J. Brennan, Jr.: That's finding 20, is it, stipulation?
Alan B. Morrison: That is right.
William J. Brennan, Jr.: Yes. Thank you.
Alan B. Morrison: It is no small wonder that the Goldfarb's were unable to find a lawyer who would charge them less than the minimum fee for title examination for their home. They indeed wrote 36 letters to attorneys in Northern Virginia who had expressed interest in real state practice work. They received 19 replies, none of which indicated a willingness to charge less and in almost every case, the reply was something to the effect that the fee is established by the Fairfax County Bar Association or I know none of my brethren who would charge any less and I feel that I'm ethically required to adhere to those charges.
Byron R. White: I take it you're asserting that the Virginia State Bar effectively enforced the minimum fee?
Alan B. Morrison: That is correct. We assert that the Virginia State Bar has two very important roles in this matter. First, the promulgation of the fee reports in 1962 which got the ball rolling in Northern Virginia. And then, in 1969 when they effectuated the revision of the fee suggestion and I might point out Your Honor that in 1969, the increase in the minimum fee for title examination alone was an increase of 67%.
Byron R. White: So, the Virginia State Bar you're saying invited the local bar associations to promulgate minimum fees and then enforce them through the ethical mandates?
Alan B. Morrison: Precisely. Indeed, I would say beyond inviting, they suggested, recommended that the local bars --
Byron R. White: Well, do you suggest that the Virginia State Bar was acting outside the scope of its authority under the Virginia law?
Alan B. Morrison: I would say Your Honor that the Virginia Bar has been given the authority to issue ethical opinions by the state court of Virginia. There is nothing any place that indicates that they were ever specifically given the authority to publish fee schedules or fee reports or ethical opinions, enforcing minimum fee schedules.
Byron R. White: Are you suggesting that there isn't any clear authority in Virginia law, you're saying for that?
Alan B. Morrison: I would say that's correct, Your Honor but that even if there were authority under Virginia law that is we, in this case are not, I don't believe deciding a question of whether that the issuance of these reports is somehow violation of Virginia law. Although, in the Parker-Brown area, it does become of some relevance and I'm not trying to avoid that (Voice Overlap).
Byron R. White: But you can't have it both ways, I don't think. You can't say that the State Bar was adopting and enforcing fee schedules and then turn around and say that it wasn't really doing anything official as long as you -- unless you say that this wasn't an administrative agency of the state?
Alan B. Morrison: Well, we do say that it was in administrative agency the state for only very limited purposes. The statute upon which the State Bar relies, Section 54-49 of the Virginia Code says that the Virginia State Bar has the authority to act as an administrative agency.
Byron R. White: So, you're saying that it was acting outside the clear scope of its authority and so far as fee schedules were concerned?
Alan B. Morrison: That's right, Your Honor, but I would say that even if we decided as a matter of state law that the authority was so broad to the Virginia State Bar that there was nothing that prohibited the State Bar from issuing fee reports or these ethical opinions that under this Court's decision in Parker versus Brown that that would not be sufficient to create an antitrust exemption that there needs to be more and that as we'll show later on that they have not met those tests here. As I say I have discussed these matters relating the importance of the Virginia State Bar because two of the judges in this case, the District Court judge and the dissenting judge in the Court of Appeals both suggested that the State Bar was immune because of what they termed the State Bar's minor role. I think that any realistic assessment of this record inevitably reaches the conclusion that the State Bar was, if not the prime mover, certainly a co-equal partner in this entire matter.
Potter Stewart: That is by opinions of 98 and 170 in 1962 and 1968 and further by being a brooding on their presence that was – that threatened to enforce these as -- on the basis of violation of ethics if there were violations of these minimum standards?
Alan B. Morrison: And further the issuance of the two fee reports; remember 1962, the State Bar issued the fee report, that was the first time that one was issued in Northern Virginia, fee schedule followed back and the --
Potter Stewart: The fee report had to do with the comparative study of doctors and lawyers' incomes and so on?
Alan B. Morrison: Only very slight Your Honor. Most of it was a recommendation to the Local Bar Associations to adopt fee schedules and contained in that recommendation was not simply the suggestion “go out to figure out your own fee schedule,” but these are the fees that you ought to charge and indeed the fees that were actually contained in the Fairfax schedule and in other schedules were virtually identical in both 1962 and again in 1969 when the scaling up took place. So, that's a very important factor in moving ahead of the advent of fee schedules in Northern Virginia.
Potter Stewart: Where there in fact disciplinary proceedings initiated against people who charged less than this minimum fee schedules?
Alan B. Morrison: No, Your Honor.
Potter Stewart: Never?
Alan B. Morrison: Never.
Potter Stewart: I mean never as far as this record this goes?
Alan B. Morrison: The State Bar has so represented and we are unaware of any cases. It of course being to the economic advantage of an attorney, if the fee schedules working across the board effectively where none of his brethren are going to undercut him, there is very well economic incentive to violate, but in any event it has not been violated.
Potter Stewart: And the ethical violation would be soliciting business, would it be beyond that theory?
Alan B. Morrison: That is on that general theory, although there need be a specific requirements of solicitation in the sense that the lawyer need not advertise or go out to tell people that he --
Potter Stewart: But if he undercuts the other lawyer --
Alan B. Morrison: But if he consistently undercuts, if he charges three quarters of a percent of the purchase price or break -- makes the break at 25 instead of $50,000.00 that's considered unethical or if he charges on the basis of time or the value of the services --
William H. Rehnquist: That fact alone would support disciplinary action?
Alan B. Morrison: That is precisely correct --
Potter Stewart: But on the theory of solicitation of it, is that it?
Alan B. Morrison: In that general theory, yes Your Honor, that fact alone would be sufficient. This of course is different from the American Bar Association's position.
William H. Rehnquist: Some evidence?
Alan B. Morrison: That's right, but there must be more, there must be more. It can be taken into account as a factor but it is not sufficient in and of itself.
Warren E. Burger: I think there's a general public interest factor they call it social interest in not having system which permits lawyers to charge, let us say, a straight $15.00 for every title examination, $15.00 not $50.00?
Alan B. Morrison: Yes, sir.
Warren E. Burger: And then gradually get most of the or a great deal of the work, but for $15.00, obviously performing shoddy professional work as it would have to be?
Alan B. Morrison: I would certainly never counsel this Court or any one to adopt any sort of situation under which the lawyers were required to charge any sort of minimum fee such as that. I would say that the lawyer should be left free to determine the amount.
Warren E. Burger: Would that not be a possible consequence of no standards for fees?
Alan B. Morrison: I don't think so, Your Honor. There are bars all around the country for which there are no minimum fee schedules. Indeed, --
Warren E. Burger: Minimum schedules have been disappearing, have they not over the country as a whole?
Alan B. Morrison: Yes, Your Honor. Indeed, I would point out that during the course of this proceeding, the Arlington County Bar Association and the City of Alexandria Bar Association withdrew their minimum fee schedules in order to settle this case out. And indeed, on the 16th day of September of this very year while our petition for writ of certiorari was pending, the Fairfax County Bar Association, the respondent in this case withdrew its own minimum fee schedule thereby belying any notion that they are necessary to ensure the maintenance of ethical standards and to ensure that attorneys do quality work. I hope Your Honor that we can rely upon the members of the bar by means other than minimum fee schedules not to do shoddy work and that I would never suggest that we ought to establish any kind of fee schedule maximum, minimum, or anything else. Those are matters to be left to the marketplace for each individual attorney to decide what his services are worth and what a reasonable fee ought to be.
William H. Rehnquist: Well, what if you just out of a law school and hung up your shingle and somebody comes to you and asks for a divorce, how do you know what to charge him, if you don't have some guidance from somewhere?
Alan B. Morrison: Your Honor, I would say first thing I would do before I hung up my shingle is I will go around and talk to my fellow members of the bar. I would ask them, what is the kind of rate they charge? There are courses these days in law and economics, the bar may have an obligation to teach lawyers in some senses when they're going out in their own, how to figure out whether they're going to make enough money.
William H. Rehnquist: Well, isn't that one purpose of at least a suggested minimum fee schedule is to kind of distill the experience of other lawyers and say, this is about what we get for it?
Alan B. Morrison: Your Honor, that maybe a purpose, but that would be a purpose at almost any other form of price fixing and we don't allow any antitrust laws and I think Congress wisely said, “No, that's not what we're going to permit.”
William H. Rehnquist: But it will be all right for a lawyer to go out and talk to 10 other lawyers and see what they were charging and charge the same thing himself?
Alan B. Morrison: If he felt that was a fair, just and reasonable fee, absolutely Your Honor. Indeed, I would say the First Amendment would compel the conclusion that the state could not prohibit a lawyer from discussing that.
Warren E. Burger: Haven't corporations got in trouble during just that?[Laughter]
Alan B. Morrison: If they've asked them what they in fact charged Your Honor with respect to a particular matter perhaps so that if they're asking, “What are you charging for a particular price?” But to find out what is the going rate on divorces, I would say that that certainly ought not to be even under the reasoning of this Court's decision in Container Corporation that that would not be prohibited from finding out that kind of general pricing information for someone who is just starting out in the business.
Warren E. Burger: I realize you don't have very much time, but are you going to refer at all to the possible impact of this case depending on its outcome on group prepaid legal services?
Alan B. Morrison: Your Honor, that is a matter of great concern to me personally. I've been working quite closely with the number of organizations in that area and I would think that the favorable outcome in this case would aid the development of prepaid legal services that the bar could properly do many things in the prepaid area. Although, the Justice Department's position with respect to prepaid legal services under bar established programs under which the bar sets all the fees without any kind of consumer input at all, without any statutory authority or court authority to promulgate fees without any kind of openness in the process, may not be sufficiently strong to qualify under Parker-Brown exemption. But those matters can be cured and I would have to, Your Honor look at the specifics of a particular prepaid legal services program. Those programs in which for instance a group of consumers entered into an agreement with a law firm to provide services that a given fee would be no different than any corporation or any other entity providing services.
Harry A. Blackmun: Mr. Morrison, did the Fairfax Bar make any statement when they withdrew their fee schedule recently?
Alan B. Morrison: There is Your Honor in its brief in opposition to a certiorari, there is a resolution which is their full statement. It's attached as appendix, I believe it's appendix 1 to the brief from the Fairfax Bar and that is the only statement we have in the record Your Honor.
Harry A. Blackmun: Does that statement contain a justification for their action?
Alan B. Morrison: I wouldn't want to characterize it one way or the other, Your Honor.
Harry A. Blackmun: Alright, I'll ask the other side.
Alan B. Morrison: Thank you, Your Honor. The Court of Appeals below, majority, relied very heavily on the so-called learned profession exemption to the antitrust laws in finding immunity for the bar for these activities. We believe that that reliance was misplaced and that the proper focus was on and should have been on this Court's decision in United States against American Medical Association. In that case, this Court held that it was immaterial what the professions of the defendants were who were charged with that criminal conspiracy provided that a affect and purpose of that restraint was to restrain the trade of group health. The defendants there were medical society and 21 doctors who opposed the establishment of prepaid medical services in matter not dissimilar to the prepaid legal services about which the Chief Justice just asked me. And the medical societies there issued rulings which said that it was unethical for a lawyer, excuse me for a doctor to work for group health and that it was unethical for other doctor to consult with that doctor or it's unethical for a hospital to and threat -- they threatened boycotts of hospitals that cooperated. And the result of this was of course a serious impairment of the proposal to deliver prepaid medical services to the workers in that particular case. In our view, the Court – Court's holding there that the profession was immaterial, requires a rejection of the attempt of the bar here to spread an ethical umbrella over its activities and to insulate it from the true effects which is as it was there to deprive consumers of opportunity for the free market. In AMA, this Court said that a conspiracy allegedly aimed at restraining or destroying competition or limiting the free availability of medical services violated the Sherman Act and it surely it does here also. I want to turn if I may to the alternative basis upon which the bar can escape, if “escape” is the proper word, from the strictures of the Sherman Act for those truly legitimate activities which the bar has and which do need to be carried forward. Now, if the bar can establish under Parker, that there has been state action and that the state has intended to replace competition.
Potter Stewart: May I just, if I may before you get into that, I want to be sure I understand your previous point. You say that there may be a so-called learned profession exemption, but we need not decide that here because if the exemption exists, it has to do with the pinch not worth the squeeze to use Justice Jackson's metaphor and that here the pinch was on the public?
Alan B. Morrison: That's certainly true, Your Honor and to the extent to which the special status of the bar becomes relevant of course it is in the rule of recent cases where like every other characteristics of a business or an industry we certainly must look to the obligations of that industry in its peculiarities.
Potter Stewart: That people in their learned profession let's say you had three or four PhD's and a couple of doctors or divinities, a divinity and maybe a dentist and an MD, all members of learned professions, but that they could conspire to violate the antitrust laws if the effect of that were on the general public, is that it?
Alan B. Morrison: That's correct. That's correct, Your Honor.
Potter Stewart: If but on the other hand if the effect were wholly within divinity school or university graduate school, they might be learned profession exemption, is that it?
Alan B. Morrison: I gave an example in my brief, Your Honor of lawyers agreeing that 60 years is an appropriate time for title examination. To go back 60 years will be considered prima facie reasonable in terms of what's required. Now, there may be a restraint. I would think it would be satisfied under the rule of reason, but the restraint there would be simply upon the internal workings of the profession and while there may be some tangential effect of the public in the long run, it would be very small and probably be protected.
Byron R. White: What about agreements not to advertise?
Alan B. Morrison: Your Honor, that of course is not the very case we have before us. We have price fixing and however I would say Your Honor that if in the commercial context the per se rule applies in that case. Then, I would say that the bar to escape Sherman Act liability would have to come either under Parker-Brown directly under the authority to regulate or under a specific state statute.
Byron R. White: Well, I thought you say, if it comes on a per se, what do you think about that?
Alan B. Morrison: Your Honor, I read the case cited by American Bar Association and if I have to extrapolate, I would say that that probably is a per se violation. There has been no decision specifically of this Court that's reached that precise question, but if I had to give my opinion and were advising a client I would say, yes, it is a per se violation.
Byron R. White: How about a rule, how about agreements not to solicit otherwise than advertising?
Alan B. Morrison: I would say Your Honor that it is under the same rule and that if the bar needs an exemption; there are two ways that the bar can get an exemption. Under Parker-Brown where there is meaningful statement regulation where there is an important state end to be achieved by that, I'm prepared to say that that can be a achieved that way.
Byron R. White: If that was a -- you would say if there was a specific state statute that forbade solicitation?
Alan B. Morrison: That's right, where the state has made a decision to --
Potter Stewart: You have pure Parker against Brown.
Alan B. Morrison: Exactly, Your Honor, or if Congress as Congress has so often done for other business problems, labor unions, the airlines, fair trade laws, there are whole raft of areas in which Congress has said, no competition is not to be all and end all for everybody, not on the state by state business, but for everybody and we want those situations to be covered by another rule. With regard to Parker-Brown, I want to point out several important things by Parker that are different from this particular case. In Parker first, there's a terribly important role played by the State Agriculture Commission who were all appointed by the Governor, confirmed by the Senate of California. One of them included the State Agriculture Director and others included consumers and handlers as well as growers. Now, these individuals made the key and essential decisions in Parker. There was no more way in which the state could operate that program unless there was positive specific approval given by these individuals. Moreover, there had to be beyond that a good deal and of this I speak of the specific factual findings that the program for the particular industry was to be carried out in accordance with the statutory scheme, an insurance against any form of unreasonable profits and then, after full hearings and full determinations that competition ought to be replaced in that particular instance by some other form of control in order to preserve the agriculture wealth of the state that in that case, the Court held yes, there was an exemption. This was indeed action of the state. We don't have anything about that kind here. The real activities here were conducted by the State Bar, and none of the committees who issued the fee schedules, fee reports, wrote the ethical opinions, none of them was appointed by the Governor, confirmed by the state Senate. There were no hearings, there were no factual findings, there was no kind of procedural assurance that any kind of policy mandate from the State of Virginia is being carried out. There was in short a very different kind of situation than what we had in Parker-Brown. The state Supreme Court has done only two, taken two actions which might conceivably be brought within the notion of an approval as in Parker. Number one, the Canons of Ethics number 12 which the State Bar adopted verbatim in this regard from the ABA's Canons of Ethics, indicated that in determining what a reasonable fee was it was proper to consider the customary fees in the area and that the customary fees in the areas included proper reference to minimum fee schedules, that's the one item. Then, in 1969 and 1970 when the Canons of Ethics were replaced by the Code of Professional Responsibility, that language was taken out and the question of reasonable fees was again included and in ethical consideration 2-18, the American Bar Association, adopted by the Virginia State Bar, Virginia Supreme Court and said that minimum fee schedules are some guidance and what a reasonable fee is. Now, that is a very different kind of approval than was required in Parker-Brown. There was no consideration by the Virginia Supreme Court of either the ethical opinions, the fee reports of the fee schedules and most particularly there was no consideration of the numbers involved. How much was reasonable fee, was there any assurance that the consumers were not being unfairly abused by the fee schedules as there was in Parker? None of that took place here and we suggest that that is a fatal flaw in the entire matter by which the minimum fee schedule system operated in Virginia. Finally, as in Parker, unlike Parker rather, there are no statutes here which give an indication to the State Bar or anyone else that these activities ought to be carried out as a replacement for competition. A careful statutory scheme was taking place in Parker; a scheme fully consistent with the federal practice and indeed a scheme intended to preserve the agricultural wealth of the state without unreasonable profits. And further, without profits in a situation that once the scheme went into effect, the program was approved after these long hearings and findings of fact that it no longer was optional that it became mandatory and any person who didn't follow that scheme for the growers of raisins in that case could subject to criminal prosecution. Your Honor, it is clear that if all of the developers in Western Virginia and all the bankers in the area and the neighboring areas, and all the real state brokers and sellers of title insurance had gotten together and published minimum fee schedules that anyone could be disciplined for not adhering to them, there can be little doubt that the Sherman Act would have been violated. The question before this Court is, are lawyers any different or do they have to meet the test that everyone else has to meet? We suggest that the Court of Appeals below was in error in reaching the contrary conclusion and accordingly we ask this Court to reverse. Thank you, Your Honor.
Warren E. Burger: Very well. Mr. Solicitor General, you have few minutes before lunch.
Robert H. Bork: Mr. Chief Justice and may it please the Court. I was hoping that Mr. Morrison would talk for two more minutes, but I should say that we, the United States supports the petitioners here and we believe that these minimum fee schedules are in fact illegal per se under Section 1 of the Sherman Act. And I hope to spend my time primarily on the issues known somewhat inaccurately as the learned profession exemption and the state action exemption. It is clear I think that Section 1 of the Sherman Act applies to personal services and it is also clear that the circulation of minimum price schedules for personal services, even without an explicit agreement to adhere them would be a violation of the per se rule against price fixing, if the respondents here were stenographers or violinists or cosmetologists or somebody else and the question we have is why should not the per se rule be applied to lawyers? The answer said to be the ethical responsibilities of the bar and while one may concede that the bar has strong ethical responsibilities and indeed the power to police those violations of their standards, one search is in vain for the connection between professional ethics and price fixing for professional services. At least one search is in vain for a connection at least to the conclusion that price fixing is ethical. The charging of the fee is the one place where the lawyer and his client have an inescapable conflict of interest and it's rather mystifying why an agreement among lawyers to pit their collective strength against the individual client so that the lawyers may win out in that conflict of interest should be required as a matter of legal ethics.
Warren E. Burger: We'll resume there at 1 o'clock. [Lunch Recess] Mr. Solicitor General, you may continue.
Robert H. Bork: Mr. Chief Justice --
William H. Rehnquist: Mr. Solicitor General, I don't mean to entrench on your very short time, but is somebody from your side of the elect is going to discuss interstate commerce?
Robert H. Bork: Well, we had hoped that Mr. Morrison would, he did not. It seems to me perfectly clear in this case that there is no problem with interstate commerce or the effect upon interstate commerce.
William H. Rehnquist: And these -- were these particular plaintiffs no lender outside of Virginia?
Robert H. Bork: Well, I don't think the plaintiffs have to affect interstate commerce. It's the defendants that have to affect interstate commerce to violate the Sherman Act and I think it's quite clear that the flow of mortgage money --
Warren E. Burger: In the specific cases or in the generality of their law practices?
Robert H. Bork: Well, I think in this case, the effect upon the interstate commerce Mr. Chief Justice is the particular fees being charged on closings of the real estate.
Warren E. Burger: With the particular people who are plaintiffs?
Robert H. Bork: The particular people who are plaintiffs are people who purchased a home and had somewhat inflated cost with the minimum fee schedule, but it's not necessary that the plaintiffs be in interstate commerce as long as the violation affects interstate commerce and I think under cases like Employing Plasterers case and Burke against Ford, and so forth where it is necessarily true that the -- and the law infers it and the law implies it that the flow of mortgage money into the state for example will be diminished as the price rises, that standard price theory upon which the interest law operates.
William H. Rehnquist: Where do you get that legal inference from?
Robert H. Bork: A legal inference?
William H. Rehnquist: Yes.
Robert H. Bork: Well, I think it was first enunciated in the Joint-Traffic case in 1897 by Mr. Justice Peckham when he said that a restraint of trade was a lessening of the flow of commerce which could be inferred from a rise in the price.
William H. Rehnquist: And that that same would carryover to mortgage money into Northern Virginia?
Robert H. Bork: Yes, and the Employing Plasterers case and the Employing Lathers case in around Chicago I believe the court inferred that the flow of building materials into the area would be diminished as the prices were raised artificially and that gives you the necessary effect upon interstate commerce I believe. I think in fact, with these minimum fee schedules here, there would be little difficulty in concluding that the Sherman Act per se rule had been violated. Indeed, I think any other conclusion would be logically impossible after, certainly after footnote 59 in the Socony-Vacuum case. Now, this morning there was some -- there were some questions I'd like to respond to now if I may. The Chief Justice asked the question, “What about the bar's responsibility with respect to a lawyer who charges fees much too low and therefore necessarily, does shoddy work?” I think there are two answers to that. One is that in Sherman Act terms, in other context, we never allow price fixing on the ground that the product will be made better if the price is higher. We let the quality and the price both be set by the market. The second is I think, that the bar --
Warren E. Burger: That maybe one thing for a box of matches and at least some people have thought in the past including the Justice Holmes and others that that was perhaps a different thing when it came to the services of professional people?
Robert H. Bork: Well, I think the bar Mr. Chief Justice has perfect authority to disciple for shoddy work which deprives the client of effective legal representation. That seems to me different in disciplining for charging to lower price. I have no problem with the discipline for not behaving as a professional man should in giving the proper legal services.
Warren E. Burger: Is there much evidence that that has been done?
Robert H. Bork: I -- across the country as a matter of fact --
Warren E. Burger: Anywhere?
Robert H. Bork: -- professional discipline is perhaps not been as effective as it should be, but I think now we're discussing and in this case, there's been discipline for cutting fees. I think we're discussing now conceptually what it is that justifies a price fixing agreement. I don't think the fear of shoddy services or shoddy work and shoddy products under the antitrust laws does and I think the bar if it wishes to guard against statute, guard against the provision of shoddy services rather than the price. The second question was asked by Mr. Justice Rehnquist who asked if this minimum fee schedule did not provide information to a young lawyer and other lawyers about what prices were current. I'm sure it does, but fee or price schedules have been defended on that ground before and that argument has never succeeded. You don't set the price to provide information. Trade association cases indicate that if you wish to provide information about the range of prices currently being charged in an area you may, but that is a far different thing from setting the price which the man must charge. And thirdly, there was the question about whether or not, several questions about, whether or not there had been enforcement by the bar in disciplining people for charging low prices or whether there was a threat of it. The usual antitrust rule is that the circulation of the price which is to be charged is sufficient for a violation of the Sherman Act and there need not be a mechanism or a threat of compulsion behind that. For example, the Nationwide Trailer System case which I think was part of which was summarily affirmed in this Court, holds that. I think the real problem in this case is really the “slippery slope” argument and that is the fear expressed by various bar associations that any application of a per se rule to any practice of the legal profession endangers all ethical regulation of the profession and I think that fear is groundless. I think there is room for legitimate regulation of professional behavior. Now, the per se rule, there are at least four defenses to an attempt to apply it. I don't think any of them applies here, but any of them may apply in other cases. The first one of course is simply the defense that the restraint whatever it is ancillary to a legitimate join venture and that kind of an argument of course justifies restrains within a law firm, within an economic unit to make it more efficient, but as recognized ever since Addyston Pipe and Steel when Judge Taft explicated that branch of the antitrust law, but there is here and no economic integration between the entire bar, no joint venture to which the restraint could be ancillary. The second defense is state action within the meaning of Parker against Brown. That defense is not available here because the fee schedules here were not imposed by the Virginia legislature nor by any state agency charged by the legislature with the setting of fees. Supreme Courts -- the Virginia Supreme Court's minimum relationship to fee schedules is not enough to satisfy Parker against Brown. The Court hasn't really proved or commanded these schedules and mere silence isn't enough. Some affirmative supervision, extensive affirmative supervision and affirmative state policy I think are required by Parker against Brown and secondly although --
Byron R. White: Well, what about the State Supreme Court proving a ethical standards that indicate that ethical conduct are reasonable fee as you take in to account of fee schedules as an element?
Robert H. Bork: You mean in the terms of state action Mr. Justice White?
Byron R. White: Yes. At least you would think the Supreme Court which is an agency of the state didn't disapprove of fee schedule and as a matter of fact invited lawyers to pay some attention to them?
Robert H. Bork: I think the -- in this case, I think Canon 12 says that of the fact is that it maybe considered are customary fees which may not be fee schedules or I think maybe the market range of fees, but that aside, perhaps I can answer your question best moving to the case where a state Supreme Court does put out a fee schedule and says abide by it as a matter of ethics. I have severed out that that would be a valid fee schedule and that the Sherman Act would not apply to people who followed it or following for a variety of reasons. One is that that court although it may have the power to regulate ethics clearly cannot call anything ethics, it wishes to. It could not say, “You may not pay a secretary more than $6,000.00 a year.”
Byron R. White: But that statute said, “You may impose fee schedules if you want it Mr. Supreme Court” and Supreme Court did.
Robert H. Bork: Oh! Well, I think in that case we get very close to Parker against Brown and if you have a legislative of determination as the Supreme Court as to supervise fees and the Supreme Court does supervise fees then I think we have a real Parker and Brown question.
Byron R. White: There is nothing close to that here you say?
Robert H. Bork: Nothing close to that at all.
William J. Brennan, Jr.: Well Mr. Solicitor General, suppose you have -- you're under a state constitutional system where the legislature can't do this sort of thing, but the court may?
Robert H. Bork: Oh! I think in Parker that depends upon the nature of form of Government. In Virginia, we happened to have the separation of powers specified in the constitution much like United States Constitution. So, that I don't think the problem arises. There maybe states where a court has legislative authority and if it does by the state constitution have legislate authority then we have a different question.
Byron R. White: If it's that fees?
Robert H. Bork: If it's that fees but does anything else that is --
Byron R. White: Do you suggest that the whole state agency here has set the fee in this case?
Robert H. Bork: No, the state agency I don't believe has set a fee in this case.
Harry A. Blackmun: Because what I thought that this problem Lathrop and Donahue involved a state Supreme Court, but did have legislative authority. They are the creation of an integrated bar.
Robert H. Bork: Uh-huh! I quite agree as to whether or not it is the state policy, When a court does it the question must be answered by reference as to whether or not the court has under state law, the authority to do that. But I want to say that there is -- because of time I will move to the last point which answers the fears rather than the -- answer the fears in this case and that is this. When the Sherman Act was passed, I think nobody who framed it at any idea that it was going to strike at the core of the bar's ability to regulate itself as to professional ethical conduct. And therefore, I think it will be quite wrong to strike at that kind of self regulation and I don't suggest -- for example I don't think there's any doubt that a bar association under the Sherman Act has the power to discipline a member for supporting perjury or for converting a client's funds. Maybe businessmen couldn't discipline their rivals in this way, I think the bar can for traditional and historical reasons.
Potter Stewart: But how about an agreement not to advertise?
Robert H. Bork: I think the agreement not to advertise becomes between the examples I just gave and the straight price fixing which we have here.
Potter Stewart: So do I since I have asked the question.
Robert H. Bork: Yes.[Laughter]
Robert H. Bork: And to say that this is per se illegal, I think it's not to say that advertising is and frankly I think the question of the relationship of advertising where the ban upon it to the lawyers, to the legal professions, professional and ethical obligations is a question that would have to be decided on a full record. I just don't know all the functions that a ban on advertising may serve in this profession and I think to decide this case is not to decide that case.
Byron R. White: And the same goes for solicitation, I suppose?
Robert H. Bork: I believe so, yes, Mr. Justice White. I don't think one can say that lowering your price is a method of solicitation and therefore unethical. That is merely to say the price competition is unethical. One might equally say that providing better services for the same price is a way of soliciting business and is therefore unethical. I hope one would not say that, but one might on the same rational.
Warren E. Burger: It would be a little hard to communicate that without advertising, wouldn't it?
Robert H. Bork: Well, I think most I mean the better services, Mr. Chief Justice?
Warren E. Burger: Yes.
Robert H. Bork: I think --
Warren E. Burger: Except as it passes by word of mouth for the man's reputation?
Robert H. Bork: Yes, it would be but I trust that --
Warren E. Burger: Or a woman's reputation?[Attempt to Laughter]
William O. Douglas: Wouldn't the agreement among bankers as respect to increase on purchase [Indiscernible]
Robert H. Bork: By the Sherman Act I certainly think it would Mr. Justice Douglas. Yes, it would and I think and I see no reason in this context why the lawyer's participation on that same process should be governed differently. I think we know enough. This Court over the years has worked out the rules about price fixing and there's no occasion here to jettison those rules just because lawyers rather than cosmetologists or somebody else are involved. To decide this case I stress does not decide other issues of professional obligation. So the Government asks that the judgment of the Court of Appeals be reversed in order to vindicate the Sherman Act and indeed I think that would help to vindicate the legal profession.
Warren E. Burger: Mr. Booker, you may proceed.
Lewis T. Booker: Mr. Chief Justice and may it please the Court. We submit there are five issues here for this Court's determination today. And the very first one is the one Mr. Justice Rehnquist just turned to, is any Interstate commerce involved here in the first place, is there indeed any basis for jurisdiction, was there in the trial court and is that here? Secondly, is there any exemption or exclusion of the practice of law because of the so-called “learned professions” decisions over the years? Third, is the Virginia State Bar and the State of Virginia so intimately involved in the promulgation of advisory fee schedules that in fact the Parker against Brown doctrine is applicable to the fees promulgated even by voluntary local bar associations such as the Fairfax County Bar Association. Fourth if advisory fee schedules be determined to be violations of Section 1 of the Sherman Act in fact should per se treatment be accorded them. And finally, if the Fourth Circuit was wrong in its decision below should any adverse decision by this Court be applied prospectively only or should it be applied retroactively? The nature of this transaction is simplicity itself. Residents of Virginia who liked Virginia and who wanted to purchase another home in Virginia went to Reston, Virginia and there purchased a home and had the title to that home examined by a Virginia attorney, who never left his home county to go from his office to the clerk's office of the Circuit Court of Fairfax County to examine the title. The transaction was closed in the office of the Virginia attorney in Virginia. The money which had to be borrowed to finance the transaction was borrowed from the Northern Virginia Savings and Loan Association, a Savings and Loan Association in Virginia that has been --
Thurgood Marshall: Mortgage money? It was mortgage money?
Lewis T. Booker: Yes, Your Honor. It was --
Thurgood Marshall: Isn't that by the decision in this Court in Interstate Commerce Commission, all mortgage money?
Lewis T. Booker: If Your Honor please, this money did not move out of Virginia.
Thurgood Marshall: How did it get there?
Lewis T. Booker: The money -- it was a Savings and Loan Association in Arlington, Virginia, Your Honor. The money was deposited presumably by Virginia residents who desired to purchase shares or to make investments in the Virginia Savings and Loan Association.
Thurgood Marshall: The flow of mortgage money is not an interstate commerce, you say.
Lewis T. Booker: Whether the flow of mortgage money is in interstate --
Thurgood Marshall: You said one phrase which this Court has used.
Lewis T. Booker: We submit that not in this instance has certainly no showing that the money which the Goldfarb's borrowed flowed in interstate commerce. Now, mortgage money may flow in interstate commerce, but it didn't here so far as there is any proof. Furthermore, this is not a case involving mortgage money. This is a case involving title examination and the title examination was done in Virginia and nowhere else. The only contact the title examination have with any state was West Virginia. Let me see whether I can illustrate that point more clearly. Suppose, there are two lots in Reston, side-by-side. In one of the lots, the purchaser has all the money he needs. He has always lived in Virginia. He never intends to live anywhere else. He works in Virginia. He has an attorney examine the title. His next-door neighbor on the other hand lives in Ohio. He moves to Virginia because he's going to work for the Government in Washington. He borrows money from a bank in Maryland. The loan is guaranteed by the Veteran's Administration. The price for the property is identical. The work required by the title examiner is identical. What is the title examiner to do when he fixes his fee? One transaction has no contact whatever with interstate commerce on any stretch of the imagination. Is the attorney in that case to disregard the Canons of Ethics at his peril and charge whatever he thinks is appropriate or must he not consider the Canons of Ethics.
Thurgood Marshall: Did you mean he used the phrase disobey the Canons of Ethics?
Lewis T. Booker: The Canons of Ethics prescribe what an attorney must consider in fixing the fee Your Honor. And if he is told --
Thurgood Marshall: Could he follow those canons if it set it at less to this fee?
Lewis T. Booker: Excuse me, Your Honor?
Thurgood Marshall: Could he follow the canons that set the fee at less than this?
Lewis T. Booker: Absolutely, he could have Your Honor.
Thurgood Marshall: And what would happen to him if he did?
Lewis T. Booker: If he consistently did it for the purpose of solicitation, he could be disciplined.
Thurgood Marshall: Let's say if he just consistently did it, he would be disciplined?
Lewis T. Booker: He might or might not be disciplined, Your Honor. It depends on the purpose of which he was doing it. That was evidence in the record for example that the minimum fee was not followed for a number of title examinations in Reston because the attorneys doing those examinations were doing a number of them and could do them economically at a less charge than the suggested fee schedule. So, it would have to depend on the transaction itself and the attorney is told in the introduction to the fee schedule that it is only one of the elements to be considered and that it is not to be controlling. It is purely as the Canons of Ethics say one factor to be considered. So, where the attorney examines a piece of land where the title is clearly involved only in Virginia, he must at his peril disregard, we say the Canons of Ethics. And yet the very next lot which has the kinds of insubstantial context with interstate commerce described in the record below must at his peril not consider the minimum fee schedule or consider the Canons of Ethics. For the minute he begins to consider them and setting his fee, the petitioners would contend he has violated the antitrust laws. We say just as the Fourth Circuit said that this is a test, this is a conflict that no attorney need be put to. In this instance, there is simply no substantial effect on interstate commerce. There is nothing in the record below to indicate that the choice of a home in Virginia is in anyway influenced by the cost of title examination. The title examination is something which one after he decides upon the purchase then he's concerned about. There is no evidence of any kind in the record that title examinations in Virginia are more or less expensive and in Maryland or the District of Columbia. There is a complete absence of any evidence that there is any effect on interstate commerce and counsel for the petitioners are very fairly conceded in their brief that clearly this transaction is not in interstate commerce. This Court spoke to the question of interstate commerce just three months ago in Copp against Gulf. In that case, which was Clayton Act case and not Sherman Act case, this Court nevertheless said what we say is very important in this case and I might quote from the Court. “Even if the Clayton Act were held to the extent to acquisitions and sales having substantial effects on commerce” and that's a test which must be met here, “a court cannot presume that such effects exist. The plaintiff must allege and prove that apparently local acts in fact have adverse consequences on interstate markets and the interstate flow of goods in order to invoke federal antitrust provisions.” And they are simply is no such evidence in this case. This is simply not a case involving interstate commerce. But if --
William H. Rehnquist: How about Judge Bryan's findings on page 9 and 10 of the appendix? He found contrary to your contentions, didn't he?
Lewis T. Booker: Yes Your Honor, but that as a conclusion of law, we submit in this Court as the Fourth Circuit has the right to review that and the Fourth Circuit did review that and the Fourth Circuit concluded there were no substantial effect on Interstate commerce. And therefore, there was no basis for jurisdiction.
William H. Rehnquist: Do you agree with the Solicitor General that the test is whether the defendant's activities affect Interstate commerce rather than whether the plaintiff's activity was in the interstate commerce?
Lewis T. Booker: No sir, we do not. We say the question is whether the transaction effects substantially interstate commerce. Has this transaction substantially affected interstate commerce and there is no evidence that it has. This is a title examination at cost of $522.00 on a house which was valued at over $50,000.00 and we say that does not show an effect of any substantial nature on interstate commerce. But turning now from that to the question of whether there is a learned profession's exemption or exclusion from the antitrust laws. It is incorrect, we submit, to say that we seek here today an exemption for the practice of law to the contrary. The practice of law has never been considered to be trade or commerce before. We are not seeking an exemption here. We are saying that the coverage of the antitrust laws as Congress intended, the term trade in commerce to mean and that 1890 simply does not extent to the learned professions. There are acts where Congress has carved out legislative immunity from the antitrust laws. The Capper-Volstead Act for example, Trade Associations, McCarran-Ferguson Act, Insurance where absent some congressional authority, commerce, insurance clearly commerce, agricultural organizations, clearly commerce were said to be exempt because of congressional declaration from the antitrust laws, but that is not this case. There is no case which has said that law is trade or commerce to the contrary everything the courts have said and we have called the Court's attention to each one of those instances as an average. Over the past 80 years and perhaps even if we want to go back to the Schooner Nymph to 1833 has said that there is a distinction between trade and commerce and the professions. In fact, the phrases of the Sherman Act in 1890 had only the precedent of the Schooner Nymph before them at that time. In that case, Mr. Justice Story very clearly said that trade is one thing and the learned professions and the odds are another. So, if there was anything which the Congress had in its mind at that time in 1890 it would've been the decision in the Schooner Nymph. In that connection, it is significant, we submit, that the Department of Justice in 1961 and again in 1965 when the question of advisory fee schedules were put to it by a sister bar organization of the Fairfax Bar Association said, “We regard this as not falling within the Sherman Act.” Why? Because the Sherman Act does not apply to the practice of law, it's not in commerce, it's not commerce. That was the Department of Justice's view 10 years ago, 15 years ago, a view which the Department of Justice changed only last year. The Solicitor General has not commented upon that change in the Department of Justice's view, but I submit that that is persuasive evidence that the Department of Justice along with the Congress, along with this Court, along with other courts which had spoken to the issue had concluded that the antitrust laws in fact do not apply to the practice of law. But if we're wrong as to that, should in fact per se treatment be accorded to the practice of law and let me suggest another analogy and I think this takes off from what the Solicitor General said. Suppose there is a town in which there are two businesses -- a large one and a small one both of these businesses are in the process of trying to develop a breakthrough invention, a means of turning solar energy into nuclear energy. They're both working on it as hard as they can. In order to do that, they need a particular kind of refractor which is available only from one company. The large company goes to the manufacture or the manufacturer and says, “I want to purchase a refractor from you, but I want you to agree with me that you will not sell to it my competitor, who was also working on this process.” I suggest to you that that manufacturer has a serious antitrust problem on his hands. But suppose there's only one patent lawyer in the city and the first manufacturer goes to the patent lawyer and says, “I want to apply for a patent and here is the background of the patent and I want you to agree with me that you will not represent my competitor in a patent action.” Is there any antitrust violation there? Of course not, the attorney there is following the Canons of Ethics which forbid any conflict of interest. Now the Solicitor General would suggest that some of the Canons of Ethics are good ones and some of them are bad ones. I suspect the Solicitor General would say, “I think Canons of Ethics forbidding conflicts of interest are good and that we should have them and that we should prevent attorneys from having conflicts of interest.” The Solicitor General seems not quite as certain as counsel for the Goldfarb's as to whether advertising by attorneys is good or bad. Both seem to believe that minimum fee schedules and the recommendation that they be considered along with many other factors are bad. So, we see before us three different Canons of Ethics in the illustrations I have suggested. One involving a minimum fee schedule, one involving advertising, and one involving a conflict of interest. And some of us would say that they are all proper, that the bar is capable and responsible for self regulation. Some would say some are good and some are bad, but is that any way for laws to be enforced? Is that anyway for an attorney to know how to determine, how he should perform his practice? We submit not, that there is no way that can be selective or choice enforcement of the antitrust laws if indeed certain aspects of the practice of law do involve Interstate commerce and we assert they do not, if indeed, certain aspects of the practice of law ought to be regulated by some other body then by professional responsibility. And we submit that regulation should be made by the Congress and not by the courts. By the Congress which has the opportunity to examine the entire background of the matter to determine what is appropriate under all the circumstances.
William H. Rehnquist: Do you have any doubt that the Virginia legislature could provide by law that minimum fee schedules were against the law in Virginia?
Lewis T. Booker: Virginia has an antitrust law. No actions have been brought under that antitrust law against advisory fee schedule, Your Honor.
William H. Rehnquist: What if the Virginia legislature in its next session were to say, “We don't care whether the federal antitrust laws apply or not. We don't want minimum fee schedules for lawyers here in Virginia.” Is there any reason why they couldn't pass other to that effect?
Lewis T. Booker: Certainly, the problem of Interstate commerce is solved by that. The state can certainly regulate in that area. I would believe that Virginia legislature could if it's saw fit to enact such a lawyer Your Honor, yes sir. In fact, the State of Virginia has enacted certain laws relating to the practice of law and it's a misdemeanor in Virginia for example to solicit and if that's the case and certainly the state if it's saw fit after consideration would make such a rule and obviously would be subject to the same type of constitutional review as any other state statute, but certainly it's within their power to do so.
Thurgood Marshall: Does is it still have to run in [Inaudible] statute?
Lewis T. Booker: Yes, it does Your Honor. That's still very much with this.
Thurgood Marshall: I still withdraw from it, would it come. I'm --
Lewis T. Booker: Well, I'm -- that's all I chimed in, Your Honor. I have never quite understood the distinction either. Turning to a question as to which the Attorney General of Virginia will spend more time that I today on the question of whether the Parker against Brown doctrine insulates the advisory fee schedules of a Virginia State Bar or of local bar associations from the antitrust laws. I pause only to point out in that context that counsel for the Goldfarb's in his opening argument has generally agreed with our position and that is that when the state promulgated minimum fee schedules in 1962 and 1969 under the imprimatur of the Virginia State Bar which is an administrative agency of the Virginia Supreme Court and then issued the opinions which it did, it thereby did indeed sanction and direct state action and as I understand the argument for petitioners here today that state action was bad as to the Virginia State Bar and so it's bad as the local bar association. But if this Court concludes as the court below did that that action is proper as to the Virginia State Bar then we say it must follow that that action was proper as to the Fairfax Bar Association. And in addition to the promulgation of the two collections of the minimum fee schedules, the Virginia State Bar has indeed issued various ethical opinions considering minimum fee schedules and let me simply call to the Court's attention, Opinion 98 which is reproduced in the joint appendix at page A-46. I simply wish to read one sentence from that. “To ignore such schedules under these circumstances has no ethical justification and deserves censure.” These opinions are available to and are furnished to every member of the Virginia State Bar. What is he to do when he reads that? Is he not to consider that? Of course it's not binding, of course it's not the only thing he will consider. There were six considerations under the Canons of Ethics. There are eight considerations under the Code of Professional Responsibility, but it's one of the things he must consider. I would be surprised if there is a lawyer within the sound of my voice today who has not at one time or another considered the propriety of the ability of a client to pay a fee in establishing the proper fee to charge that client. If a businessman were to pick and choose among his customers as to what he would charge them, he would pretty clearly be in violation of the antitrust laws. Would anyone suggest that an attorney who follows the Canons of Ethics which say that he should consider the ability of the client to pay, it's set forth right in this opinion. Would anyone suggest that he is there by violating the antitrust laws? Of course not. That's the nature of the profession, it's a service. It's a service to a society and not a mere money-making occupation as a Canons of Ethics have so frequently pointed out. Even if none of the protections which I suggest exist that is that there is no substantial effect on interstate commerce that the practice of law is not included within the ambit of Section 1 of the Sherman Act, now, the Parker against Brown doctrine does indeed insulate the Fairfax Association schedule from the antitrust laws, even if we and the court below were wrong on all of those, we submit this is not a per se case. It is not a case in which this Court or any court without consideration of all the factors, without consideration of all the professional responsibilities can act. But even if we're wrong about all of that, we suggest that this fee, this decision should not be applied retroactively. That attorneys who has the court below said having good faith followed the Canons of Ethics should be punished in a punitive way for that's what treble damage recovery is, it's punitive in nature. This Court has said it dozens of times and indeed it is, why they should be punished in a financial way because of their adherence to the minimum fee schedules, because of their consideration of these advisory schedules along with all the other test. This Court in the Chevron decision set forth the circumstances under which it would excuse retroactive application of the law. Without going in to that case in detail, we suggest that if this Court gets to that point and we say there is no reason for it to get to those point, it should apply the Chevron test and decide that any decision should be applied in the future only. When we get back to the same fine as we began, there is no substantial effect on Interstate commerce here. There is no basis for this Court to say, “Some Canons of Ethics are good and some Canons of Ethics are bad and we'll reward the attorney who follows the good ones and we'll punish the attorney who follows the bad ones.” Those are not matters as to which this Court should speak. Those are matters as to which Congress is speaking, must be done, should speak. So, we say in conclusion that the professional system of self-regulation of the practice of law; the discipline and ethics of the attorney which we suggest have furnished this country exceptionally good legal services over the years, services which are often provided free or in minimal cost to those who are unable to pay for them. If this system is to be changed upon a plea of consumer interests and the distinctions between trades and professions obliterated, we suggest that that obliteration should not be done by the courts, but by the Congress and if it must be done, it may be the consumers who suffer the most. There is no evidence to contrary.
Harry A. Blackmun: Mr. Booker, this doesn't bear on this case, but I'm looking at the next case down the road. You have spoken of the learned professions and would you define that for me, would it include engineers, would it include registered nurses who these days are unionized and chiropractors, osteopathes, naturopathes, and all the other?
Lewis T. Booker: Your Honor, I speak only for a Bar Association. I speak in the context of what I understand the traditional professions to have been at the time Mr. Justice Story has spoken 1832. The professions of medicine, law and the divinity. I do not speak for other organizations which call themselves professions, whether they are or not I do not know. I do suggest that traditionally in England and in the United States and certainly at the time Mr. Justice Story spoke those where the professions.
Byron R. White: Your retroactivity point goes only to the damages?
Lewis T. Booker: That's correct Your Honor.
Byron R. White: Was there a prayer for an injunction here?
Lewis T. Booker: There was.
Byron R. White: Is that moot or not?
Lewis T. Booker: It is moot because the Fairfax Bar Association has rescinded its schedule.
Byron R. White: I thought so. Do you think that moots it as an antitrust case, just secessions of an alleged illegal activity?
Lewis T. Booker: In this case if there is to be prospective application only, that's correct Your Honor. But in fact, there was no suspension of the injunction below. When the injunction below was entered on February 2, 1973 the Bar Association immediately send notice to everyone not to consider the advisory fee schedule any longer.
Byron R. White: Suppose we agree with you on the damages, it shouldn't be prospective or retroactive, would the case be dismissed as moot or would the -- let's assume we disagree with you on all the antitrust points?
Lewis T. Booker: We would suggest to that point the case is moot Your Honor because the fee schedule has been rescinded and because if there is no question --
William J. Brennan, Jr.: (Voice Overlap) antitrust principle, does continuance of the antitrust violation doesn't guarantee that should not be gathering injunction?
Lewis T. Booker: Your Honor, I hesitate to reach that point because we say there is no antitrust violation here, but assuming we're wrong on that.
William J. Brennan, Jr.: Yes.
Lewis T. Booker: Assuming we're wrong on that, we say that the fact that a practice which everyone regarded as a proper practice until a suit was brought in this case but which has now been discontinued, was discontinued long before they have been in the definitive statement by this Court is moot. If this were something which were continuing in the future, that might be different if this Court had spoken. But this Court had not spoken and has not spoken.
Byron R. White: But you're not -- you're just speaking of Fairfax County Bar?
Lewis T. Booker: I am Your Honor. That's my client here today.
Potter Stewart: May or may not be moot even if you're right about the mootness to your client, it may or may not be moot as to the Virginia State Bar?
Lewis T. Booker: It may not be and I speak not to the mootness as to the question as to the Virginia State Bar.
Harry A. Blackmun: Mr. Booker, would you give me your answer to the question I asked to Mr. Morrison?
Lewis T. Booker: Yes, sir.
Harry A. Blackmun: As to what is the Fairfax Bar's stated justification for the rescission of the schedule?
Lewis T. Booker: If Your Honor please, the Fairfax Bar Association has long since exhausted all of its resources and ability and means to defend this litigation. When the Fairfax Bar Association was successful in the Fourth Circuit, it sought to avoid further expense, further threats, further uncertainty as to its members without in any way conceding that the adoption and the promulgation of the advisory fee schedule was illegal or wrong and the resolution reprinted so reflects. The association concluded that in order to remove this uncertainty and in order it hoped to avoid the expense and necessity of further litigation, it would rescind its advisory fee schedules.
Harry A. Blackmun: So, you're not charging a minimum fee schedule?
Lewis T. Booker: We are not, Your Honor.
Warren E. Burger: Mr. Attorney General.
Andrew P. Miller: Mr. Chief Justice and may it please the Court. My name is Andrew Miller. I'm Attorney General of Virginia and counsel for the Virginia State Bar. My portion to the argument will be devoted to a discussion of the nature of the organization known as the State Bar. It's rule in the activities which form the basis for this proceeding and the reasons why this rule constitutes state action. Now, the State Bar is an administrative agency of the Supreme Court of Virginia created by that court pursuant to the laws of the Commonwealth in 1938. The Virginia Supreme Court has promulgated rules governing the conduct of attorneys and the operation of the State Bar which are found in part 6 of the Court's rules. The powers of the State Bar were signed by the Supreme Court to its counsel to which in addition to certain elected members, six persons are appointed by the court itself. Now, there are number of voluntary Bar Associations in the Commonwealth, both at the local and at the state level. Now, the state level, there is the Virginia Bar Association, the Old Dominion Bar Association, the Virginia Trial Lawyers Association, etcetera, but each attorney pricing law in Virginia is required by statute and by rule to be a member of the State Bar. The State Bar is mandated both by the general assembly and the Supreme Court of Virginia to investigate alleged violations of prescribed standards of conduct and to report its findings to a court of appropriate jurisdiction for any disciplinary procedures. These investigations are carried out by the district committees of the State Bar organized in each of the 10 congressional districts in the Commonwealth. Pursuant to the code, the funds for operation of the State Bar are appropriated from a special fund in the state treasury by act of the general assembly of Virginia. The special fund in the state treasury consists of fees paid by members of the State Bar. The amounts of which are set pursuant to statute by the Supreme Court. Now, the general assembly has established a ceiling on the setting of such fees. The State Bar has given -- been given authority by the Supreme Court of Virginia to issue advisory opinions on matters involving questions of ethics. Analysis of existing fee schedules of local bar association by the State Bar involved questions of ethics in that they may provide some guidance on the subject of fairness of fees. Now it has been stipulated that the State Bar has been authorized, Mr. Justice White, by the Supreme Court to issue opinions such as Legal Ethics Opinions 98 and 170 which relate to the significance of minimum fee schedules adopted by local bar associations and to disseminate studies on such schedules. Now, I refer you to stipulation 19. In Parker v. Brown, this Court stated that the Sherman Act was not intended by Congress to restrain actions by the state, its officers or agents. Now, while the fact that there is state action, does not automatically confer antitrust immunity upon a person or corporation. I submit that the Sherman Act's sanctions are inapplicable to a state agency involved in such activity. And this is true I submit whether the state action is mandated by command of the legislature as in Parker or by the judiciary, Mr. Justice Brennan, you raised the question of inherent power earlier in this argument or by both as in this case. And the conduct of the State Bar alleged to have contributed to a restrain of trade relates to its role in enforcement of the Code of Professional Responsibility promulgated by the Supreme Court of Virginia in 1970. Now, pursuant to, and the Supreme Court made this very clear, both the statute and its inherent authority, the Supreme Court of Virginia organized the State Bar to act as its administrative agency for the purpose of investigating and reporting violations of such ethical standards as the Court has promulgated. Further, pursuant to both statute and inherent authority, the court has implemented specific disciplinary procedures should violations to be deemed to have occurred. In 1970, the Supreme Court amended its rules by substituting a new Code of Professional Responsibility for the Canons of Professional Ethics which had been promulgated in 1938 at the time that the State Bar was created. Now, pursuant to this Code, an attorney is prohibited from charging an excessive fee. In determining his fee, it is provided that an attorney should consider among seven other factors, the fee customarily charged in the locality for similar legal services. It is further stated that suggested fee schedules provide guidance as to what might be considered reasonable fees. And clearly, the State Bar has the duty provide attorneys and local bar associations with self-governed guidelines by which the reasonableness of fees can be judged and the minimum fee schedule reports circulated in 1962 and 1969 served this purpose. I want to emphasize to the Court in response to some previous questions from the bench that the State Bar did not undertake to establish a minimum fee schedule for the state as a whole. All that these reports of 1962 and 1969 addressed themselves to were an analysis of the fee schedules which had in fact been adopted by local bar associations.
Potter Stewart: Was there a good deal of variation among the various localities of the state?
Andrew P. Miller: That is exactly correct sir. And as a consequence, the reports showed that there was a variation that this was an analysis and the results of the analysis were submitted to the local bar associations for their consideration. But in this particular case, I would like to point out Your Honor that as shown on page 11 of our brief that the minimum fee schedule which was adopted by the defendant, Fairfax County Bar Association contrary to assertions which appear in the brief of petitioners did in fact contained significant variation from the minimum fee report at which the Virginia State Bar sent out in 1969, that is footnote 4 on that page Your Honor.
Thurgood Marshall: Mr. Attorney General, what is the State Bar done since the injunction was issued?
Andrew P. Miller: As far as issuing advisory opinions?
Thurgood Marshall: As far as this case is concerned?
Andrew P. Miller: Well, sir of course as far as the State Bar is concerned, the State Bar was not found to have then in violation of the Sherman Act and as a consequence the State Bar has proceeded to continue with respect to its operations as mandated by the rules of court adopted by the Supreme Court of Virginia.
Thurgood Marshall: In regard to minimum fees?
Andrew P. Miller: I know no instance in which an advisory opinion has been requested Your Honor of the State Bar since this case started with respect to minimum of fees. As counsel for petitioners indicated this morning, there has never been a complaint to the Virginia State Bar that in fact in ethical violation has occurred with --
Thurgood Marshall: Is there any more suggested fee set up?
Andrew P. Miller: I know of no plans of the Virginia State Bar to send out another report such as was set out in 1962 and 1969 Your Honor.
Byron R. White: Do you -- if the Supreme Court has not required any local bar to make up a minimum fee schedule or has it required lawyers to follow it?
Andrew P. Miller: I think that the record reflects Your Honor that in 1962 there were some 21 minimum fee schedules in effect local associations of --
Byron R. White: But the Supreme Court hasn't required local bars to propound them?
Andrew P. Miller: Well, that was my point of course because there are many more local bar associations in 21 (Voice Overlap).
Byron R. White: Yes and I suppose if it did require, Fairfax would not have discontinued its fee schedule and certainly the State Bar has neither required nor suggested that local bars have a minimum fee schedules.
Andrew P. Miller: As far as the State Bar is concerned, it is not required to local bar associations adopt the minimum fee schedule. That is correct. Now --
Byron R. White: Now, --
Andrew P. Miller: Excuse me --
Byron R. White: -- and you're still suggesting however that there's enough official action than the fee schedules to satisfy Parker?
Andrew P. Miller: As far as the State Bar is concerned, I don't think there any question about it sir.
Byron R. White: What do you mean, or you mean it does or it doesn't?[Attempt to Laughter]
Andrew P. Miller: Well, I mean that in fact, the Parker doctrine applies to the State Bar.
Byron R. White: Well, it hasn't required anything of the local bar association?
Andrew P. Miller: Well, as representing the State Bar sir, the suit is against the State Bar as well as against the local bar association. Now, whether or not a local bar association adopted a minimum fee schedule would be a matter for the local bar association is determined.
Byron R. White: Has the Supreme Court required the State Bar to adopt or suggest minimum fee schedule?
Andrew P. Miller: I think if you take a look at the --
Byron R. White: Well, it hasn't, hasn't it? It hasn't required it to suggest these things?
Andrew P. Miller: As far as what the State Bar has done in this instance which is the issue advisory opinions, there are two of them. That is clearly required under the rules of the Supreme Court, Rule 10 as far as circulating of the minimum fee schedules Your Honor, I think clearly the State Bar had a duty in light of the reference not only in Ethical Consideration 2-18 but Disciplinary Rule 2-106 where references are made to customary fees and suggested fee schedules to provide some guidance under the mandate from the Supreme Court.
Byron R. White: Well, would you suppose that Parker against Brown is satisfied or the exemption that comes into being if the state simply passes a law and says the sellers of tobacco in the state may now agree if they want to on prices.
Andrew P. Miller: I think Your Honor that this case is complete different from the Asheville Board of Trade which I assume you maybe referring to because there was a local association of warehousemen who said about to restrict their prices and restrict selling space on the floors of the warehouses. This is not that case at all. Here, you have the --
Byron R. White: How about my question though Mr. Attorney General? The state simply authorizes a group of business if they want to fix prices? Now, does that bring into being Parker against Brown exemption?
Andrew P. Miller: No sir, it does not.
Byron R. White: And so if the Supreme Court simply authorize the State Bars to propound but didn't require it, if you want to propound fees, go ahead, if you --
Andrew P. Miller: I thought I alluded to that point earlier in saying that the State Bar has not promulgated the fee schedule here which is applicable to all attorneys in the state. All that the State Bar has done in this particular instance is to provide analysis of existing local minimum fee schedules. As far as issuing their advisory opinions are concerned, there again, that was part of the road of the State Bar as the administrative agency of the Supreme Court. Now, this is entirely different from simply allowing individuals and the businessman whom you elude to, to go out and decide what they're going to do on their own because I think you have to take a look at the minimum fee schedule in the context of the Code of Professional Responsibility. And the minimum fee schedule simply relates to one of the criteria set forth in disciplinary rule --
Byron R. White: Do you think the State Bar would be with its authority if it to put out an order to as an administrative agency of the state which you suggested that it is. If it put out on order to all local bar associations to propound a fee schedule and then said, “All lawyers must obey it.” Is that within its authority?
Andrew P. Miller: It is not because that has not been authorized by the legislature or the Supreme Court of Virginia. However, if in fact it were authorized by the legislature in the Supreme Court of Virginia, I think it could. Yes, sir.
Byron R. White: Well, but it isn't?
Andrew P. Miller: No, and it hasn't been done.
Byron R. White: Yes, all right. Thank you.
Potter Stewart: Attorney General, --
Andrew P. Miller: Yes, sir.
Potter Stewart: In Virginia is there any state law or court regulations specifically and explicitly regulating fees to be paid in the administration of a state -- of the decedent's estate, do you have probate courts or I'm sure you have the equivalent whatever you call them?
Andrew P. Miller: No, sir.
Potter Stewart: In many states, there are statutes or court rules which explicitly provide what the fee shall be to counsel for the executor or administrator of a decedent's estate. Does Virginia have anything such as that?
Andrew P. Miller: No sir, we do not.
Potter Stewart: And are those, I guess then are covered by or the of 1969 State Bar Report, are they?
Andrew P. Miller: Well, that would as again just a report, it was not a requirement that in fact those fees to be charged.
Potter Stewart: Yes. And they are covered in there?
Andrew P. Miller: That is correct sir.
Warren E. Burger: This was simply by way of a service of the State Bar association to its local components, is that what you suggest about that analysis?
Andrew P. Miller: Well, I think, may it please Mr. Chief Justice that you have as far as the Code of the Professional Responsibility two concerns. One, that there not be an excessive fee charge nor that solicitation be permitted to occur. And I think when you have one factor which may be considered in determining the reasonableness of the fee, obviously any information which impinges on that determination should be made available and that's precisely what the State Bar was attempting to do in this instance. But it was not requiring that such fee schedules be adopted locally and in fact the majority of local bar associations no such fee schedules were adopted.
Thurgood Marshall: You say that they all showing that excessive charges, do have any opinions on that?
Andrew P. Miller: Well, I think DR 2-106 clearly states that a lawyer shall not enter into an agreement for charge or collect an illegal or clearly excessive fee.
Thurgood Marshall: And was that the case that was involved? I want to sure that was the case, I didn't understand them. Was that in charged in that case?
Andrew P. Miller: You're talking about the present case that --
Thurgood Marshall: Well, in that case there. It seems to be several things in that. Well, I can't hold you responsible for on that. I just got kind of confused.
Andrew P. Miller: All I'm trying to suggest to the Court is that the Code of Professional Responsibility deals with both aspects excessive fees on the one hand and solicitation on the other. And there's an effort --
Thurgood Marshall: Well, I find an excessive fee as being very unethical but I have great difficulty in finding a lower than minimum fee unethical?
Andrew P. Miller: Well, sir, I think that if you take a look at the --
Warren E. Burger: Go ahead in your response.
Andrew P. Miller: Alright, thank you sir. What the -- in the appendix at pages 47 and 48, opinion number 170, the Virginia State Bar, what that does is simply to require a lawyer to produce evidence as such charges are not made for the purpose soliciting business. Now, if in fact, he shows that he is not using this as an advertising device then there is no ethical violation.
Thurgood Marshall: But this is to be a presumption, doesn't it?
Andrew P. Miller: No sir, I don't -- I would not regard it as a presumption. I would say it was a further of going forward in terms of the --
Thurgood Marshall: A violation of ethics when you don't charge me as much as you should?
Andrew P. Miller: Well, sir, I think --
Thurgood Marshall: I think that's very ethical for some.[Laughter]
Andrew P. Miller: I think that --
Thurgood Marshall: You do agree, don't you?
Andrew P. Miller: I'd enjoy representing you on some occasion, Your Honor. Thank you very much.
Warren E. Burger: Thank you Mr. Attorney General. We'll enlarge your time a little bit from one minute to three minutes counsel.
Alan B. Morrison: Thank you Mr. Chief Justice. I'd like to respond to the question that Justice Rehnquist asked about the commerce matter. We believe that the Solicitor General is entirely correct in his position that the focus should beyond the activity of the defendants whereas we have here a broad base conspiracy involving all of the attorneys in Northern Virginia who have agreed to a per se violation constituting price fixing. And we look to the decision of this Court in Burke against Ford for that kind of analysis where we plainly have a restraint against title examinations which are not only an integral part of home financing in Northern Virginia, but absolute necessity because under the opinions of the Virginia Bar, only lawyers can give opinions on title examination.
Potter Stewart: But you are however attacking this minimum fee schedule only insofar as that is involves title examination, are you?
Alan B. Morrison: The complaint is directed in that solely toward title examination. The only evidence came in with respect to title examinations. We believe however that once the fee schedule was declared unlawful with respect to that, we've met our jurisdictional requirement as to that then the remainder of the fee schedule also must be declared --
Potter Stewart: Even though they would clearly not affect interstate commerce at all --
Alan B. Morrison: I think that's right.
Potter Stewart: -- writing a local -- little old lady's will in a small town and right in the middle of the state?
Alan B. Morrison: That's right, Your Honor.[Laughter] On the assumption that you didn't have any relatives in another state or --
Potter Stewart: Or didn't have any out-of-state property?
Alan B. Morrison: That's right.[Laughter] Thats right. That is our position, Your Honor. That where we have a massive involvement as we have here with Interstate commerce that once we have established this jurisdictional nexus and shown that the transaction, the restraint here operates on an integral part of what is a larger interstate transaction. And we have a per se violation that under Burke we not inquire further. As the Court said there, such per se restraints inevitably affect intestate commerce and that the kind of proof as Mr. Booker suggests is required certainly impossible to do with lots of little small transactions. So we look at the entire context and in that way, we believe that we satisfy the commerce requirements. My time has been limited here so I would refer the Court only to my brief with the issue with regard to the issue of prospectively and as far as the question of mootness is concerned. The case is certainly not moot as to the Virginia State Bar which has to this date insisted upon its right to issue the ethical opinions, to continue them in force, it is not withdrawn them. It may tomorrow issue another updated fee report with recommendations to the local bars or indeed promulgate its own fee report as to which this Court should and ought in this posture to adjudicate the lawfulness of it. And finally, I would just say that with regard to the position previously taken by the Justice Department of those letters appear in the appendix at pages 49 to 58 and indicate in that context that the Justice Department was primarily concerned about the commerce question, indicating that the practice of law did not affect commerce. And for that reason, minimum fee schedules were not subject to the Sherman Act not because lawyers were exempt from the antitrust laws. Thank you very much.
Warren E. Burger: Thank you gentlemen. The case is submitted.