Further & More

Supreme Court Ungags Lawyers

Consumers and champions of marketplace freedoms should rejoice over a recent Supreme Court decision striking down an Ohio law that placed strict limits on lawyer advertising.

The case involved an Ohio lawyer named Philip Q. Zauderer, who in 1982 advertised in newspapers seeking clients to file lawsuits against A.H. Robins, manufacturer of an allegedly hazardous intrauterine contraceptive device, the Dalkon Shield. As Trends reported in May, the high court agreed to hear Zauderer's appeal of a reprimand he received from the Ohio Supreme Court for violating state regulations restricting client solicitation and the use of illustrations in advertisements.

The Supreme Court, in a 5-to-3 decision, held that the Ohio restrictions violated Zauderer's right to "commercial free speech." (The court knocked down blanket prohibitions on lawyer advertising in a landmark 1977 case.) Justice Byron White wrote the majority decision in the Zauderer case. In addition to enjoying First Amendment protection, Justice White observed, lawyer advertising "tended to acquaint persons with their legal rights who might otherwise be shut off from effective access to the legal system."

The case against lawyer advertising has always rested on the belief that the "dignity" of the legal profession would be tarnished by legalized huckstering. Justice Sandra Day O'Connor expressed this view in a dissenting opinion. O'Connor argued that lawyers should adhere to "standards beyond those prevailing in the marketplace."

Yet the marketplace Justice O'Connor so haughtily disparages provides consumers with more choices and lower prices than in the dignified old days of the advertising blackout. A Federal Trade Commission (FTC) study found that lawyer's fees in states with few restrictions on lawyer ads are 5–13 percent cheaper than in states with stringent regulations.

As barriers to advertising continue to fall, so will prices. So the next time you divorce your spouse or sue your IUD-maker, whisper a word of thanks to the Supreme Court for helping to keep down your legal fees.

And More

? Private postal potential. The US Postal Service has announced that it will close down E-COM, the government-run electronic-mail service that competes with Federal Express's Zap Mail and MCI's MCI Mail, if no private operator will buy the money-losing operation soon. Started up in 1982 with high hopes, E-COM never attracted the volume of business that the Postal Service had predicted. It is estimated that E-COM lost as much as $100 million during its brief life.

Meanwhile, the Postal Service is considering a pilot project under which private contractors would deliver first-class mail in several cities. It could be the next breakthrough in the government's monopoly on delivery of first-class mail (the first having come when delivery firms such as Federal Express were permitted to carry "time-sensitive" material). And that's why the postal unions are expected to oppose the USPS potentially money-saving pilot project.

? IRS gets bashed—Donna L. Todd, who drew the wrath of the IRS by typing "signed involuntarily under penalty of statutory punishment" on her 1040 form, has turned the tables on the tax collectors. As REASON reported in September 1984 (Brickbats), the IRS responded to Ms. Todd's insolence by fining her $500, seizing her bank account, and filing a lien against her house.

When Todd sued the agency, the government dropped its claim and offered to pay her legal costs; she refused the deal and took them to court. A US district court judge in Billings, Montana, recently awarded round one to Ms. Todd. He ruled that the IRS had violated her rights to free speech and due process. The outcome of the suit now hinges on whether the IRS agents knew that they were violating Todd's constitutional rights.