Chapter 6 Restrictions on advertising
6. The issue which the Group examined was whether current restrictions on advertising by solicitors and advocates represented the most proportionate balance between the interests of the profession and of the public.
(a) Advertising by solicitors
6.1 Between the 1930s and 1985 there was a blanket prohibition on solicitors advertising their services, on the grounds (a) that advertising diluted the relationship of trust between solicitor and client by suggesting that the relationship was one from which a solicitor would gain; and (b) that advertising was precluded by a solicitor's wider duty to the public. The prohibition was lifted in 1985 and gradually further relaxed in 1987, 1991 and by the Law Society of Scotland's current rules which were made in 1995 64.
Restrictions on advertising by solicitors
6.2 The key restrictions on the way in which a solicitor might promote his services under the Solicitors (Scotland)(Advertising and Promotion) Practice Rules 1995 were :
- solicitors may not seek instructions from another solicitor's client by way of a direct or indirect approach (rule 5); and
- a solicitor's advertisement must not (in terms of rule 8) :
a) claim superiority for his services or practice over those of or offered by another solicitor;
b) compare his fees with those of any other solicitor; or
c) contain any inaccuracy or misleading statement; or
d) be of such nature or character… as may reasonably be regarded as bringing the profession of solicitors into disrepute;
e) identify any client or item of his business without the prior written consent of the client; or
f) be defamatory or illegal.
(b) Advertising by advocates
6.3 Until 1991 there was an absolute prohibition on advocates advertising. In March 1989 the Scottish Office consulted on the proposal that advocates should be permitted to advertise to solicitors and to others entitled to instruct them. By resolution of May 1991 the Faculty resolved that advocates be permitted to advertise, subject to the ultimate control of the Dean of Faculty.
Restrictions on advertising by advocates
6.4 The Faculty's current rules on advertising and publicity provided as follows :
(1) An advocate may engage in any advertising or promotion in connection with his or her practice which conforms to the British Code of Advertising Practice (and in the case of work outside the United Kingdom conforms to any further requirements binding under local law or under the rules of any national or local bar) and such advertising or promotion may include:
(a) photographs or other illustrations of the advocate;
(b) statements of rates and methods of charging;
(c) statements about the nature and extent of the advocate's services;
(d) with that client's express written consent, the name of any professional or lay client.
(2) Advertising or promotion must not :
(a) be inaccurate or likely to mislead;
(b) be likely to diminish public confidence in the legal profession or the administration of justice or otherwise bring the legal profession into disrepute;
(c) make comparisons with other advocates or members of any other profession;
(d) include statements about the quality of the advocate's work, the size or success of the advocate's practice or the advocate's "success rate";
(e) indicate or imply any willingness to accept instructions or any intention to restrict the persons from whom instructions will be accepted otherwise than in accordance with the Guide to Professional Conduct;
(f) be so frequent or obtrusive as to cause annoyance to those to whom it is directed.
(3) A practising advocate must not in relation to any current matter in which he is or has been instructed comment to or in any news or current affairs media upon the facts of or the issues arising in that matter.
6.5 The Faculty produced a Directory of Advocates and published a website, both of which provided information about advocates, including, for those who wished to include such information, areas of the law in which they took a particular interest. Advocates' clerks were able to provide further information on request. Part 10 of the Faculty's Guide to Professional Conduct, which predated the Faculty's resolution on advertising referred to above, required that advocates should not tout for professional work or do anything to draw attention to themselves in their professional capacity which would be liable to impair public trust in themself or their profession and contained some further guidance in that regard. The provisions of the Guide were currently under review and it was anticipated that Part 10 would be reviewed in light of the Faculty resolution on advertising set out above.
6.6 Professor Stephen drew attention to an extensive empirical literature on the restriction of advertising of professional services and what happened to fee levels when such restrictions were relaxed 65. The general thrust of the evidence from that literature was that restrictions on advertising increased the fees charged for the profession's services and that the more advertising there was the lower were the fees. There were, however, a number of limitations to those studies.
6.7 The early empirical studies of advertising by members of the legal profession found that law firms which advertised, on the whole, charged lower fees than those that did not advertise. However, such research did not say anything about whether advertising impacted on prices throughout the market. More recent studies found the stronger result that the more advertising by lawyers there was in a locality, the lower were the fees charged by all lawyers in the locality (at least for certain transactions) 66. That suggested strongly that advertising increased competition in the market. However, UK studies 67 had found that that result was only valid for some forms of lawyer advertising. Most studies did not distinguish between different forms of advertising.
6.8 Critics of professional advertising frequently asserted that advertising would drive down the quality of services provided. Economists had examined the relationship between advertising and quality. It had been shown formally that even if price could communicate no information directly about quality, it could do so indirectly because price served as a positive signal of quality when price advertising was allowed. Price advertising was therefore welfare enhancing because it improved consumer choice.
6.9 A problem arose, however, if price advertising was undertaken exclusively, or at least principally, by low-price/low-quality suppliers. In those circumstances price advertising became an adverse signal on quality. That was a general argument, and did not depend on price being a clear signal on quality. It was reasoned that consumers who were unable to assess quality before (and possibly even after) having received a service and who observed a low price for a non-standardised service might assume that more knowledgeable purchasers had assessed the service as being of low quality. Professionals were keen to avoid such adverse signals on quality, and so it was concluded that price advertising would be uncommon in most professions 68. Thus not only might advertising have an effect on quality, perceptions of quality might have an effect on the form of advertising chosen by professionals. Evidence from the USA and UK on low rates of price advertising supported that view.
6.10 The extent and impact of solicitor advertising in Scotland was the subject of a study funded by the then Scottish Home and Health Department 69. That revealed that by 1988 although 56.8% of solicitors' firms in the sample had advertised in some way and 41.2% had advertised in print, sound or visual media, only 2.6% had advertised the price of a service. Analysis of the data from that study revealed that higher levels of non-price advertising across the local markets had the effect of reducing the conveyancing fees charged by all firms in the market for one (of two) specimen transactions. Variations in price advertising across local markets had no effect. However, no effect of advertising was found for the other (higher value) transaction 70.
6.11 The OFT report Competition in Professions71 argued that removal of restrictions on comparative fee advertising could enable small firms to compete more effectively and help prospective clients to evaluate relative value for money.
6.12 The OFT was generally concerned about the effects on competition of any rule of a professional body that prohibited any form of comparative advertising, including comparative fee advertising, in relation to services provided by its members. In defence of such a rule it was often argued that the rule was necessary, in essence, because the professional body considered it impossible to compare any two instances of service provision. As a consequence, the professional body argued that advertising that compared services would be misleading.
6.13 The OFT entirely accepted that it was in the interests of consumers that advertising should not be misleading, as already required by the rules of most professional bodies, and those of the Law Society of Scotland. Other rules of the professional body required that advertising by its members be legal and accurate, and that advertising should not bring the profession into disrepute.
6.14 The OFT regarded advertising as an important element of competition on any market. Advertising provided consumers with a better picture of the merits of each of the operators, the quality of their services and their fees. A simple prohibition on comparative advertising of services denied information to clients that would help them to choose a provider. It also restricted the ability of more efficient service providers to develop their services. The OFT questioned whether the cost of local advertising, which might be of greatest relevance to smaller suppliers, was likely to be prohibitive.
6.15 The OFT had concerns about two of the Faculty's rules :
- rule (2)(c) which banned comparative advertising, ie advertising or promotion which made comparisons with other advocates or members of any other profession; and
- rule 2(d) which prohibited advertising from including statements about the quality of the advocate's work, the size or success of the advocate's practice or the advocate's "success rate".
In defence of these rules, the Faculty argued that
- whether a case was won or lost might be influenced by effective advocacy, but would also depend on other considerations, not least the merits of the case. Moreover, "success" could not necessarily simply be measured in terms of winning or losing: one might consider e.g. the importance in a family action which might be placed on the arrangements for contact with children, or in a damages action the significance of the amount of the award.
- whether a particular advocate won or lost more cases which were fought to a decision was unrelated to that advocate's skill. An advocate could not pick and choose between cases. Furthermore, a good advocate might well give clients sound and accurate advice upon the basis of which cases could be settled rather than fought to a conclusion. Whether any particular case was settled or ran to a conclusion depended on a variety of circumstances, in particular the individual client's instructions. Thus, the cases which were fought to a conclusion might be a wholly unrepresentative sample (in terms of "success rate") of the advocate's practice, while the proportion of those cases in which the advocate's clients achieved a successful result depended on a number of factors, not least the merits of the case.
- For those reasons it was difficult to judge the quality of an advocate objectively by reference to success rates, and advertisements which referred to "success rates" would be liable to be actively misleading.
6.16 The OFT accepted that some claims could be misleading but believed that the rules went further than actually necessary to avoid such claims. The OFT considered that in most cases prohibition of comparative advertising that was factual and verifiable was unlikely to be justified. Rules of most professional bodies already required that advertising be factual and verifiable. With regard to fee advertising for example, it followed therefore that the OFT was unlikely to accept that comparative advertising on fees that was factual and verifiable should be prohibited. On the other hand there might exist cases where, notwithstanding that the comparative information was factual and verifiable, the OFT would accept that prohibiting its publication might be justified. With regard to the advertising of success rates for example, the OFT was likely to take the view that a prohibition on comparative advertising, restricted in its scope to success rates, might be justified, where it was clear that to permit such advertising might make advocates less likely to take more difficult cases and might therefore operate against the public interest. The Scottish Consumer Council agreed with the views of the OFT on advertising generally, including those on comparative advertising.
6.17 The Group noted that
- the Faculty's advertising was not at present directed at the general public but at other professionals who should be informed enough to make a judgement; and
- where a market was small and the providers were well known to the clientele, restrictions on advertising might have relatively little effect.
6.18 In the light of its review of the proportionality of its rules on advertising, the Law Society of Scotland decided to consult its membership on its rules, and in particular on proposals by its Professional Practice Committee to relax (a) the restriction on comparative advertising; (b) the prohibitions on claims of superiority and comparison of fees; and (c) the rule on general circulation to allow a focused promotion to a group of people with something in common (whilst at the same time continuing the prohibition on a targeted approach to specific persons known to be clients of other solicitors). The Council had agreed to bring forward changes to the Society's Annual General Meeting in March 2006, which would come into effect if approved by the Annual General Meeting.
(c) Communication and quality of information flow between legal practitioners and the various users of legal services
6.19 The Group recognised the potential value of an exercise to look at ways to tackle the asymmetry of information which was known to exist between legal services providers and users and to look at how the information available about lawyers was used by consumers to choose the correct type of service and service provider. An analysis of the marketplace might be a useful check on whether there was a shortage of information on quality and how that might be addressed. Time was not available to mount such an exercise in the course of the Group's deliberations but the Group agreed that it might be flagged for future action.