Attorney Advertising and the Contingency Fee Cost Paradox

65 Pages Posted: 2 May 2013 Last revised: 12 Jul 2013

Date Written: May 1, 2013

Abstract

It has long been taken as gospel that attorney advertising drives down the cost of legal services. The Supreme Court assumed it when first permitting attorney advertising in the landmark First Amendment case, Bates v. State Bar of Arizona. And, in the decades following Bates, courts, commentators, the ABA, and the FTC have followed suit, frequently touting advertising’s ability to cut consumer costs. The price effect of attorney advertising is thus both seemingly settled and also deeply embedded in its judicial justification.

But there is a wrinkle. Though it appears advertising did drive down prices for routine legal services in the years immediately following Bates, in the intervening decades, there has been a decided, yet heretofore unexplored, shift. Contemporary attorney advertising is now mostly the province of the personal injury bar. Yet there is scant evidence that attorney advertising reduces the contingency fees personal injury lawyers charge. To the contrary, the best, most sophisticated, most comprehensive study of legal fees and attorney advertising ever conducted found that, unlike for most basic legal services (e.g., wills, personal bankruptcies, uncontested divorces), those who advertised personal injury legal services charged higher prices than their non-advertising counterparts. Other evidence likewise shows contingency fees have not dropped, even while personal injury lawyers’ ad expenditures have soared.

This fact has been all but ignored, though it is of enormous consequence for both the legality of attorney advertising and the delivery of legal services more generally. This Article aims to reopen and reorient the “settled” attorney advertising debate, in light of the particularities of personal injury practice and the changing nature of the market for personal legal services in the United States.

Suggested Citation

Engstrom, Nora Freeman, Attorney Advertising and the Contingency Fee Cost Paradox (May 1, 2013). Stanford Law Review, Vol. 65, No. 633, 2013, Stanford Public Law Working Paper No. 2259302, Stanford Law and Economics Olin Working Paper No. 448, Available at SSRN: https://ssrn.com/abstract=2259302 or http://dx.doi.org/10.2139/ssrn.2259302

Nora Freeman Engstrom (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
6507368891 (Phone)

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