1973, August, Pg. 1. Attorney's Fee Schedules: Professional Price Fixing?.

• Author: by Miles C. Cortez, Jr.

2 Colo.Law. 1

The Colorado Lawyer

1973.

1973, August, Pg. 1.

Attorney's Fee Schedules: Professional Price Fixing?

1Vol. 2, No. 10, Pg. 1Attorney's Fee Schedules: Professional Price Fixing?by Miles C. Cortez, Jr.In January 1973, a federal district court held that the minimum fee schedule of the Fairfax (Virginia) Bar Association was an agreement in restraint of trade violative of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1890). Goldfarb v. Virginia State Bar, 355 F. Supp. 491 (E.D. Va. 1973). The plaintiff was an attorney with the Federal Trade Commission who had been quoted by several lawyers the identical fee for title work to be performed in connection with his purchase of a home. The quoted fee was the same fee set forth in the minimum fee schedule adopted by the Fairfax bar for such services.

The action also named as defendants the Alexandria, the Arlington County, and the Virginia State Bar associations. However, Alexandria and Arlington County entered into consent judgments pursuant to which they were directed to cancel their existing minimum fee schedules and enjoined from "adopting, publishing or distributing any future schedules of minimum or suggested fees."(fn1) Because the Virginia State Bar was created and governed pursuant to action by the Virginia Supreme Court and membership therein is compulsory, lawfully regulated state action has involved which was exempt from Sherman Act coverage under Parker v. Brown, 317 U.S. 341 (1943).(fn2)

A different conclusion was reached in a New York state court action based upon state antitrust law in Matter of Accounting of Lincoln Rochester Trust Co., 1973 Trade Cas. ¶ 74,480 (N. Y. Sup. Ct., App. Div. 1973). At issue was a surrogate's award of fees for an attorney's work on behalf of an estate. The court found that the surrogate could properly consider the fee schedule of the Monroe County bar association in his determinations. It held that since no attorney had even been disciplined, coerced, pressured or threatened with sanctions for charging below the suggested minimum fee, the schedule did not in fact establish minimum fees. The court applied a "rule of reason" existent under state case law which does not parallel case law under the Sherman Act, and it is doubtful that Monroe County could have withstood a Goldfarb-type challenge in federal court. Thus although the appellant presented evidence of sanctions available to the bar and capable of being imposed upon non-complying lawyers, his case failed under the New York "rule of reason" (which is apparently even applied to alleged price-fixing schemes)

2because he had presented no empirical data to show that the schedule unreasonably fixed legal fees.

Sherman Act LiabilityThe finding of antitrust liability on the part of a bar association for practices arising out of the use of fee schedules is surprising only in that it was so long in coming. Although fee schedules come in a variety of forms and lately with more novel titles, they have been in use for years. Justification for their promulgation, publication and use has been phrased in the loftiest of terms, but all too frequently the effect of their existence has been pernicious. Consequently, fee schedules of all forms have been the subject of much scrutiny within the past several months by the Department of Justice, state attorneys general, bar associations from national through local levels and consumer groups. Thomas Kauper, Assistant Attorney General, Antitrust Division of the Justice Department, expressed the opinion that the legal profession has had "sufficient warning" about possible Sherman Act liability for use of fee schedules, and stated that the Department's "next warning will be in the form of a complaint."(fn3) A special assistant of Mr. Kauper followed up this statement with the disclosure that several investigations were under way in this area by the Department.(fn4) The Department of Housing and Urban Development...