The United States Supreme Court has long mandated an intermediate level of scrutiny for restrictions on attorney advertising. The limits must be based on evidence, and be narrowly drawn to materially advance a substantial governmental interest. Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980)
In a case that the Times' Adam Liptak ridicules as representative of the trivial nature of current free speech cases, the Supreme Court has agreed to review Milavetz, Gallop & Milavetz v. United States of America. (See briefs and opinions below courtesy of Scotusblog.)
Alan Milavetz, a consumer bankruptcy attorney in Minnesota objects to the Congress's requirement that bankruptcy lawyers in their advertisements describe themselves as "a debt relief agency". (see 11 U.S.C. 528)
Milavetz complains that consumer bankruptcy lawyers are lumped together with predatory lenders and non-attorney agencies, compelled to confusingly describe themselves in terms that make it sound like they are a government "agency", and lumps them together with the aggressive, largely under regulated consumer counseling and other "debt relief" operations.
And 11 U.S.C. 526 (a) (4) forbids advising someone to take on more debt in contemplation of bankruptcy. But that could bar advice to a client to prudently buy a reliable car - to get to work, or to refinance a mortgage at a lower rate to pay off credit card debt. Such considerations led the 8th Circuit to find a constitutional violation, citing Erwin Chemerinsky, Constitutional Issues Posed in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 79 Am. Bankr. L.J. 571, 579 (Summer 2005).
One can understand Liptak's point that the issue lacks broad significance. But not everyone can be Eugene V. Debs, Democracy's Prisoner, campaigning for President from a jail cell, a story retold in Ernest Freeberg's fine new account .
Advocates looking for an attorney free speech issue broader than that posed by Federal bankruptcy law could look at New Jersey Advertising Guideline 3. It instructs that consumer-directed advertisements:
4) include information sufficient to inform an unsophisticated individual of the potential pitfalls and disadvantages of a bankruptcy proceeding as follows:
The decision to file for bankruptcy is a serious choice. It is a remedy that may affect your credit and may affect your ability to use the bankruptcy code at a future time. Be sure to discuss the advantages and disadvantages of bankruptcy with any professional whom you are considering to represent you.
5) not attempt to indicate a special relationship, expertise, experience or knowledge which will or may provide a more favorable result than other licensed New Jersey attorneys;
6) not raise unjustified expectations or use language or format susceptible of unduly enticing a person because of possible economic or personal consequences of a judgment; and
7) not raise false hope for relief inapplicable to the individual person’s circumstances.
The Guideline , according to the drafters, bars as misleading statements like "* "The Law Firm of XXX has been in business since XXX helping people just like you. Only an attorney can properly assist you in this situation and stop SHERIFF SALES, TAX LIENS."
The information compelled by the New Jersey rule is bad advice. Were it not for the Guideline an attorney could truthfully say without state-mandated qualification "going bankrupt is GOOD for your credit. Discharge wipes the slate clear, provides a fresh start, and blocks filing for bankruptcy again within 7 years. Creditors will want to lend to you again when you are free of your past debt."
Enunciated by the N.J. Supreme Court's Committee on Attorney Advertising as Opinion 30, the requirement has survived a challenge in the state Supreme Court which refused to overturn the rule. The court directed it be re-cast as an Advertising Guideline. The court has had four years to finalize the rule but has not acted.
Opinion 30 - which is in effect and is simply recast as proposed Guideline 3- bars an attorney from saying "Choose experience" by referring to her "25 years of experience exclusively representing debtors like you".
That stricture, based on the New Jersey Rule of Professional Conduct 7.4 (a), which bars any comparative statement will probably not survive the recent opinion of the New Jersey Supreme Court allowing use of the Super Lawyers moniker here.
The New Jersey Supreme Court has not formally approved the Guideline. One wonders if they will await the Supreme Court's ruling in Milavetz, or the Second Circuit in the pending challenge to New York's advertising restrictions reported here.
The decision on the New York challenge - Alexander & Catalano v. Cahill, brought by Public Citizen, will be interesting since the panel includes Judges Calabresi, Walker, and Sotomayor. At oral argument Sonia Sotomayor pressed the point that attorney advertising is "attention-getting, not informational".
Docket: 08-1119 and 08-1225
Title: Milavetz, Gallop, & Milavetz, P.A., et al. v. United States ; United States v. Milavetz, Gallop, & Milavetz, P.A., et al.
Issue: Whether an attorney who provides bankruptcy assistance to an assisted person in return for valuable consideration, and who does not fall within one of the five exceptions, is a “debt relief agency” for purposes of 11 U.S.C. 526 and whether 11 U.S.C. 528 violates the First Amendment.
