Legal advertising in the United States

In the Bates v. State Bar of Arizona case, the Arizona State Bar argued against advertising by law firms because they believed that advertising would place too much burden on the legal system. They believed that the advertising may be too effective and dangerously increase litigation. They also believed that lawyers would raise the cost of their services in order to compensate for their increased overhead due to the additional cost of advertising. Another fear was that the legal profession would be viewed as a common trade rather than the noble profession they believed they were part of.[4]

Bar associations and consumer advocates were concerned that the members of the public would not protect themselves against false or misleading lawyer advertisements. The bar also argued that legalizing advertising would cause more and more people to pursue a career in law. This was a result of a study that showed that between the years of 1951 and 1971 the number of lawyers increased by 326%. They also believed that an increase in advertising would promote a larger client base and would make it harder for lawyers to serve their clients.[4]

In 1972 John Bates and Van O'steen were admitted to the State Bar of Arizona.[6] Immediately after their admittance to the bar the pair began working for the Maricopa County Legal Aid Society.[7] After working there for a period of two years they founded their own practice.

As a firm they handled cases for clients who could not qualify for government grants despite moderate incomes. Bates and O’steen decided that, rather than charge expensive fees for their services, they would focus on a large volume of cases in order to generate their income; as such, the firm focused its practice on low-fee cases such as uncontested divorces, adoptions, simple bankruptcy cases, and name changes.[7] They realized that in order to obtain the necessary volume they needed to advertise their name and their services to the public. Bates and O’steen placed an advertisement in the Arizona Republic on February 22, 1976.[6] The State Bar acted reviewed the case. Both Bates and O'steen were suspended from practicing law for six months in accordance with the regulations of the State Bar of Arizona.[6] Bates and O'steen petitioned the Arizona Supreme Court to review their case on the grounds that a total ban on advertisement violated the Sherman Antitrust Act and the First Amendment to the United States Constitution.[6] The state supreme court rejected both of their claims, but did reduce their suspensions, in part, because the court believed that Bates and O’steen advertised as a way to test the constitutionality of the ban on advertising within the legal industry.[6]

The Supreme Court of the United States recognized that they had the power to review judicial decisions of lower courts and set the case for argument. Chief Justice Warren E. Burger threw out the claim that a total ban on advertising by lawyers and law firms was in violation of the Sherman Antitrust Act.[6] He based his position on the precedent set in Goldfarb v. Virginia State Bar. This case set the precedent that "lawyers engage in trade or commerce," and lawyers and the practice of law were therefore NOT exempt from the Sherman Antitrust Act.

On the claim of the violation of free speech, the Supreme Court ruled in favor of Bates and O'steen, stating that Arizona's ban of advertising "inhibit[ed] the free flow of information and ke[pt] the public in ignorance".[6] The Supreme Court therefore removed the ban on advertising. However, they still allowed the State Bar to "regulate" advertising in order to make certain that the information presented was true and did not mislead others or make false claims. State bar associations across the country quickly began to lift their bans on advertising.[8]

After the U.S. Supreme Court decision, law firm advertising activity increased significantly.[3] Initially the majority of lawyer advertisements were directed at "car wreck" victims. Later, advertising attempted to recruit clients affected by medications that were recalled for safety reasons or had unanticipated or undisclosed side effects.

In the top 75 television markets nationwide, 2,000 lawyers advertise on television and spend close to $200 million collectively on advertising.[9] Twenty percent of low-income households who have sought after legal counsel or advice have found their lawyer through the lawyer’s advertisements.[10]

It is estimated that 75 percent of law firms advertise.[4] Research has suggested that the smaller the firm the more likely they are to advertise. According to an article published in the Service Marketing Quarterly, 94% of Americans are familiar with lawyer television advertisements.