Legal Advertising Benefits Consumers
Advertising, the free flow of commercial information, is indispensable. Consumers looking to make major purchase decisions, such as legal representation, demand options. Advertising benefits consumers by serving to distinguish companies and ensures consumers make informed choices.
Research has found restrictions on legal advertising lead to higher prices and have either a negative or no effect on quality. The Federal Trade Commission (FTC) considered the effects of different commercial speech restrictions on attorneys and concluded “greater flexibility to engage in non-deceptive advertising will be associated with lower prices for consumers of legal services.”
Legal advertising is “an immensely powerful instrument for the elimination of ignorance” and from which consumers derive substantial benefits, including identifying preferences, according to George J. Stigler’s “The Economics of Information.”
While deceptive advertising by lawyers should be prohibited, consumers of legal services benefit from information about the legal system that can help them choose a lawyer, and “attorney advertising is one of the best ways to foster price competition,” according to the FTC.
In the precedential case Bates v. State Bar of Arizona, the U.S. Supreme Court found advertising “performs an indispensable role in the allocation of resources in a free enterprise system” because it makes it easier for consumers to compare the services and quality offered by competing suppliers.
More restrictions on advertising lead to higher prices for legal services.
FTC policy states that truthful and non-deceptive advertising “is a source of important information to consumers, assists them in making rational purchase decisions, encourages product improvement and innovation, and can lead to lower prices in the marketplace.”
The FTC report “Improving Consumer Access to Legal Services: The Case for Removing Restrictions on Truthful Advertising” found that states with more restrictions on advertising had higher prices for routine legal services.
When consumers face large costs to obtain information about prices and quality, businesses have less incentive to compete. Advertising helps consumers of legal services identify preferences, which gives sellers (including attorneys) the incentive to compete on quality and price, according to an FTC report.
As the U.S. Supreme Court observed in National Society of Professional Engineers v. U.S., “ultimately, competition will produce not only lower prices, but also better goods and services. ‘The heart of our national economy long has been faith in the value of competition.’”
Consumers benefit from choices and competition, even amongst members of the legal service community.