Consumerism and Competition: the changing scope of our justice system

Posted in competition, consumerism, legal profession, market by Gautam on December 27, 2008

Rule 36 Chapter 2 Part 6 of the Bar Council of India Rules impose a blanket ban on advertising of all kinds by lawyers;  this rule additionally also specifies that the board displaying their name be of a ‘reasonable size’ and must not disclose any kind of specialization.

An argument to justify this Victorian era rule is aptly characterized by the nature of this profession as its primary basis.  The ruling of the Supreme Court (1976) Bar Council of India v. M.Dhabolkar which held “the law is not a trade, not briefs, not merchandise and so the heaven of commercial competition should not vulgarise the profession”, in essence it rests on the simple fact that ‘advertisements’ in the legal profession would undermine the notion of ‘justice’.  However, times have changed and the nature of this profession has gone beyond ordinary litigation; the complication ensuing a ban on advertisement by lawyers involves major factors that suitably equate the position taken by proponents of this ban.

The stand taken in opposition to such regulatory measures is essentially three-pronged.  They relate to

  1. The widened scope of the legal profession
  2. Right to Information and Consumer Awareness
  3. Ban on advertisement leading to anti-competitive practices

The Supreme Court in K Vishnu v. National Consumer Disputes Redressal Commission classified the legal profession as a ‘service’ for the purpose of the consumer protection.  The WTO included the legal profession as a ‘service’ in its sectorial list, thus subjecting it to trade laws around the world.  In addition to this lawyers have taken to playing roles that demand action not necessarily related to the courtroom; the law today goes beyond simple concepts of ‘right’ and ‘wrong’ as envisioned by naturalist jurists and involve regulatory measures.

The Georgetown Journal of Legal Ethics, summer 2005 issue featured an Article by Emily Olsen which established that increase in infromation dissemination through advertising veries directly with the quality of the services and inversely with its costs.  The question that needs to answered here however is what kind of advertisement is being reffered to here.  The peculiar nature of the legal profession limits the purposes that mainstream advertisement offers to other professions; mainly competition.

Consumers have a right to be informed of the nature of the services available to them. George Akerloff’s paper on ‘the Market for Lemons’ pointed out something called ‘information assymmetry’ wherein there is an imbalance between the information of the quality of services available to the consumer and the range of services actually available by the professional; therefore the consumer considers this assymetry and settles with the average quality of the services; proposing a tendency to drive out better quality service providers out of the market.  Better information is an added incentive to the concumers and involves improving the overall standards of the profession as opposed to the general notion that the quality of ones work is sufficient to create awareness.  The United States Supreme Court in the 1977 case of Bates v. State Bar of Arizona rejected the idea that attorney advertisement was inherently misleading.  In addition is held that “the postulated connection between advertisement and the erosion of true professionalism was severely strained” and that “a lack of advertisment couild be construed asa prefoessional failure to reach out and serve the community”.

Limited choice leads to higher prices and leads to a pattern of market monopoly by existing players and is a deterring factor to new entrants to make the nature of their services known.  The quality and accuracy of information however is a cause of concern.  Two possibilities can be examined here; before which it is necessary to understand that the sole purpose of advertisement is the services offered; it is not as much to facilitate competition as much as it is consumer and justice oriented.  Lawyers owe and enhanced obligation to the society and normal rules of competition law and policy do not apply to them.  The nature of regulations under competition policy – relating to ‘agreements’, ‘abuse of dominant position’ and ‘combination’- are variedly different from those under Rule 36 of the Bar Council of India Regulations.
The first possibility is the adoption of a ‘self regulatory’ code by such professionals. The second relates to measures by a regulatory authority and backing through sanctions.  In the alternative, it might be worth giving consideration if existing laws relating to advertising (under consumer protection and other laws) are sufficient to govern the necessities of this profession without disturbing the cannons of our notions of justice delivery.  It is however irrefutable that aggresive advertising is not in conformity with the principles of this peculiar profession.

Gautam Swarup


2 Responses

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  1. Brajendu said, on December 29, 2008 at 11:16 pm

    A three judge bench of the SC (Agarwal, Kapadia and Jain, I believe), is currently hearing a petition filed by one VB Joshi. Joshi had challeneged the validity of Rule 36 of the BCI.

    One of the major arguments for the Centre and BCI was that legal profession is not a “trade”. While this is debatable, in July 2008 the Bar Council passed a resolution to amend Rule 36, allowing lawyers to have websites. This resolution has been approved by KGB, the CJ, as is required by the Advocates Act.

    The petitioners had plans of opposing the said resolution on grounds that it provided only for websites, and was silent on other aspects of advertising like publication of brouchers etc. On this, the BCI Chairman had said that the Council had no problems in amending the Rule further, however, this would happen only after foreign law firms entered the Indian markets.

    I haven’t followed this case of late. Maybe Gautam can do some research and have a sequel to the current post?

  2. […] Council of India Rule 36  relating to advertisements that I tried to address in an earlier post (accessible here), a case relating to which was pending before the Supreme Court of India where this Rule was […]

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