A Classic Case of Fixing

In 1971, when Lewis and Ruth Goldfarb wanted to buy a new $54,500 house in a development in Fairfax County, Va., they needed to have a title search done by a lawyer. Since the title had been searched less than a year before by the developer, the new check involved no more than a few hours of work, but every lawyer who replied to the Goldfarbs' inquiries (20 in all) said the job would cost more than $500--based on the minimum rate fixed by the local bar's fee schedule. Goldfarb decided to sue. Last week the Supreme Court agreed with him that the title-search fee schedule was "a classic illustration of price fixing."

Brushing aside the Fairfax County bar's contention that its price list was merely advisory, Chief Justice Warren Burger found that "the fee schedule was enforced through the prospect of professional discipline from the state bar. [A] naked agreement was clearly shown, and the effect on prices is plain." Such naked agreements were long common in bar associations; 34 states once had some kind of minimum fee schedule covering legal services. But in recent years the number has dropped to 18, as lawyers began to worry that they might indeed be subject to antitrust laws. The traditional theory was that antitrust regulation did not cover the "learned professions." If that were so, said Burger last week, "lawyers would be able to adopt anticompetitive practices with impunity." Conceding that some "forms of competition usual in the business world may be demoralizing to the ethical standards of a profession," Burger nonetheless held that where title searches and the like are concerned, "the exchange of such a service for money is 'commerce' in the most common usage of that word."

Vain Effort. The court's unanimous decision did not specifically apply to all legal fees, much less to fees charged in other professions; but the implications are strong. "The decision shows that all professions are subject to the antitrust laws," exulted Alan Morrison, a director of Ralph Nader's Public Citizen, who argued the Goldfarbs' case. "Doctors, lawyers, accountants, engineers--all must now recognize that when they do business in the community, they'll be looked on as businessmen. It means lower prices and more competition." Indeed in Virginia, in a vain effort to head off the court's decision, the county bar dropped its schedule last winter, and the average title-search fee paid to lawyers has already fallen by about one-third.

The court also decided by a 7-to-2 vote to reverse the misdemeanor conviction of a Virginia newspaper editor who was fined $500 for printing an ad in 1971 that described abortion services available in New York City. While agreeing that advertising "may be subject to reasonable regulation," the court held that since Virginia at that time forbade abortions, the ad provided citizens with valuable information protected by the First Amendment. The decision also included a minor legal gaffe, unexpected from the court. Cited in support of the ruling was the court's decision on whether Jacksonville, Fla., may ban sex movies at drive-in theaters--but the court has yet to announce its Jacksonville decision, and the reference did not make clear which way the court is planning to rule when it actually does hand down its opinion, probably in the next week or two.

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