Over the past six months, I have been forwarded at least ten letters to the editor or e-mail posts from frustrated attorneys desperate to see rates for appointed counsel raised in their state or county. Each says the same thing: if the government refuses to raise rates, we should all band together and stop taking cases.

There is one big problem: the antitrust laws. Many of the groups that have tried to address low rates with work stoppages have found themselves under investigation by federal authorities.

Cultivating a wider knowledge of antitrust was not my plan when I accepted the position as indigent defense counsel at NACDL. But ten incidents in six months signaled a desperate need for more information. This article provides an overview of the fundamentals of antitrust, a history of antitrust enforcements against groups of appointed counsel, and finally, some expert advice, from NYU law professor Eleanor Fox, on how to avoid antitrust entanglements.

Antitrust laws are intended to preserve "free and unfettered competition as the rule of trade"1 by prohibiting conduct that would unreasonably interfere with free and open competition. It broadly, and somewhat vaguely, proscribes two things: (1) combinations or conspiracies in restraint of trade; and (2) monopolies.2 The first proscription is the one at issue when attorneys seek to use boycotts or strikes to pressure the government to raise counsel rates.

A conspiracy to restrain trade is difficult to define, because all business contracts restrain trade in some way. If I contract with Company A to provide it widgets for a year, I have restrained its ability to buy widgets from other companies during that year, which is a type of restraint of trade. Through interpretation, the courts have established that, to constitute an antitrust violation, the conduct must "unreasonably restrict" trade or competition.

In determining whether particular actions are unreasonable restraints of trade, the courts have decided that certain types of conduct are inherently anticompetitive and therefore always unreasonable restraints. These per se violations include: price fixing, i.e. conspiring to set a price for goods or services; allocation of customers or geographic regions, i.e. agreeing not to compete by not selling to certain groups or in certain locations, and boycotts, i.e. refusing to sell to certain companies or groups unless they meet certain terms.3

In 1983, a group of attorneys who accepted most of the appointments to represent indigent defendants in the District of Columbia tried to persuade the district to increase their rates.4 At the time, the rates were $30 per hour for in-court work and $20 per hour for out- of-court work. The rates had not changed in almost ten years.5

Almost all of the attorneys were members of the Superior Court Trial Lawyers Association. In the summer of 1983, the mayor met with the officers of SCTLA and explained that, while he was sympathetic, there was no money available to raise the rates.6 The group responded by forming a strike committee, and, in August of that year, about 100 of the attorneys who accepted most of the appointments resolved not to accept any new cases until the fees were raised. They signed a petition stating:

The attorneys' refusal to take new cases caused an immediate backlog, and attempts to get other private attorneys to take appointments failed. "Within 10 days, the key figures in the District's criminal justice system `became convinced that the system was on the brink of collapse[.]'"8 At their urging, the mayor met with members of the strike committee and offered to support an immediate increase to $35/hour, followed by a permanent increase to $45/hour for out-of-court work and $50/hour for in-court work. The striking attorneys voted to accept the offer, and legislation putting the immediate raise into effect was passed by the city council the next day.9

Two months later, the Federal Trade Commission filed a complaint against SCTLA, its officers and the chair of the strike committee. The Complaint alleged that the SCTLA attorneys had "entered into an agreement among themselves and with other lawyers to restrain trade by refusing to compete for or accept new appointments."10 The FTC claimed the agreement "constitute[d] a conspiracy to fix prices and to conduct a boycott, and . . . [were] unfair methods of competition."11

The lawyers argued that that their actions were exempt from antitrust prosecution because: (1) they were a form of political protest protected under the First Amendment; and (2) their actions were a protected form of petitioning the government. The lawyers also argued that, even if it was anti-competitive, the boycott was justified because it was in the public interest. The Supreme Court rejected all three defenses and held that the strike violated federal antitrust law.12

Specifically, the Court found that the agreement among attorneys who accepted appointments to strike until fees were raised violated the per se rules against price fixing and boycott. "The horizontal arrangement among these competitors was unquestionably a `naked restraint' on price and output."13

In the wake of the Court's decision in FTC v. Superior Court Trial Association, the FTC has prosecuted at least one group of attorneys for organizing a boycott to persuade the government to raise fees. Others have been investigated, but not prosecuted, and still others appear not to have been investigated.

In 2004, the FTC filed a complaint against attorneys in Clark County, Washington alleging that they had "organized a boycott against the payor of criminal indigent defense services for the Clark County area."14 The allegedly illegal conduct began in the fall of 2001. Following news reports critical of the assigned counsel program in capital cases, a group of 43 attorneys agreed to stop accepting homicide cases until Clark County improved the terms of their contracts.

Each attorney in the group signed a "consortium agreement" authorizing certain individuals to negotiate his or her contract with the county and demanding, among other things, that the pay system for homicide cases be switched from a flat fee to an hourly rate. The county negotiated with the appointed representatives and acceded to many of the demands, including the hourly rate.15

The FTC began investigating the consortium's actions in the spring of 2003. In 2004, a complaint was filed against four of the consortium leaders alleging that they had "acted to restrain competition by . . . facilitating, entering into, and implementing agreements among competing criminal indigent defense attorneys on price."16

The complaint took the attorneys by surprise. According to James Sowder, one of the attorneys named in the complaint, "We formed what we thought was an innocent consortium agreement. We were just trying to prevent the county from undercutting us."

The case against the Clark County lawyers was settled in the summer of 2004. The attorneys named as defendants signed a consent order forbidding them from participating in any negotiations on behalf of attorneys or working with other attorneys to negotiate favorable terms with any indigent defense authority for a period of twenty years. 17

Other groups of attorneys have avoided FTC prosecution. Around the same time as it was investigating the attorneys in Clark County, the FTC was also investigating a group of lawyers in Massachusetts who had refused to accept cases.

In July 2003, a small group of attorneys in Bristol County, Massachusetts began declining new appointments after they received notice that invoices for their past indigent defense work could not be paid. By August, about two thirds of the attorneys in Bristol County were on strike.18 A number of attorneys in Hamden County also started to refuse new cases. And, the situation escalated further when the Suffolk Lawyers for Justice announced, in August 2003, that the private attorneys who regularly accepted indigent defense cases in Boston would refuse further cases until they received payment for their past work.19

As in the other cases, the strike was arguably effective. The same day the Boston lawyers joined the strike, the Massachusetts legislature hastily approved a $15 million appropriation for back payments to the court-appointed attorneys. It was signed into law shortly thereafter.20

But the Federal Trade Commission almost immediately launched an investigation into the Massachusetts work stoppages.21 Suffolk Lawyers for Justice resisted the investigation, refusing to turn over requested documents.22 Then, later that fall, the FTC announced that it was terminating the investigation.23 Subsequently, some attorneys in Massachusetts have refused to take cases in attempt to get the state to raise fees,24 but to the best of our knowledge, these actions have not resulted in FTC investigations.

There is no formal, governmental statement that explains why the FTC prosecuted the lawyers in Clark County, Washington, but not the attorneys in Massachusetts. There are some factual differences between the cases that may have made the Massachusetts case more difficult to prosecute. For example, in both the SCTLA case and Clark County, the groups of attorneys had signed an actual agreement to refuse to take cases. In Massachusetts, the attorneys did not sign an agreement.25 On the other hand, the choice to prosecute one group and not the other also could have been a simple matter of agency discretion.

The bottom line lesson from these past experiences is that actions that involve a significant portion of lawyers choosing to opt out of the appointment process are enormously risky because, whether or not they involved group decision-making, they can look like boycotts, and boycotts are illegal. Groups of lawyers who decide to stop taking appointments in an effort to persuade the government to raise rates are opening themselves up to investigation and possible prosecution.

But that answer is not completely satisfactory. So, to explore these antitrust issues further and get advice from an expert on how attorneys can more likely avoid antitrust prosecutions, I sat down with Eleanor Fox, a law professor at New York University School of Law.

Professor Fox is the Walter J. Derenberg Professor of Trade Regulation at NYU and a prominent antitrust and comparative competition law scholar. She has also served as chair of the New York State Bar Association's Section on Antitrust Law, chair of the Section of Antitrust and Economic Regulation of the Association of American Law Schools, and vice chair of the ABA Antitrust Section.

Brink: When laypeople or even lawyers think of antitrust, they think of big corporations like Microsoft. So how do indigent defense lawyers find themselves subject to antitrust laws?

Fox: The antitrust laws contain two major prohibitions, apart from merger control. One is against monopolizing, which is the Microsoft type of case. The other is against combinations or agreements among competitors that restrict trade. It is this second type of prohibition that the lawyers are accused of violating, generally in the form of an agreement to fix the price for services.

Brink: With indigent defenders, the classic scenario is a group of lawyers who do appointed counsel work decide to stop taking cases until their fees are raised. They are then accused of violating antitrust laws. How does this violate the antitrust laws?

Fox: The courts view it as a price-fixing agreement among competitors. Lawyers may not price-fix. There is a prophylactic rule on price-fixing; it makes price-fixing illegal per se.

Brink: But it seems so odd to talk about price-fixing with regard to indigent defense. Lawyers who represent indigent defendants are not really like the big companies that we generally associate with antitrust violations, are they?

Fox: This is a logical question, and it was raised in the Superior Court Trial Lawyers case. How can it be illegal when the law really means to catch big companies that, if they act together, can act as a monopolist and control the market? This is where the prophylactic rule comes in – the courts simply will not hear defenses. The prophylactic rule does not allow for any consideration of circumstances, such as how much market power the participants have, what the motivations were, or how much effect they can have on the market.

Brink: Why is the rule so inflexible?

Fox: The prophylactic rule was established because price-fixing is viewed as one of the worst types of restraint of trade. However, obviously, to be a really harmful restraint, the price-fixing has to be by big steel or big automobile companies, which would have a significant impact on the economy as a whole. Cases of that dimension gave rise to the per se rule. Courts developed an early impatience with defenses like, "the agreement really did not have an effect on the market." As a result, the courts established the per se rule.

Brink: What other types of agreements will always constitute illegal restraints of trade?

Fox: The other kinds of agreements among competitors that are considered illegal restraints of trade per se include dividing markets, i.e. you will sell only east of the Mississippi and I will sell only west of the Mississippi; dividing customers, i.e. you will agree not to sell to companies x, y, and z, and I will agree not to sell to companies a, b, and c; and assigning quotas, i.e. you and I agree that each of us will produce nor more than 1000 widgets per month. All of these things relate to creating scarcity and pushing up prices.

Brink: The goal, as articulated by the lawyers involved in strikes, is to change the system for the good of the clients. It is a political message. Certain types of political boycotts are legal. For example, various groups have boycotted Wal-Mart because they sell guns. What distinguishes a legal boycott from an illegal one?

Fox: When the lawyers were boycotting, they were agreeing to not take on any more cases as a means of getting higher fees. The difference between the lawyers' boycott and moms' boycotting Wal- Mart is pecuniary gain. The lawyers' strike or boycott, if successful, results in their receiving more money. The moms' boycott, even if successful, would not result in pecuniary gain to the moms.

In SCTLA, the big attorney boycott case,26 the Supreme Court viewed the boycott as price-fixing because lawyers demanded that the prices for their services go up. The case held that if you boycott in order to get prices to go up, it is the equivalent of price-fixing. The lawyers argued that the goal of the strike was not to put money in their pockets, but to improve the system for the indigent defendants. Their problem was that they wanted the price to rise and the price rising would put more money in their pockets. Based on this reality, the Court concluded that this was a commercial strike and that the lawyers should not get the benefit of the protection accorded to political boycotts.

Brink: In the typical attorneys' case, the object is to get the government to take action. That action is generally in the form of a rate raise, but because you are asking the government to do something, isn't this a form of petitioning the government that should be constitutionally protected?

Fox: There is an exception to the antitrust rules for petitioning the government. Companies or individuals are allowed to combine or enter an agreement to lobby the government, even if what you are asking the government to do is anti-competitive. The government has the right to adopt anti-competitive measures; they can pass a law that reduces competition. There is a state action exemption from the antitrust laws. The key case on the petitioning-government exception is Eastern Railroad v. Noerr.27

The Noerr case involved the railroads, which wanted the governor to veto legislation allowing trucks to use the highways. They started a lobbying campaign and spread propaganda about how the trucks hurt the roads. Success would mean that the railroads, not the truckers, would be used for shipping. It would also hurt the marketplace – less competition in shipping. But it was government action that would hurt the competition.

The Court in SCTLA said that, unlike in Noerr, it was the attorneys' actions, not the actions of government, that harmed the marketplace, so the action could not be viewed as protected. The Court rejected the Noerr analogy because the lawyers' strike itself hurt competition. The lawyers hoped that the harm to the market would get the government's attention and would cause the government to act. Effectively, the lawyers hurt competition to get state action. They did not petition for state action to hurt competition.

Brink: But what about the fact that the attorneys could not set the price? When we think about price-fixing we think about big companies that have the power to agree and establish the price for the market. Here, the attorneys did not have the power to set the price – the government did.

Fox: I think that is a good argument, but it just did not win. The government said that because the acts used to motivate the government to set the price higher were anti-competitive, they amounted to price-fixing.

Brink: Could the attorneys have just argued that raising the rates was in the public good? That raising the rates would mean better lawyers, less cases overturned on appeals or in habeas, fewer exonerations, etc.

Fox: I never thought that this was a good argument. There are a lot of things that could arguably help the public. For example, in an early railroad price-fixing case, the railroads argued that their actions helped the public because they prevented the railroads from going bankrupt. If some railroads went bankrupt, the prices would be higher in the end. The Court held that such a claim just could not be considered: antitrust laws are about what is and what is not anti- competitive, not what is or might, in the future, be in the public good. If such arguments were allowed, courts would be authorized to conclude that higher prices would, in the end, be good for the public; they could override the aim of the law to preserve competition.

Brink: In the years since SCTLA, the Supreme Court has placed increasing limitations on the ability of Congress to regulate purely instate activities. Since indigent defense is a state issue, how can the federal antitrust laws apply?

Fox: There might be a no-interstate-commerce defense in some cases. It depends. But there is a very low threshold for federal antitrust jurisdiction. If there is some amount of interstate commerce involved, the case is within the purview of the federal laws. Whether the indigent defendants committed crimes in interstate commerce could be relevant. But one could certainly make the argument in a proper case, and the argument is stronger today than it would have been at the time of SCTLA.

Brink: If the federal laws did not apply, could the states still prosecute?

Fox: Most states have a "little Sherman Act," which they can enforce in the state courts. But the states, of course, are free not to follow the interpretation given to the federal law. This is precisely the type of area where you can imagine a state interpretation differing from the federal law.

I should note that some of the state laws also exempt professionals. Others do not, but even those states might decide that this type of boycott should not be prosecuted.

Brink: Let's talk a little bit about the kinds of behavior that can get attorneys into trouble. What if one attorney were to call upon other attorneys to consider their individual situations, and, if they felt the fees were unfair, to join that attorney and stop taking appointed work?We have seen, for example, a number of letters to the editor in legal newspapers calling for people to join together and stop accepting appointments. Would this subject those attorneys to risk of investigation?

Fox: This is the kind of thing that raises a red flag. I would be really worried if my client did that. But there is still the question, did the lawyers agree? If others fell in line with the request, the uniformity could be some evidence of agreement.

Brink: Where is the line?

Fox: It depends. If an e-mail or article simply points out that the average lawyer is losing money on these cases because the fees are not enough to cover expenses, there likely would not be a problem. Although there would still be a question of fact – was there an agreement?

If the e-mail said that the only way we can make the government raise the rates is if we all stop taking cases, this is a very large red flag.

Suppose an article pointed out that it is usually against individual interest to take appointed work and it encouraged people to assess whether or not it is worth it, for them personally, to continue taking on cases. This does not expressly call for collective action, but it would still raise a red flag.

I should note that proof of agreement is much harder to establish today than it was twenty years ago. The Supreme Court has ruled that in the absence of direct proof of an agreement, the fact finder must find that the conduct is more likely to be explained by concerted action than by individual action. It would be very difficult to prove agreement by circumstantial evidence in these attorney cases if it were against their individual interests to continue taking the cases.

Brink: Has the law changed in any other way that might make these cases harder to prosecute?

Fox: The Court today is much less likely to apply a per se rule. In a recent case, California Dental Association v. Federal Trade Commission, 526 U.S. 756 (1999), which is a very different type of case, the Court said that per se rules should seldom be applied, particularly in the context of professionals trying to regulate themselves. The Court said that you should look at the circumstances and whether or not the specific activity is anti-competitive in intent and effect.

The California Dental case involved a professional organization that prohibited certain types of advertising, including discount advertising. The Court held that the regulation was not obviously anti-competitive, which is interesting because discount advertising is very informative and is generally effective at creating competition. Banning discount advertising generally has the effect of raising prices.

Nevertheless, the Court refused to apply a per se rule and concluded that this type of self-regulation would be permitted if it was not anti-competitive. The Court considered that the prohibition may have been intended to weed out deceptive and fraudulent practices – a goal that should be encouraged – and upheld the regulation.

The Court's refusal to apply a per se rule is helpful in the attorney context, but it would be difficult to analogize the attorney case further. The facts are very different. The problem in the attorney case is that the concerted effort to raise fees is a naked restraint. The most obvious purpose and most direct effect is to raise the price and the lawyer's income.

Brink: In the SCTLA case and, more recently, the case in Washington State, there were written agreements. Is this the biggest thing to be avoided?

Fox: Yes. It establishes a violation of the per se rule.

Brink: In the absence of recorded proof of agreement, what sort of evidence is used to show collective action?

Fox: The prosecutor will look for when certain behavior occurred, e.g. did everyone stop all at once? If everyone stops on the same day and hour, it indicates an agreement. But if everyone stops little by little, you can attribute that to assessing their own interests and making individual decisions. It would be hard to prove an agreement from a gradual drop off of people taking cases. Brink: What recommendations would you give to lawyers who are frustrated and want to take action but do not want to end up being investigated by the FTC?

Fox: Restrict communications to assessments showing that taking on cases at the current fee is contrary to their own interests, and stop there. You can go so far as to say: "I am not taking on cases because the fee is so low that it does not pay me to do so." Maybe you can say, "You should decide for yourself whether it is worth it for you." But stop there. Any decisions must be personal, not collective.

Do not call for a boycott or any collective action. Stop short of asking people to "join in." It would also help if the individual lawyers who decline to take further cases would make a record of why it is against their individual interests to continue taking cases, for example, the fees do not even cover their overhead expenses.

They can also try to insulate themselves by specifically saying that they are not calling on everyone else to stop taking cases. There is always going to be someone who say, "I agree, and we should all agree to stop taking cases." That will create a danger. The best anyone can do when that happens is to reiterate that they are not asking anyone to boycott, but simply pointing out that it may not be in an attorney's best interest to take appointments.

1. Northern Pacific Railway Co. v. United States, 356 U.S. 1, 4 (1958).

2. 15 U.S.C. § 1, et. seq.

3. Fishman v. Wirtz, 1981 WL 2153, 38 (N.D. Ill. Oct. 28, 1981) (citing Duplex Printing Press Co. v. Deering, 254 U.S. 443, 446 (1921)).

4. FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411, 415 (1990).

5. See id.

6. Id. at 416.

7. Id.

8. Id. at 417 (quoting In re Superior Court Trial Lawyers Assn., 107 F.T.C. 510, 544 (1986)).

9. See id. at 418.

10. In re Superior Court Trial Lawyers Assn., 107 F.T.C. at 511.

11. Id.

12. FTC v. Superior Court Trial Lawyers Assn., 493 U.S. at 423-428.

13. Id. at 423 (citation omitted).

14. FTC Complaint at 1, available at http: //www.ftc.gov/os/caselist/0310155/040730comp0310155.pdf#search= 'ftc%20robert%20lewis' (last visited May 18, 2005).

15. See Lise Olsen, Lawyers strike back in Clark County, Seattle Post-Intelligencer, Seattle, Washington (April 29, 2003); see also Michael Heywood, In Our View: Court Squeeze, Columbian, Vancouver, Washington (January 16, 2002).

16. FTC Complaint at 3.

17. FTC Consent Decree at 3, available at http://www.ftc.gov/os/caselist/0310155 /040614agree0310155.pdf (last visited May 19, 2005).

18. Scott Dolan, Lawyer strike spreads to Suffolk County, Taunton Gazette (August 15, 2003).

19. See id.; see also David Weber, Public Defense Lawyers Strike, Boston Herald (August 19, 2003).

20. See id.; see also Boston Lawyers Who Refused New Indigent Defense Cases Return to Work, Associated Press (August 19, 2003).

21. See Kathleen Burge, Lawyers for poor feel slap from US, Boston Globe Staff (October 17, 2003).

22. See id.

23. See James L. Sultan, FTC Probe Was `Frontal Assault' On Professional, Massachusetts Lawyers Weekly (November 17, 2003).

24. See, e.g., Shawn Regan, Governor warns lawyers, Lawrence Eagle Tribune (November 22, 2003).

25. There need not be direct evidence of an agreement to prove a conspiracy; conspiracy can be proven by circumstantial evidence, such as conduct of the parties and opportunity to conspire. See, e.g. Kreuzer v. American Academy of Periodontology, 735 F.2d 1479 (D.C. Cir. 1984); Contractor Utility Sales Co. Inc. v. Certain-teed Products Corp., 638 F.2d 1061 (7th Cir. 1981). The existence of an agreement potentially could have been found by circumstantial evidence in the Massachusetts case, but the existence of a literal agreement likely made the DC and Clark County cases much easier to prove.

26. Superior Court Trial Lawyers Association v. FTC, 493 U.S. 411 (1990).

27. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961). n