What Lawyers Must Learn From Dentists About The Unauthorized Practice Of Law
Alternative legal service providers, don’t say that Anthony Kennedy never did anything for you.
Alternative legal service providers, don’t say that Anthony Kennedy never did anything for you.
Last week, the U.S. Supreme Court decided North Carolina State Board of Dental Examiners v. Federal Trade Commission. Justice Anthony Kennedy wrote the opinion for the six-justice majority, holding that the FTC could hold the Board of Dental Examiners accountable for its anticompetitive efforts to drive non-dentist teeth whitening services out of the state. The majority worried about the risks that professional licensing boards packed with active members of the same profession pose to the free market.
Legal Zoom, 10MinuteWill.Com, and others occupying the grey and fuzzy space between the unauthorized practice of law and consumer-centered legal-services innovation should be stoked by the Court’s decision. If the dentists in North Carolina aren’t able to go after on-the-cheap, non-dentist teeth whiteners, then state bars across the country may find their options limited when hunting down on-the-cheap, non-attorney legal service providers.
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So, how do the plights of dentists and lawyers match up? Here’s a closer look.
If Dentists Had Their Way, North Carolinians Could No Longer Get Their Whitening Done In Between Visits to Spencer Gifts and Cinnabon
Time was when, if you wanted your teeth whitened, you had to pay a dentist to do it. Eventually, though, spas, salons, mall kiosks, and at-home kits could do the same job. The non-dentists could typically charge much less for their services than could dentists, given dentists’ higher overhead costs.
In North Carolina, dentists rallied against the competing teeth whitening services. The North Carolina State Board of Dental Examiners, starting in 2006, issued at least 47 cease-and-desist letters to these non-dentist purveyors of peroxide. The Board’s letters gave the impression that teeth whitening fell within the scope of the practice of dentistry, although it’s not at all clear from statutory language that this is so. The Board also helpfully reminded their competitors that the unlicensed practice of dentistry is a crime.
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The Federal Trade Commission was not smiling, however. In 2010, the FTC filed an administrative complaint charging the Board of Dental Examiners with violating antitrust law, including portions of the Federal Trade Commission Act. According to the FTC, the dentists had engaged in anticompetitive and unfair methods of competition when they tried to bully the non-denstists out of the whitening market.
State agencies are allowed to interfere with markets in some ways that would get private actors in trouble, because not letting them interfere would often hinder their proper power to regulate. The Board of Dental Examiners claimed that, because the state authorized the Board to regulate the dental profession, the Board was entitled to state-action immunity from antitrust requirements.
The Supreme Court disagreed. The majority concluded that the Board was not entitled to immunity. The Court decided that the Board is a non-sovereign actor, authorized by the state to regulate, but not itself a state agency. (Justice Alito’s dissent, joined by Justices Scalia and Thomas, considers the Board a state agency.) So, if North Carolina delegates regulation of the dental profession and control over the dental services market to the Board of Dental Examiners, the Board is only immunized if North Carolina remains politically accountable for the the Board’s practices.
So, how can we tell that an entity like the Board is executing state policies and, therefore, is subject to political rather than antitrust accountability? The Court applied its Midcal two-part test: A non-sovereign actor controlled by active market participants can invoke immunity if and only if the challenged restraint is (1) clearly articulated and affirmatively expressed as state policy, and (2) the policy is actively supervised by the State.
Unfortunately for North Carolina dentists, their efforts to shut down teeth whitening services failed the test.
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As Dentists Go, So Goes The Nation
The broad, vague statutory authority and light-handed state supervision of the North Carolina State Board of Dental Examiners is not so different from that of other professional regulatory bodies. No wonder groups like the National Council of Examiners for Engineering and Surveying, the Federation of State Boards of Physical Therapy, and the American Association of Nurse Anesthetists filed amicus briefs with the Supreme Court. If the Court thought that the dentists in North Carolina went too far in this case in policing the unlicensed practice of dentistry, then there’s a pretty good chance that the Court would disapprove of what other professions do to protect their turf.
The Court’s decision could mean big changes in how state bars enforce the unauthorized practice of law. Skimming a collection of states’ definitions of the scope of the practice of law reveals just how spacious the wiggle room is in many jurisdictions.
LegalZoom.com, Inc., the do-it-yourself-mostly legal services provider, also filed its own amicus brief with the Supreme Court in North Carolina State Board of Dental Examiners v. FTC, arguing that the Board of Dental Examiner’s “unsupervised, anticompetitive regulation of its self-defined market monopoly closely resembles the unsupervised, anticompetitive actions of some state bar associations.” The brief continues on pages 17 and 18:
Like the dental board, that state bar conducts investigations and issues cease-and-desist letters to non-lawyers, accusing them of the unauthorized practice of law or UPL [ . . . ]
State bar UPL enforcement — especially when challenging perceived competition from non-lawyers — often suffers from the same inadequacies as the dental board’s actions here. There is often no clearly articulated state policy on what constitutes “the practice of law.” What constitutes UPL is notoriously poorly defined, often treated on a case-by-case basis, leaving state bars with broad discretion to choose targets for enforcement. State bars face little supervision by the state or scrutiny by the public. Their UPL investigations often take place behind closed doors and outside the reach of public information statutes. Increasing this opacity, some state bars hold short of taking formal enforcement actions that would subject their UPL enforcement to independent judicial review. Rather, they rely on closed-door investigations, cease-and-desist letter demands, and opinions released by small committees of members, typically volunteers. Even without judicial enforcement, such “official” actions effectively suppress competition for legal services.
No word for sure on whether the amici drafted the brief from a fill-in-the-blank online template.
The North Carolina State Bar sent a cease-and-desist letter to LegalZoom.com, Inc. in 2008, claiming that the company engaged in the unauthorized practice of law. LegalZoom and the North Carolina State Bar have been battling in court ever since. No doubt, the next addition to LegalZoom’s library of legal documents should be a copy of the U.S. Supreme Court’s opinion in North Carolina State Board of Dental Examiners v. FTC.
The unlicensed practice of law is, of course, still prohibited. After what the Supreme Court had to say to the Board of Dental Examiners last week, though, state bars around the nation might want to take a closer look at the statutes granting them specific authority.
Tamara Tabo is a summa cum laude graduate of the Thurgood Marshall School of Law at Texas Southern University, where she served as Editor-in-Chief of the school’s law review. After graduation, she clerked on the U.S. Court of Appeals for the Fifth Circuit. She currently heads the Center for Legal Pedagogy at Texas Southern University, an institute applying cognitive science to improvements in legal education. You can reach her at [email protected].
