U.S. Court of Appeals Rules on NY Lawyer Advertising Rules

On March 12, the Second Circuit issued its decision in Alexander v. Cahill, the case that challenged the changes to the New York ethics rules with respect to lawyer advertising. The Court largely affirmed the decision of the District Court, striking down many of the restrictions contained in the new rules. The only change from the District Court opinion was the reversal of their decision with respect to the ban on "the portrayal of a fictitious law firm, the use of a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply[ing] that lawyers are associated in a law firm if that is not the case."

You can see my post about the District Court's decision in Alexander v. Cah ill here. Both decisions relied upon the Supreme Court's analysis of the First Amendment protection accorded to commercial speech in Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y. 447 U.S. 557, 566 (1980). This test applied to regulations restricting commercial speech is as follows:

Does the speech concern lawful activity and is it not misleading?
Is the asserted government interest substantial?
If the answers to #1 and #2 are both yes, does the regulation directly advance the governmental interest asserted?
Is the regulation more extensive than necessary to serve that interest?

Both courts found that the speech was subject to First Amendment protection by answering #1 in the affirmative, and both found that the asserted government interests (here, the interest of the State in prohibiting attorney advertising that contains deceptive or misleading content and protecting the reputation of the legal profession) were substantial.

Where the regulations fall short, according to the Court, is the question of whether the regulations directly support the government's stated interest. It is the State's burden to demonstrate that the harms are real and that the regulations will alleviate that harm "to a substantial degree."

But the State's justification for these regulations falls short here according to the Court, since they are based not on any evidence of actual harm or of any complaints by the public that they were misled by these lawyer advertisements; rather the State merely claimed that these kinds of attorney advertisements were potentially misleading.

The Court found that the State could regulate only advertisements that were inherently or actually --not merely potentially-- misleading. Since the State did not proffer sufficient evidence that the kinds of advertisements they were seeking to regulate were actually misleading, the regulations were struck down. But the Court was quick to point out that similar regulations could be enacted in the future if the State could provide evidentiary support for their claims.

The Court also found that the existing regulations failed the fourth prong of the Central Hudson test because, in most cases, the regulations constituted an outright prohibition on information that would only be potentially misleading, even if the same information could be provided in a manner which was not misleading, and therefore, the restrictions were not narrowly tailored enough.

According to the Court, in most instances, the State's interests could have been advanced simply by requiring disclaimers on certain kinds of advertisements, rather than an outright ban. In fact, the New York State Task Force that studied these issues and made recommendations prior to the enactment of these rules suggested just such an alternative.

The Court upheld the restrictions placed upon solicitation of specific individuals or groups following an event (such as an automobile accident) for a specific period of time following the accident or event (30 days, or 15 days if there is a 30 day deadling for a filing, such as the filing of a notice of claim). This ban does not prevent lawyers from advertising generally - it just prevents them from directly contacting known victims/participants. And the rule certainly does not curtail the client's right to reach out to a lawyer during that 30 day period.

As a practical matter, what does the decision mean for lawyers in New York?

Based upon the decision, lawyers will be permitted to:

Use testimonials or endorsements, even of current clients, as long as those testimonials or endorsements are accompanied by a disclaimer indicating that past results are not an indicator of future performance.
Use an actor or spokesperson in advertisements, provided that there is disclosure of that fact in the advertisement.
Portray judges in advertisements, as long as those advertisements do not imply an ability to influence the court.
Use 'attention-getting' techniques in their advertisements (such as the gimmicks used in the advertisements in the case at hand, including special effects), particularly where these techniques serve to impart information in a form which makes it easy for the general public to understand.

Lawyers may not portray a fictitious law firm, or use a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply that lawyers are associated in a law firm if that is not the case. The Court specifically discussed this provision in its decision, and noted that the parties agreed to narrowly construe this regulation to refer only to situations in which lawyers from different firms give the misleading impression that they are from the same firm.

One area in which I think there still may be some confusion is in the restriction of the use of trade names. The Court addressed 22 NYCRR 1200.5(c)(7), which prohibits the use of a nickname, moniker or trade name that implies results, and found that the regulation was unconstitutional because the restriction was too broad and prohibited these names even when they were not misleading. Presumably, this analysis would also apply to the even broader rule which says, in part:

A lawyer in private practice shall not practice under a trade name, a name that is misleading as to the identity of the lawyer or lawyers practicing under such name, or a firm name containing names other than those of one or more of the lawyers in the firm...

However, this separate rule was not directly discussed in the Court's opinion, most likely because the case at hand involved only 'nicknames' and not the actual law firm name.

In all circumstances, the overarching test must be applied to lawyer ads to ensure that they are not deceptive or misleading in any way.