f/k/a . . . the archives

September 18, 2003

Even Struggling Lawyers for the Poor Don’t Get Antitrust Immunity

Filed under: pre-06-2006 — David Giacalone @ 8:50 pm

A dedicated lawyer in Massachusetts, Deborah Sirotkin Butler, has been corresponding with me about the recent refusal of assigned counsel across the Commonwealth to take new cases, and their hints at future boycotts.   As argued here and there, I believe that a group boycott to achieve better pay or other terms by independent providers of services violates antitrust law, even when the target is a huge buyer, such as a State, and the boycotters are sympathetic, struggling lawyers.   Deborah recently voiced the following concern to me, which I’d like to address in this posting:


I thought the public policy purpose of antitrust law was to protect the little guy against the monopolist giant.  Your analysis seems to protect the monopolist giant against the little guy.  This just feels all wrong, morally, and in terms of common sense to me. 

As the U.S. Supreme Court has often said, antitrust protects “competition, not competitors.”    Brunswick Corp. v. Pueblo Bowl-O-Mat Inc., 429 U.S. 477, 488 (1977)  Antitrust law is not based on the notion that bigness itself is bad or that the “pygmies” should always prevail against the giant.  Instead, antitrust law:





” . . . was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.  It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition.” (emphasis added) Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 4 (1958).


Furthermore, t
he firm consensus across the political spectrum is that protecting consumers and consumer interests is the primary purpose of antitrust law.  For a good summary of the goals of antitrust enforcement see Looking Forward, a speech by FTC Chairman Timothy J. Muris (Dec., 2002).   As Muris states, “Competition policy succeeds when it serves consumer interests – for example, by pressing producers to offer lower prices or to improve product quality. The true measure of our contribution to the economy is our progress in increasing consumer welfare.”   



  • The Robinson-Patman Act, which was passed in 1936 and prohibits various types of price discrimination by sellers, is the one so-called antitrust law that attempted to protect competitors (e.g., small grocers and other ”mom’n'pop” stores) from competition by larger entities (especially discounters).  RPA departed from a consumer-oriented focus as a result of a conscious political-policy choice that equated the well-being of individual firms with consumer interests.   However, as Chairman Muris describes, almost all economists and antitrust experts agree that enforcing RPA often harmed consumers — by paying insufficient attention to the effect of the challenged conduct on competition, market efficiency, and consumer welfare.  The statute is still on the books, but has been virtually abandoned by enforcement agencies. 

The joint boycott — “pressuring a party with whom one has a dispute by withholding, or enlisting others to withhold, patronage or services from the target” (the Barry Case, 438 U.S. 531) — has received special attention by antitrust enforcers, because it is particularly able to distort competitive process and to force the target to accept the terms demanded by the conspirators, who would otherwise have to make individual decisions in the marketplace.   The Barry Court emphasized that buyers are protected against group boycotts, just as are sellers and competitors of the boycott conspirators.



In the context of a fee dispute between attorneys on assigned counsel panels and a government attempting to obtain legal services for indigents, it the government is the buyer (and is also standing in the shoes of the taxpayer-consumer who pays the bills and of the defendant-consumer who needs legal representation).   The assigned counsel are the sellers — independent providers of legal services who are in competition with eachother to provide the services.  Each lawyer must decide for herself or himself whether to accept the price and other terms offered by the government.   

 

Thus, it is no surprise to an antitrust lawyer, professor or court that the Supreme Court, in the 1990 SCTLA decision, had no problem finding an antitrust violation, when faced with a group boycott by assigned counsel for indigent criminal defendants to obtain increased fees from the D.C. government.  Yes, the lawyers were the worse paid in the City, and yes the government was a large buyer of criminal defense services, but the Supreme Court nevertheless adopted the FTC’s reasoning regarding the conduct of the “CJA” (Criminal Justice Act) attorneys who were the members of SCTLA (emphasis added):



    “`[T]he city’s purchase of CJA legal services for indigents is based on competition. The price offered by the city is based on competition, because the city must attract a sufficient number of individual lawyers to meet its needs at that price. The city competes with other purchasers of legal services to obtain an adequate supply of lawyers, and the city’s offering price is an element of that competition. Indeed, an acknowledgement of this element of competition is implicit in the respondents’ argument that an increase in the CJA fee was `necessary to attract, and retain, competent lawyers.’ If the offering price had not attracted a sufficient supply of qualified lawyers willing to accept CJA assignments for the city to fulfill its constitutional obligation, then presumably the city would have increased its offering price or otherwise sought to make its offer more attractive. In fact, however, the city’s offering price before the boycott apparently was sufficient to obtain the amount and quality of legal services that it needed.’” 272 U.S. App. D.C., at 278, 856 F.2d, at 232.


Similarly, the SCTLA Court (493 U.S. at 423) favorably quoted the reasoning of the Court of Appeals (emphasis added):



    “The Commission correctly determined that the CJA regulars act as `competitors’ in the only sense that matters for antitrust analysis: They are individual business people supplying the same service to a customer, and as such may be capable, through a concerted restriction on output, of forcing that customer to pay a higher price for their service.   That the D. C. government, like the buyers of many other services and commodities, prefers to offer a uniform price to all potential suppliers does not alter in any way the anti-competitive potential of the petitioners’ boycott.   The antitrust laws do not protect only purchasers who negotiate each transaction individually, instead of posting a price at which they will trade with all who come forward.  Nor should any significance be assigned to the origin of the demand for CJA services; here the District may be compelled by the Sixth Amendment to purchase legal services, there it may be compelled by the voters to purchase street paving services. The reason for the government’s demand for a service is simply irrelevant to the issue of whether the suppliers of it have restrained trade by collectively refusing to satisfy it except upon their own terms. We therefore conclude, as did the Commission, that the petitioners engaged in a `restraint of trade’ within the meaning of Section 1.” Id., at 281, 856 F.2d, at 235 (footnote omitted). [emphases added]

The Commonwealth of Massachusetts — like the D.C. government in SCTLA — must compete with other consumers of legal services in order to attract assigned counsel.   On the other side of the  marketplace, the lawyers are expected to compete with each other to sell their services, by deciding individually if the fees and terms offered are acceptable (taking into account, for example, “excess capacity”, need for income, idealism, desire for experience and exposure).  It is up to the buyer to decide whether it is getting the amount and quality of legal services that it wants or needs, and whether it is being shortsighted at not.  It is not the right of the sellers to force the buyer to see things their way by using joint boycott tactics.   They may, of course, lawfully join together in lobbying and education efforts. (see this posting and the related comments)


  • Just today, as described in this press release, the Federal Trade Commission issued an antitrust complaint against some “little guys” selling professional services — independent competing physicians in Texas — who were acting together to get better terms from some “big guys” who sought to buy their services — insurers, HMO’s, etc.  (In re North Texas Specialty Physicians, Dkt. No. 9312). 

ANALOGIES

 

It’s human nature that other people’s analogies often seem unpersuasive, but let me leave you with a few examples of situations where one large buyer-consumer offers its terms to a marketplace with many small sellers-providers.  


(1)   The State’s schedule of Medicaid fees are considered too low by physicians across State X.   Dwindling numbers of doctors are willing to accept Medicaid patients.  Due to growing financial distress, the State legislature turns down lobbying efforts by the State Medical Society for increased fees.   At their annual meeting, members of the Medical Society vote to refuse to take Medicaid patients if the State has not approved their higher fee schedule within 30 days.  

 

(2)  Sadsong Prison is by far the largest purchaser of foodstuffs in an isolated, rural New York county.   Due to belt tightening (caused by the public’s lack of interest in the conditions faced by prisoners), the Prison announces that it will pay no more than $2.00 per gallon for milk.   The county’s dairy farmers are incensed, saying they can get $3 or more per gallon elsewhere, but many farmers continue to sell to the Prison.   The Prison Administrator refuses to budge on the price, despite constant complaints by the farmers, who say they must sell locally and might go out of business.   One morning, a majority of dairy farmers in the region meet and agree that they will no longer sell to the Prison for less than $3.   They issue a statement condemning both the Prison and any farmer who crosses their picket line.

 

(3)   Sadsong Prison has also announced that, in order to achieve efficiencies and save money, it will hire staff physicians for primary care of the prisoners, but will continue to purchase specialty medical care on a per case, fee-for-service basis.   Angry general practitioners meet with their colleagues at the 19th Hole club house and persuade the specialists to refuse to deal with the Prison unless it returns to using fee-for-service private practitioners for all of its medical needs.   The specialists go along out of professional courtesy, and also because they fear a loss of referrals from the angry primary care doctors.

As you know, I could go on and on (e.g., a county purchasing garbage collection services, the only newspaper in town contracting out delivery services to adult carriers), but I know that my readers are too quick to need more examples.  It seems clear that antitrust would and should be able to intervene in the above examples to stop a boycott.   I hope it now makes more sense — even to the attorneys involved — that antitrust would and should also condemn any joint refusal to deal by lawyers who want better terms from their State before accepting more assigned cases.

 

6 Comments

  1. While I greatly appreciate the time taken to respond to me, I still have trouble with your analysis, and the twisting of the public policy which does not, in fact, benefit the ordinary citizen in these examples. The most likely result will be decreased services from a dwindling pool and unmet needs in each of your examples as the real world operates.

    One cannot provide a below cost service because the business ceases to exist.

    In fact, true “competition” does not exist in the United States, but rather oligarchic profit sharing, piggishness iand criminality at the highest levels of corporate management, and extermination of independent business people in favor of various sorts of conglomerates who in fact, provide worse products and services at a higher price (not all prices are monetary, after all).

    Deborah Sirotkin Butler, Esq.

    Comment by Deborah Sirotkin Butler, Esq. — September 18, 2003 @ 11:57 pm

  2. While I greatly appreciate the time taken to respond to me, I still have trouble with your analysis, and the twisting of the public policy which does not, in fact, benefit the ordinary citizen in these examples. The most likely result will be decreased services from a dwindling pool and unmet needs in each of your examples as the real world operates.

    One cannot provide a below cost service because the business ceases to exist.

    In fact, true “competition” does not exist in the United States, but rather oligarchic profit sharing, piggishness iand criminality at the highest levels of corporate management, and extermination of independent business people in favor of various sorts of conglomerates who in fact, provide worse products and services at a higher price (not all prices are monetary, after all).

    Deborah Sirotkin Butler, Esq.

    Comment by Deborah Sirotkin Butler, Esq. — September 18, 2003 @ 11:57 pm

  3. Let me see if I get this, Deborah: The world is filled with selfish people and oligarchies, therefore, lawyers who feel underpaid (by the Government, that is the taxpayer) should be able to create their own cartels and coerce the Government (that is, their fellow citizens) into paying them more money. Ditto, for those poor starving doctors who feel underpaid under Medicaid. (Could it be that both professions charge too much to their non-govermental consumers?)
    Most of the “ordinary citizens” you claim to be fighting for are taxpayers, and they and their elected officials get to decide how much assigned counsel are worth per hour, and whether it is worth it to increase the pay in order to get some very hypothetical improvement in quality. Ordinary citizens/taxpayers shouldn’t get squeezed for more money, because some lawyers aren’t enjoying the standard of living they feel should come with their degrees. If the Government finds out that it is offering to pay too little in the marketplace — which is only measured by how many takers it gets when each lawyer makes the decision unilaterally — it will have to pay more. To raise the fee when it is getting all the lawyers it wants, at an acceptable level of quality, would be highly irresponsible to the ordinary citizen who has to pay the bills.
    You guys want your piece of the action — AND you want to feel like do-gooders. Unfortunately, antitrust prosecutors and courts have heard all the self-serving justifications, and have noticed how the bottom line is always that the doctors or lawyers believe everyone else would be much better off if only THEY got paid more money.
    By the way, do you really believe that doctors should be able to form cartels to shakedown HMOs for higher fees? Just who ends up having to pay for those higher premiums? Yep, the ordinary citizen you claim to champion (in premiums or in lesser wages from their employers who foot the bill). Sure, doctors would love it if every insurer paid full price for every procedure or pill ordered by a doctor or wanted by a patient. But, we ordinary-citizen-patients really couldn’t afford that kind of medicine.
    One last question: Is it any more likely that the average boycotting lawyer is driven less by greed than the average boycotting doctor?
    One last thought: I’ll take the results of the marketplace, free from unlawful concerted activity, ANYday, over the results that we’d get if lawyers, doctors, or any other sellers got to get together and choose the prices they think are best for the good of society. Lots of these issues are hard, but this one is easy. (having said all this, after midnight, I’m going to take two weeks off)
    p.s. The Mass. lawyers have a political problem. They need to find political solutions.

    Comment by David Giacalone — September 19, 2003 @ 1:22 am

  4. Let me see if I get this, Deborah: The world is filled with selfish people and oligarchies, therefore, lawyers who feel underpaid (by the Government, that is the taxpayer) should be able to create their own cartels and coerce the Government (that is, their fellow citizens) into paying them more money. Ditto, for those poor starving doctors who feel underpaid under Medicaid. (Could it be that both professions charge too much to their non-govermental consumers?)
    Most of the “ordinary citizens” you claim to be fighting for are taxpayers, and they and their elected officials get to decide how much assigned counsel are worth per hour, and whether it is worth it to increase the pay in order to get some very hypothetical improvement in quality. Ordinary citizens/taxpayers shouldn’t get squeezed for more money, because some lawyers aren’t enjoying the standard of living they feel should come with their degrees. If the Government finds out that it is offering to pay too little in the marketplace — which is only measured by how many takers it gets when each lawyer makes the decision unilaterally — it will have to pay more. To raise the fee when it is getting all the lawyers it wants, at an acceptable level of quality, would be highly irresponsible to the ordinary citizen who has to pay the bills.
    You guys want your piece of the action — AND you want to feel like do-gooders. Unfortunately, antitrust prosecutors and courts have heard all the self-serving justifications, and have noticed how the bottom line is always that the doctors or lawyers believe everyone else would be much better off if only THEY got paid more money.
    By the way, do you really believe that doctors should be able to form cartels to shakedown HMOs for higher fees? Just who ends up having to pay for those higher premiums? Yep, the ordinary citizen you claim to champion (in premiums or in lesser wages from their employers who foot the bill). Sure, doctors would love it if every insurer paid full price for every procedure or pill ordered by a doctor or wanted by a patient. But, we ordinary-citizen-patients really couldn’t afford that kind of medicine.
    One last question: Is it any more likely that the average boycotting lawyer is driven less by greed than the average boycotting doctor?
    One last thought: I’ll take the results of the marketplace, free from unlawful concerted activity, ANYday, over the results that we’d get if lawyers, doctors, or any other sellers got to get together and choose the prices they think are best for the good of society. Lots of these issues are hard, but this one is easy. (having said all this, after midnight, I’m going to take two weeks off)
    p.s. The Mass. lawyers have a political problem. They need to find political solutions.

    Comment by David Giacalone — September 19, 2003 @ 1:22 am

  5. Thank you for the info!

    Comment by Daniel — September 16, 2005 @ 6:35 pm

  6. Thank you for the info!

    Comment by Daniel — September 16, 2005 @ 6:35 pm

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