FTC Charges Attorneys Group in Clark County, Washington, with Price-Fixing

The Federal Trade Commission today announced a proposed consent order settling charges that a group of attorneys for criminal indigent clients in Clark County, Washington, violated the FTC Act by forming a “consortium” through which they collectively demanded higher fees from the county for defending homicide, attempted homicide, persistent offender, and death penalty cases. Lawyers in the group refused to accept certain new cases until their demands for increased fees were met. According to the FTC, this conduct was in all essential respects identical to the boycott by criminal defense attorneys that was found to be per se price-fixing by the U.S. Supreme Court in a 1990 case, Federal Trade Commission v. Superior Court Trial Lawyers Association, 493 U.S. 411. The four attorneys named as respondents in the complaint led the activities undertaken by the Consortium. Under the terms of the proposed order, they are enjoined from engaging in similar conduct in the future.

“The collective negotiation by 43 Clark County attorneys represents straightforward price-fixing that violates the most basic principles of antitrust law,” said Susan Creighton, Director of the FTC’s Bureau of Competition. “The Commission’s action against these lawyers reiterates the Commission’s conviction to pursue such actions against professionals engaging in illegal conduct.”

Background

In Clark County, criminal legal services for indigent defendants are provided by private
lawyers under contract with the county. Their work is separate and independent in all respects. In late 2001, the county entered into contract negotiations with the attorneys who had provided
criminal indigent defense services during the preceding biennial contract period. During the negotiations, the lawyers named in the Commission’s complaint presented the county with a document called the “Indigent Defense Bar Consortium Contract,” commonly referred to as the Consortium Contract. It was signed by 43 of the attorneys who had previously signed contracts with the county to provide felony defense services.

In the Contract, the attorneys stated they had formed a “consortium” and it was their intention that the respondents be authorized to represent the attorneys and negotiate on their behalf in dealing with the county. Further, the Consortium Contract stated the attorneys’ collective demand that the county’s payment methodology be altered and that they be paid significantly more for homicide, attempted homicide, persistent offender, and death penalty cases. In addition, the 43 attorneys, through the Contract, stated they would refuse to take additional case of these types unless the county complied with their demands, and authorized the Consortium to take legal action against any of the 43 lawyers who agreed to provide such services in any way except those provided for in the Contract.

The Commission’s Complaint

According to the Commission’s complaint, after receiving the Consortium Contract, Clark County was forced to agree to a new contract adopting the methodology demanded by the Consortium. This new contract substantially increased the county’s reimbursement rate for each of the case categories specified by the Consortium. Such collective action by the 43 individual attorneys, the FTC contends, was a threat to “refuse to deal” constituting illegal price-fixing in violation of Section 5 of the FTC Act.

The Proposed Consent Order

The proposed consent order will prevent the recurrence of the illegal anticompetitive conduct alleged by the Commission. Under its terms, which were modeled on the remedy sought by the FTC and approved by the U.S. Supreme Court, the respondents are prohibited from entering into or facilitating any agreement between or among attorneys: 1) to negotiate with payors on any attorney’s behalf; 2) to deal, refuse to deal, or to threaten to refuse to deal with payors; 3) that concerns the terms of dealing with any payor; or 4) not to deal individually with any payor.

Other terms of the proposed order reinforce these general prohibitions by enjoining the respondents from facilitating the exchange of any information between attorneys concerning whether, or on what terms, to deal with a payor; enjoining attempts to engage in prohibited conduct; and prohibiting the respondents from inducing anyone else to engage in similar conduct.

Finally, the proposed order contains information detailing the respondents’ rights with regard to this matter and presents record-keeping and compliance requirements. The proposed order will expire in 20 years.

The Commission vote to accept the proposed consent order was 5-0. A summary of the consent order will be published in the Federal Register shortly. The order will be subject to public comment until July 13, 2004, after which the Commission will vote on whether to make it final. Comments can be sent to: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. This case was filed in cooperation with the Office of the Attorney General of the State of Washington.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the Commission’s complaint, consent order, and an analysis to aid public comment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC’s Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published “Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws,” which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

(FTC File No. 031-0155)