EVEN THOUGH THE ANTICOMPETITIVE BEHAVIOR AND market failures addressed in Chapters 4 and 5 largely account for the lack of price competition, they do not sufficiently explain the persistence and pervasiveness of uniform contingency fee pricing. Absent additional factors, we would expect some tort lawyers to compete by advertising below market rates. We would also expect a variety of other market-based solutions to arise that would lead to price competition. In this chapter, I consider the bar's policies to prevent the rise of market mechanisms that would facilitate price competition.

To be sure, all occupational groups – not just lawyers – seek to limit price competition. One of the most common strategies for professional groups is to prohibit business structures that would likely promote price competition under the guise of ethical rules. For example, the American Medical Association (AMA) long maintained that “it was unethical for physicians to join partnerships or other professional relationships with [nonphysicians] unless ownership remained solely in the hands of the licensed physicians.” These restrictions were justified in that they preserved the independent decision-making power of doctors and maintained high standards of medical care. When this rule came under attack in 1975, a federal court of appeals rejected the AMA's justification and found that the restrictions “had the purpose and effect of restraining competition by [nonphysicians], and restricted physicians from developing business structures of their own choice.” Lawyers have an identical anticompetitive rule and justification, which appellate courts have upheld.