1 Emphasis in this paper will be primarily on the Sherman Act, especially section 1. 15 U.S.C. sec. 1 (1970). However, it should be noted that the Federal Trade Commission also has applicable enforcement power under section 5 of the Federal Trade Commission Act, 15 U.S.C. sec. 45 (1970). That section makes illegal “unfair methods of competition.” This provision has been held to cover those acts that conflict with the basic policies of the Sherman and Clayton Acts. FTC v. Brown Shoe Co., 384 U.S. 316 (1966). The Court has recently gone even further in holding that the FTC may prohibit conduct that is an unfair method of competition although it poses no “threat to competition” within the precepts of the antitrust laws. FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244–45 (1972).Google Scholar

2 See Werner Pfennigstorf & Spencer L. Kimball, Legal Service Plans: A Typology, 1976 A.B.F. Res. J. 411. There is now extensive literature on this need and the role of group and prepaid legal services in meeting it. A full listing of these sources will not be attempted here.CrossRefGoogle Scholar

As noted in Pfennigstorf & Kimball, at 461–65, there is a definitional problem in using the term “prepaid” legal services to describe the whole range of plans that generally fit within the scope of this article. Nevertheless, the term prepaid legal services plans will be used throughout for the sake of simplicity.Google Scholar

3 See, e.g., Special Committee on Prepaid Legal Services, Compilation of Reference Materials on Prepaid Legal Services, Chapter on Surveys 1–26 (Chicago: American Bar Association, 1973) [hereinafter cited as ABA Compilation]; Barbara A. Curran & Francis O. Spalding, The Legal Needs of the Public 5–14 (Chicago: American Bar Foundation, 1974); Susan T. Mackenzie, Group Legal Services 4, 16–24 (Key Issues Series-No. 18) (Ithaca: New York State School of Industrial and Labor Relations, 1975); Florian Bartosic & Jules Bernstein, Group Legal Services as a Fringe Benefit: Lawyers for Forgotten Clients Through Collective Bargaining, 59 Va. L. Rev. 410, 417–24 (1973); Preble Stolz, Insurance for Legal Services: A Preliminary Study of Feasibility, 35 U. Chi. L. Rev. 417, 419–20 (1968); Hearings on H.R. 13938 Before the Special Subcomm. on Labor of the House Comm. on Education and Labor, 92d Cong., 2d Sess. 60–87 (1972); John V. Tunney & Jane Lakes Frank, Federal Roles in Lawyer Reform, 27 Stan. L. Rev. 333, 337 (1975).Google Scholar

4 Of course default or pro se appearance is a common occurrence in such situations.Google Scholar

5 See Pfennigstorf & Kimball, supra note 2, at 470–72. There is an analogy here, as well, to the health care field, since some health care is volitional in the same sense, e.g., some dental work and cosmetic surgery. Nevertheless, it appears that the negative aspects of medical treatment act as a brake on consumer use of such services. Where this is not the case (as with routine checkups), health care plans, at least until recently, excluded such care from coverage. See Stolz, supra note 3, at 423–24 n. 24. It has been generally assumed that the legal situation poses these problems of control over volitional use to a somewhat greater extent than in the medical field. See Louis M. Brown, Legal-Cost Insurance, 1952 Ins. L.J. 475; Stolz, supra note 3, at 423–36.Google Scholar

6 The mere adoption of a prepaid plan will probably not reduce costs. However, increase in the volume of business and the possible specialization that this makes possible could have that effect.Google Scholar

7 See Robert D. Eilers, Regulation of Blue Cross and Blue Shield Plans 8–28 (Homewood, Ill.: Richard D. Irwin, 1963).Google Scholar

8 See, e.g., Bartosic & Bernstein, supra note 3, at 440–44; Mackenzie, supra note 3, at 48–52.Google Scholar

Until the 1973 amendment, Act of Aug. 15, 1973, Pub. L. No. 93–95, 87 Stat. 314, to the Labor-Management Relations Act (Taft-Hartley Act) sec. 302(c), 29 U.S.C. sec. 186(c) (1970) (codified at 29 U.S.C. sec. 186(c) (Supp. IV, 1975)), employer contributions to prepaid legal services funds came within the section 302 prohibition against payments, loans, or deliveries of money or other things of value by employers to any employees, group of employees, representatives of employees, or labor organizations. The amendment permits employers to contribute to jointly administered trust funds established for the purpose of “defraying the costs of legal services for employees, their families, and dependents for counsel or plan of their choice.” This change was expected to produce a vas, increase in labor-negotiated plans. This has not yet materialized for a variety of reasons.Google Scholar

A crucial aspect of the problem is posed by the federal income tax consequences to the employer, the fund, and the employee-participant. The employer's contributions would seem to be deductible under Int. Rev. Code sec. 162(a) as ordinary and necessary expenses. The fund may be able to qualify for tax-exempt status under Int; Rev. Code sec. 501(c)(9). The Internal Revenue Service was expected to grant the tax-exempt status, but new regulations have not yet been issued. Under Int. Rev. Code sec. 61(a)(1) the benefits received by participants are gross income to the participant upon receipt of the benefits. In addition, the contributions of an employer to a legal services plan fund may be income to the participant to the extent they exceed any benefits paid out on behalf of the participant. Amendments to Int. Rev. Code secs. 105 and 106 are pending in the 94th Congress to exclude these amounts from the participants' gross income. See John C. Hendricks, Federal Income Tax Consequences of Group Legal Services Plans, 27 Baylor L. Rev. 431 (1975); Note, Prepaid Legal Service Plans-The Grasps of the Internal Revenue Code, 27 Baylor L. Rev. 544 (1975).Google Scholar

9 Justice Department and Other Views on Prepaid Legal Services Plans Get an Airing Before the Tunney Subcommittee, 60 A.B.A.J. 791 (1974) [hereinafter cited as Justice Department and Other Views]; Tunney & Frank, supra note 3; Hearings on Prepaid Legal Services Plans Before the Subcomm. on Representation of Citizen Interests of the Senate Comm. on the Judiciary, 93d Cong., 2d Sess. 146–69 (1974); Thomas Ehrlich & Murray L. Schwartz, Report on Reducing the Costs of Legal Services, prepared for the Subcomm. on Representation of Citizen Interests of the Senate Comm. on the Judiciary, 93d Cong., 2d Sess. (Comm. Print 1974); Hearings on the Effect of Legal Fees on the Adequacy of Representation Before the Subcomm. on Representation of Citizen Interests of the Senate Comm. on the Judiciary, 93d Cong., 1st Sess. (1973).Google Scholar

10 Legal expense insurance was written as early as 1899 by the Physicians' Defense Company of Fort Wayne, Indiana. Automobile-related coverage of legal expenses was offered by automobile clubs in the late 1920s. Many plans also existed to help with employment-related legal matters. See John R. Dunne, Prepaid Legal Services Have Arrived, 4 Hofstra L. Rev. 1, 2–4 (1975); Philip J. Murphy, Buy Now, Receive Later: A Vision of the Future, 11 Trial Mag. 12 (March/April 1975).Google Scholar

11 Werner Pfennigstorf, Legal Expense Insurance: The European Experience in Financing Legal Services 13–22 (Chicago: American Bar Foundation, 1975), reprinted in part in Werner Pfennigstorf, Legal Expense Insurance, 23 Am. J. Comp. L. 451 (1975).Google Scholar

12 Murphy, supra note 10; Stolz, supra note 3, at 417–22; Revised Handbook on Prepaid Legal Services: Papers and Documents Assembled by the Special Committee on Prepaid Legal Services, April 1972 (Chicago: American Bar Association, 1972). See generally Pfennigstorf & Kimball, supra note 2, at 454–509.Google Scholar

13 Pfennigstorf & Kimball, supra note 2, at 454–509, gives an analysis and list of the significant existing or proposed plans.Google Scholar

14 There are many ways to classify the array of plans presently proposed or operating. The simple method used here is sufficient for purposes of drawing the distinctions necessary for the later antitrust analysis. For a much more comprehensive categorization see id.Google Scholar

15 See Dunne, supra note 10, at 22–32; Garrick F. Cole, Freedom of Choice and Group Legal Services, 9 Suffolk U.L. Rev. 671 (1975); Bartosic & Bernstein, supra note 3, at 427–33; Pfennigstorf & Kimball, supra note 2, at 465–69; Note, State Prohibition of Closed Panels-The Constitutional Question, 27 Baylor L. Rev. 590 (1975).Google Scholar

16 See Claude C. Lilly, Legal Services for the Middle Market 123–88 (Cincinnati: National Underwriter Co., 1974); Howland Keller, The Insurance Industry's Role and the Role of State Insurance Commissioners in Pre-Paid Legal Plans 2d at 161, Commercial Law & Practice Course Handbook Series No. 21 (New York: Practising Law Institute, 1974) [hereinafter cited as Pre-Paid Legal Plans 2d]; Pfennigstorf & Kimball, supra note 2, at 487–89; Forrest A. Norman, Prepaid Legal Services, 24 Fed. of Ins. Counsel Q. 30, 40–43 (Spring 1974); ABA Compilation, supra note 3, Chapter on Plans at 49–86; Transcript of Proceedings, 5th National Conference on Prepaid Legal Services, New Orleans, La., May 8–10, 1975, at 34–62 (Chicago: American Bar Association, 1975) thereinafter cited as ABA Proceedings 19751; Richard L. Ismond, Insurance Implications and Insurance Industry Activity in Group Legal Services, 63 Ill. B.J. 360 (1975).Google Scholar

17 See, e.g., F. Raymond Marks, Robert Paul Hallauer, & Richard R. Clifton, The Shreveport Plan: An Experiment in the Delivery of Legal Services (Chicago: American Bar Foundation, 1974); Henry A. Politz, The Shreveport Plan: An “Open Panel” Model, 4 Toledo L. Rev. 433 (1973), and his Prepaid Legal Services: The Public Interest, 27 Baylor L. Rev. 405 (1975); Note, The Shreveport and Columbus Plans of Prepaid Legal Services-An Analysis of Plans Presently in Operation, 27 Baylor L. Rev. 485 (1975); Revised Handbook, supra note 12, at 81–269 (1972).Google Scholar

18 It differs somewhat in its organization and its approach to risk carrying. See Pfennigstorf & Kimball, supra note 2, at 496; Transcript of Proceedings, National Conference on Prepaid Legal Services & Beyond, Boston, Mass., May 2–4, 1974, at 32–39 (Chicago: American Bar Association, 1974) [hereinafter cited as ABA Proceedings 19741; Joseph Novak, How the Utah Bar Prepaid Legal Services Plan Operates, 60 A.B.A.J. 1081 (1974).Google Scholar

19 See Transcript of Proceedings, National Conference on the Future of Prepaid Legal Services, San Francisco, Cal., Dec. 7–8, 1973, at 7–10 (Chicago: American Bar Association, 1973) [hereinafter cited as ABA Proceedings 19731; Peter F. Sloss, The California Lawyers' Services Plan, in Pre-Paid Legal Plans 2d, supra note 16, at 27–34.Google Scholar

20 In the process of planning for the California Lawyers' Services Plan, supra note 19, the bar committee sought antitrust clearance from the Department of Justice. The Department refused to grant clearance because there was concern that the plan might involve price fixing and also that certain provisions in the Rules of Professional Responsibility of the State Bar of California would give the plan competitive advantages over other plans. The exchange of letters between Peter F. Sloss, representing the California bar group, and Ass't Att'y Gen. Kauper is printed in BNA, 1974 Antitrust & Trade Reg. Rep., Aug. 20, 1974, at D1. Ass't Att'y Gen. Kauper's'response can also be found in Pre-Paid Legal Plans 2d, supra note 16, at 123. See Joe Sims, Antitrust Considerations, ABA Proceedings 1975, supra note 16, at 147. Prior to that time little attention had been given to the potential antitrust problems associated with prepaid legal services plans. Since then, and especially after the decision in Goldfarb v. Virginia State Bar Ass'n, 421 U.S. 773 (1975) (see note > 77 infra), the topic has received at least passing attention in any comprehensive discussion of prepaid plans. See, e.g., Frederick G. Fisher, Jr., & Timothy H. Gailey, Antitrust Implications of Prepaid Legal Services in Texas, 27 Baylor L. Rev. 451 (1975); Dunne, supra note 10, at 33–35; Peter F. Sloss, Antitrust Problems in Pre-Paid Legal Plans, in Pre-Paid Legal Plans 2d, supra note 16, at 119–60; Note, Prepaid Legal Services, Ethical Codes, and the Snares of Antitrust, 26 Syr. L. Rev. 754 (1975).+77+infra),+the+topic+has+received+at+least+passing+attention+in+any+comprehensive+discussion+of+prepaid+plans.+See,+e.g.,+Frederick+G.+Fisher,+Jr.,+&+Timothy+H.+Gailey,+Antitrust+Implications+of+Prepaid+Legal+Services+in+Texas,+27+Baylor+L.+Rev.+451+(1975);+Dunne,+supra+note+10,+at+33–35;+Peter+F.+Sloss,+Antitrust+Problems+in+Pre-Paid+Legal+Plans,+in+Pre-Paid+Legal+Plans+2d,+supra+note+16,+at+119–60;+Note,+Prepaid+Legal+Services,+Ethical+Codes,+and+the+Snares+of+Antitrust,+26+Syr.+L.+Rev.+754+(1975).>Google Scholar

21 This kind of provision raises the maximum price-fixing issue discussed below.Google Scholar

22 See, e.g., Eilers, supra note 7, at 203–9.Google Scholar

23 See F. Jay Lutz, State Bar of Oregon, ABA Proceedings 1975, supra note 16, at 19–27; Danny R. Jones, Midwest Mutual and Prepaid Risk Insurance Companies, id. at 50–56. New Mexico and Arizona have embarked upon similar plans. See Pfennigstorf & Kimball, supra note 2, at 507–8.Google Scholar

24 See ABA Compilation, supra note 3, Chapter on Plans 99–103; Richard Scupi: The Laborers' Washington Council Plan, in Pre-Paid Legal Plans 2d, supra note 16, at 69–118; Richard Scupi, Washington District Council, Laborers', in ABA Proceedings 1975, supra note 16, at 82–87.Google Scholar

25 See ABA Compilation, supra note 3, Chapter on Plans 91–95; David Clayman, The Columbus, Ohio, Laborers' Plan, in Pre-Paid Legal Plans 2d, supra note 16, at 35–67, and his Laborers' Local 423, Columbus, Ohio, in ABA Proceedings 1975, supra note 16, at 71–81; Note, supra note 17.Google Scholar

26 See, e.g., ABA Compilation, supra note 3, Chapter on Plans 49–86; ABA Proceedings 1975, supra note 16, at 34–62; ABA Proceedings 1973, supra note 14, at 24–35; Howland Keller, The Insurance Industry's Role and the State Commissioners, in Pre-Paid Legal Plans 2d, supra note 16, at 161–223.Google Scholar

27 See Jones, ABA Proceedings 1975, supra note 16, at 50–56.Google Scholar

28 See note 23 supra.Google Scholar

29 Sherman Act, 15 U.S.C. sec. 1 (1970).CrossRefGoogle Scholar

30 See, e.g., United States v. Oregon State Medical Soc'y, 343 U.S. 326 (1952); Goldfarb v. Virginia State Bar, 497 F. 2d 1 (4th Cir. 1974), rev'd, 421 U.S. 773 (1975); Elizabeth Hosp., Inc. v. Richardson, 269 F. 2d 167 (8th Cir.), cert. denied, 361 U.S. 884 (1959); Riggall v. Washington County Medical Soc'y, 249 F. 2d 266 (8th Cir. 1957), cert. denied, 355 U.S. 954 (1958). See generally Note, supra note 20; Note, Minimum Fee Schedules as Price Fixing: A Per Se Violation of the Sherman Act, 22 Am. U.L. Rev. 439, 448–50 (1973).Google Scholar

31 421 U.S. 773, 783–85 (1975).Google Scholar

32 497 F. 2d 1, 18–19 (4th Cir. 1974).Google Scholar

33 421 U.S. 773, 783–85 (1975).Google Scholar

34 The Supreme Court has held that the interstate commerce language was intended to be coextensive with the constitutional power under the Commerce Clause. E.g., United States v. Women's Sportswear Mfrs. Ass'n, 336 U.S. 460 (1949); Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219 (1948); United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533 (1944); Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 194–95 (1974) (dictum). For the Court's view on the reach of the Commerce Clause of the Constitution, see, e.g., Wickard v. Filburn, 317 U.S. 111 (1942).Google Scholar

35 355 F. Supp. 491, 494, 497 (E.D. Va. 1973).Google Scholar

36 421 U.S. at 785.Google Scholar

37 15 U.S.C. secs. 12–27 (1970).Google Scholar

38 419 U.S. 186 (1974). See also United States v. American Bldg. Maintenance Indus., 422 U.S. 271 (1975).Google Scholar

39 Goldfarb v. Virginia State Bar, 421 U.S. 773, 788 (1975).Google Scholar

40 497 F. 2d 1, 15 (4th Cir. 1974).Google Scholar

41 The cases are collected and discussed in Note, supra note 20; Note, The Applicability of the Sherman Act to Legal Practice and Other “Non-commercial” Activities, 82 Yale L.J. 313, 314–18 (1972); James E. Coleman, Jr., The Learned Professions, 33 A.B.A. Antitrust L.J. 48 (1967); United States v. Oregon State Bar, 385 F. Supp. 507, 513–17 (D. Ore. 1974) (the Court, after extensively analyzing the precedents, decides against any such exemption). But see In re Estate of Freeman, 34 N.Y. 2d 1, 311 N.E. 2d 480, 355 N.Y.S. 2d 336 (1974) (legal profession exempt under New York antitrust law).Google Scholar

42 421 U.S. at 786–87 (citing United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 350–51 (1963); California v. FPC, 369 U.S. 482, 485 (1962)).Google Scholar

43 421 U.S. at 787 (citing American Medical Ass'n v. United States, 317 U.S. 519 (1943); Radovich v. National Football League, 352 U.S. 445 (1957)).Google Scholar

44 Sherman Act, 15 U.S.C. sec. 1 (1970).Google Scholar

45 See, e.g., United States v. National Ass'n of Real Estate Bds., 339 U.S. 485, 491–92 (1950); American Medical Ass'n v. United States, 317 U.S. 519 (1943); United States v. National Soc'y of Professional Eng'rs, 389 F. Supp. 1193, 1197–99 (D.D.C. 1974), vacated and remanded, 422 U.S. 1031, on remand, 404 F. Supp. 457 (D.D.C. 1975); Northern Cal. Pharmaceutical Ass'n v. United States, 306 F. 2d 379 (9th Cir.), cert. denied, 371 U.S. 862 (1962).Google Scholar

46 421 U.S. at 786.Google Scholar

47 421 U.S. at 787.Google Scholar

48 421 U.S. at 787–88 n.17:Google Scholar

… It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts which originated in other areas. The public service aspect, and other features of the professions, may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently. We intimate no view on any other situation than the one with which we are confronted today.Google Scholar

49 See, e.g., American Medical Ass'n v. United States, 317 U.S. 519 (1943); Northern Cal. Pharmaceutical Ass'n v. United States, 306 F. 2d 379 (9th Cit.), cert. denied, 371 U.S. 862 (1962); Utah Pharmaceutical Ass'n v. United States, 201 F. Supp. 29 (D. Utah 1962), aff'd per curiam, 371 U.S. 24 (1962).Google Scholar

50 317 U.S. 341 (1943).Google Scholar

51 Id. at 350–52.Google Scholar

52 See, e.g., United States v. Oregon State Bar, 385 F. Supp. 507 (D. Ore. 1974); George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 424 F. 2d 25 (1st Cir.), cert. denied, 400 U.S. 850 (1970); Asheville Tobacco Bd. of Trade, Inc. v. FTC, 263 F. 2d 502 (4th Cir. 1959); Woods Exploration & Producing Co. v. Aluminum Co. of America, 438 F. 2d 1286 (5th Cir. 1971), cert. denied, 404 U.S. 1047 (1972); Marnell v. United Parcel Serv. of America, Inc., 260 F. Supp. 391 (N.D. Cal. 1966); Paul E. Slater, Antitrust and Government Action: A Formula for Narrowing Parker v. Brown, 69 Nw. U.L. Rev. 71, 87–90 (1974). The Parker case itself stated that “… a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring their action is lawful ….” 317 U.S. at 351; cf Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 706–7 (1962).Google Scholar

53 See, e.g., Allstate Ins. Co. v. Lanier, 361 F. 2d 870 (4th Cir.), cert. denied, 385 U.S. 930 (1966); Washington Gas Light Co. v. Virginia Elec. & Power Co., 438 F. 2d 248 (4th Cir. 1971); Gas Light Co. v. Georgia Power Co., 440 F. 2d 1135 (5th Cir. 1971), cert. denied, 404 U.S. 1062 (1972).Google Scholar

54 The long line of cases and the varying approaches are collected and analyzed in Slater, supra note 52.Google Scholar

55 See, e.g., Slater, supra note 52; Paul R. Verkuil, State Action, Due Process and Anti-trust: Reflections on Parker v. Brown, 75 Colum. L. Rev. 328 (1975); Milton Handler, Twenty-Fourth Annual Antitrust Review, 72 Colum. L. Rev. 1, 4–18 (1972); Note, Federal Antitrust Policy v. State Anticompetitive Regulation: A Means Scrutiny Limit for Parker v. Brown, 1975 Utah L. Rev. 179.Google Scholar

56 Goldfarb v. Virginia State Bar, 421 U.S. 773, 788–92 (1975). The approach of the Court had been presaged by United States v. Oregon State Bar, 385 F. Supp. 507 (D. Ore. 1974), also involving an antitrust attack upon minimum fee schedules.Google Scholar

57 421 U.S. at 790.Google Scholar

58 The Court's forceful handling of this issue is worth quoting directly:Google Scholar

The threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign …. Here we need not inquire further into the state-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent …. [A]lthough the Supreme Court's ethical codes mention advisory fee schedules they do not direct either respondent to supply them, or require the type of price floor which arose from respondents' activities. Although the State Bar apparently has been granted the power to issue ethical opinions, there is no indication in this record that the Virginia Supreme Court approves the opinions. Respondents' arguments, at most, constitute the contention that their activities complemented the objective of the ethical codes. In our view that is not state action for Sherman Act purposes. It is not enough that, as the County Bar puts it, anticompetitive conduct is “prompted” by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign.Google Scholar

Id. at 790–91.Google Scholar

59 See, e.g., Washington Gas Light Co. v. Virginia Elec. & Power Co., 438 F. 2d 248, 251–52 (4th Cir. 1971); Verkuil, supra note 55, at 338, 352–54; Slater, supra note 52, at 94 n.121.Google Scholar

60 This test has been most concisely stated in the Fourth Circuit Court opinion in the Goldfarb case itself. Goldfarb v. Virginia State Bar, 497 F. 2d 1, 6 (4th Cir. 1974), rev'd, 421 U.S. 773 (1975). The application there, however, has been subjected to criticism. See Verkuil, supra note 55, at 352–54; United States v. Oregon State Bar, 385 F. Supp. 507, 512–13 (D. Ore. 1974).Google Scholar

61 Parker v. Brown, 317 U.S. 341, 352 (1943).Google Scholar

62 See, e.g., Allstate Ins. Co. v. Lanier, 361 F. 2d 870 (4th Cir.), cert. denied, 385 U.S. 930 (1966); E. W. Wiggins Airways, Inc. v. Massachusetts Port Authority, 362 F. 2d 52 (1st Cir.), cert. denied, 385 U.S. 947 (1966); Washington Gas Light Co. v. Virginia Elec. & Power Co., 438 F. 2d 248 (4th Cir. 1971); Gas Light Co. v. Georgia Power Co., 440 F. 2d 1135 (5th Cir. 1971), cert. denied, 404 U.S. 1062 (1972); Travelers Ins. Co. v. Blue Cross, 298 F. Supp. 1109 (W.D. Pa. 1969); Comment, Whitten v. Paddock: The Sherman Act and the “Government Action” Immunity Reconsidered, 71 Colum. L. Rev. 140 (1971).Google Scholar

63 See, e.g., Asheville Tobacco Bd. of Trade, Inc. v. FTC, 263 F. 2d 502, 509–10 (4th Cir. 1959); Bale v. Glasgow Tobacco Bd. of Trade, Inc., 339 F. 2d 281 (6th Cir. 1964); Travelers Ins. Co. v. Blue Cross, 298 F. Supp. 1109 (W.D. Pa. 1969); Gas Light Co. v. Georgia Power Co., 440 F. 2d 1135 (5th Cir. 1971), cert. denied, 404 U.S. 1062 (1972); United States v. Oregon State Bar, 385 F. Supp. 507 (D. Ore. 1974).Google Scholar

64 There is, however, a close relationship between the Parker v. Brown state action concept and the exemption accorded by the McCarran-Ferguson Act, to be discussed in detail subsequently. If a prepaid legal services plan qualifies as the business of insurance and if it is subjected to state insurance regulation, then the McCarran-Ferguson Act exemption would apply irrespective of the Parker v. Brown doctrine. However, the state insurance regulation would also arguably provide the necessary state action for the Parker v. Brown doctrine. See Allstate Ins. Co. v. Lanier, 361 F. 2d 870 (4th Cir. 1966), for a discussion of this interrelationship.Google Scholar

65 The essential concerns with vertical arrangements are that they might foreclose competitors from a significant share of the market, reducing consumer choice, and that they might increase entry barriers to potential competitors.Google Scholar

66 See, e.g., Lewis Bernstein, Chief, Special Litigation Section, Antitrust Division, U.S. Dep't of Justice, Antitrust Considerations in Prepaid Legal Plans, ABA Proceedings 1973, supra note 19, at 139, 147–55. But see Fisher & Gailey, supra note 20, at 462. The group sponsoring the plan may, of course, as the consumer, set a fee that it is willing to pay and invite lawyers to enter into a contract with it for the services at that fee.Google Scholar

67 As the market power of the organization becomes greater, the risk of an antitrust action increases, as witness the potential antitrust challenge currently pending in the Federal Trade Commission against the Blue Cross-Blue Shield organization. A related matter, however, is the potential exemption from antitrust coverage contained in the McCarran-Ferguson Act, to be discussed in detail subsequently.Google Scholar

68 Section 1 of the Sherman Act only applies if there is a “contract, combination or conspiracy,” the agreement requirement. See generally Donald F. Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusal to Deal, 75 Harv. L. Rev. 655 (1962).Google Scholar

69 See Testimony of Bruce B. Wilson, Acting Ass't Att'y Gen., Antitrust Division, U.S. Dep't of Justice, Hearings Before the Subcomm. on Representation of Citizen Interests of the Senate Comm. on the Judiciary, 93d Cong., 2d Sess. 94–108 (May 14, 1974); Note, Minimum Fee Schedules as Price Fixing, supra note 30, at 439.Google Scholar

70 United States v. Container Corp. of America, 393 U.S. 333 (1969); United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940); James A. Rahl, Price Competition and the Price Fixing Rule–Preface and Perspective, 57 Nw. U.L. Rev. 137 (1962); Comment, The Per Se Illegality of Price-Fixing-Sans Power, Purpose, or Effect, 19 U. Chi. L. Rev. 837 (1952).Google Scholar

71 This situation is beginning to correct itself as actuarial data from operating plans is starting to be reported.Google Scholar

72 See note 5 supra and accompanying text.Google Scholar

73 Blame for the increased cost of health care is attributed in part to the prevalence of health care insurance. There is concern that the same pattern may develop in legal costs if legal insurance becomes common. See Pfennigstorf & Kimball, supra note 2, at 44243; Garrick F. Cole, An Act to Regulate Group Legal Service Plans, 11 Harv. J. Legis. 68, 101–2 (1973) (Preliminary Draft published as Group Legal Services: The Need for an Approach to Regulation, Supplement to ABA Compilation, supra note 3). There has been a long tradition in the legal profession to adjust fees in appropriate cases depending on the clieht's ability to pay. This is reflected in the Code of Professional Responsibility Canon 2 and Ethical Considerations EC2–17 to EC2–25. See also the experience reported in Marks, Hallauer, & Clifton, supra note 17, at 27–30. As ability to pay increases with prepaid plans, it can be expected that fees will increase.Google Scholar

74 See Pfennigstorf & Kimball, supra note 2, at 431–34.Google Scholar

75 See authorities cited, supra note 3.Google Scholar

76 The per se rule in price fixing has come to mean that the anticompetitive consequences of such arrangements will be presumed. Thus a showing that the agreement was ineffective because other competitive forces were present is generally irrelevant. See Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225 n.59 (1940); Comment, supra note 70, at 857–64.Google Scholar

77 Goldfarb v. Virginia State Bar, 421 U.S. 773, 781–83 (1975), held a “suggested” minimum fee schedule illegal per se in a factual context in which apparently all or most lawyers in the relevant market were adhering to it. The Court stated a suggested schedule might be acceptable if it were only used for advisory purposes and not adhered to. But see United States v. Container Corp. of America, 393 U.S. 333 (1969). See also United States v. Oregon State Bar, 385 F. Supp. 507 (D. Ore. 1974). See generally Note, supra note 30, at 44048; Richard J. Arnould & Robert N. Corley, Fee Schedules Should be Abolished, 57 A.B.A.J. 655 (1971); Hearings on the Effect of Legal Fees on the Adequacy of Representation Before the Subcomm. on Representation of Citizen Interests of the Senate Comm. on the Judiciary, 93d Cong., 1st Sess. passim (1973).Google Scholar

78 See Correspondence between Peter Sloss and Thomas Kauper, Ass't Att'y Gen., Anti-trust Division, U.S. Dept. of Justice, supra note 20; Sims, ABA Proceedings 1975, supra note 16, at 147–55; Bernstein, ABA Proceedings 1973, supra note 19, at 139–55.Google Scholar

79 The ingredients of a classic per se price-fixing violation are all present: an agreement among competitors that they will all charge the same price for a given product.Google Scholar

80 See, e.g., United States v. Container Corp. of America, 393 U.S. 333 (1969); United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940); Plymouth Dealers' Ass'n v. United States, 279 F. 2d 128 (9th Cir. 1960); Note, supra note 30; Note, A Critical Analysis of Bar Association Minimum Fee Schedules, 85 Harv. L. Rev. 971 (1972).Google Scholar

81 310 U.S. 150 (1940).Google Scholar

82 Id. at 221–23.Google Scholar

83 See Sims, ABA Proceedings 1975, supra note 16, at 147, 155; Bernstein, ABA Proceedings 1973, supra note 19, at 153–54.Google Scholar

84 Since agreements to fix price that would not have any impact upon price are usually not entered into, very few cases have presented this problem directly. As the per se rule has developed, however, it is assumed that protecting innocuous agreements is not terribly important and thus power to have an anticompetitive effect does not have to be proven to establish the per se violation. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225 n.59 (1940); Comment, supra note 70. This approach is criticized in certain situations in Robert H. Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division, 74 Yale L.J. 775 (1965), 75 Yale L.J. 373 (1966).Google Scholar

85 See, e.g., Rahl, supra note 70, at 146–47.Google Scholar

86 See generally Bork, supra note 84 (pp. 384–87 are particularly on point); Rahl, supra note 70, at 143–48.Google Scholar

87 See, e.g., United States v. National Ass'n of Real Estate Bds., 339 U.S. 485 (1950); United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940); United States v. Trenton Potteries Co., 273 U.S. 392 (1927); United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290 (1897); United States v. Addyston Pipe & Steel Co., 85 Fed. 271 (6th Cir. 1898), aff'd, 175 U.S. 211 (1899).Google Scholar

88 See authorities cited, supra note 87.Google Scholar

89 See, e.g., Board of Trade of the City of Chicago v. United States, 246 U.S. 231 (1918); United States v. Columbia Pictures Corp., 189 F. Supp. 153 (S.D.N.Y. 1960); United States v. Morgan, 118 F. Supp. 621 (S.D.N.Y. 1953).Google Scholar

90 See United States v. Columbia Pictures Corp., 189 F. Supp. 153 (S.D.N.Y. 1960); United States v. Morgan, 118 F. Supp. 621 (S.D.N.Y. 1953); Robert Pitofsky, Joint Ventures Under the Antitrust Laws: Some Reflections on the Significance of Penn-Olin, 82 Harv. L. Rev. 1007, 1045–49 (1969).Google Scholar

91 Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598 (1951). The term “joint venture” has no clear meaning. It is used generally to describe any agreement among entrepreneurs, short of actual consolidation, to pool resources or efforts to accomplish a common goal.Google Scholar

92 See Bernstein, ABA Proceedings 1973, supra note 19, at 148. See generally Pitofsky, supra note 90.Google Scholar

93 See p. 878 supra.Google Scholar

94 The client has the incentive to save benefits to cover any future legal problems that might arise as well as the incentive to avoid any fee in excess of the benefits. The lawyer has some incentive in keeping the fee below the maximum benefits allowable to avoid the collection problems that arise in seeking the excess from the client. In addition, on the assumption of competition, the lawyer will be bidding for the work against other lawyers and will only get the work if the price (adjusted for any relevant quality considerations) is less than that of his competitors. This assumes sufficient incentive and the ability to price shop.Google Scholar

95 Several operating and proposed plans include such provisions. See, e.g., the Oregon plan and the California plan.Google Scholar

96 Sims, ABA Proceedings 1975, supra note 16, at 154–55; Bernstein, ABA Proceedings 1973, supra note 19, at 145–47.Google Scholar

97 Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213 (1951); Albrecht v. Herald Co., 390 U.S. 145, 152–53 (1968); see American Tobacco Co. v. United States, 328 U.S. 781 (1946); cf. Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219 (1948).Google Scholar

98 Id. The American Tobacco Case is an exception. The Court found a horizontal conspiracy to lower prices to drive out competitors. The case was essentially decided on a section 2 monopoly theory. Thus, the case is distinguishable both on its facts and theory of decision.Google Scholar

99 See Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213 (1951); Albrecht v. Herald Co., 390 U.S. 145, 152–53 (1968); Note, Albrecht v. Herald Co., 390 U.S. 145 (1968)-Resale Price Fixing, 63 Nw. U.L. Rev. 862, 864 (1969); Comment, 10 B.C. Ind. & Corn. L. Rev. 208, 214–16 (1968); Comment, supra note 70, at 843–48. Compare Comment, Maximum Price Fixing: A Per Se Violation of the Sherman Act, 1969 Law & Social Order 476, 478–83 (1970).Google Scholar

100 Bork, supra note 84, at 464–65 (1966). (Professor Bork doubts the validity of the argument in some situations at least.)Google Scholar

101 Albrecht v. Herald Co., 390 U.S. 145, 153 (1968).Google Scholar

102 Although habitual failure to adhere to minimum fee schedules has been subject in the past to disciplinary sanctions by the bar at both the national and local levels (Note, Minimum Fee Schedules, supra note 30, at 440–41), the logical effect of Goldfarb will be the elimination of compulsory adherence to minimum fee schedules. Indeed, many bar associations had eliminated such fee schedules anyway.Google Scholar

103 Cf. Letter from Thomas E. Kauper to Peter F. Sloss, Aug. 5, 1974, supra note 20; Sims, ABA Proceedings 1975, supra note 16, at 155; Bernstein, ABA Proceedings 1973, supra note 19, at 142, 144.Google Scholar

104 See United Trans. Union v. State Bar, 401 U.S. 576 (1971); United Mine Workers of America, Dist. 12 v. Illinois State Bar Ass'n, 389 U.S. 217 (1967); Brotherhood of R.R. Trainmen v. Virginia, 377 U.S. 1 (1964); N.A.A.C.P. v. Button, 371 U.S. 415 (1963); Note, Group Legal Services and the Organized Bar, 10 Colum. J. Law & Soc. Probs. 228, 234–46 (1974).Google Scholar

105 See authorities cited, supra note 104; Peter L. Zimroth, Group Legal Services and the Constitution, 76 Yale L.J. 966, 968–82 (1967); Comment, Group Legal Services, The Ethical Evolution, 27 Baylor L. Rev. 527, 527–31 (1975); Note, Group Legal Services: A Blessing in Disguise for the Legal Profession, 58 Iowa L. Rev. 174, 180–88 (1972).Google Scholar

106 See authorities cited, supra notes 104 and 105.Google Scholar

107 See Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961); Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959); Fashion Originators' Guild of America, Inc. v. FTC, 312 U.S. 457 (1941); cf. Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).Google Scholar

108 See, e.g., Silver v. New York Stock Exch., 373 U.S. 341 (1963); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961); Fashion Originators' Guild of America, Inc. v. FTC, 312 U.S. 457 (1941).Google Scholar

109 See, e.g., Goldfarb v. Virginia State Bar, 421 U.S. 773, 792–93 (1975) (dictum); Berntein, ABA Proceedings 1973, supra note 19, at 140–41; Address by Thomas E. Kauper, Ass't Att'y Gen., 60 A.B.A.J. 1411 (1974).Google Scholar

110 See, e.g., ABA Canons of Professional Ethics, Canons 35 & 47; California State Bar Committee on Group Legal Services, Group Legal Services, 39 Cal. St. B.J. 690–701 (1964); Zimroth, supra note 105, at 968.Google Scholar

111 See, e.g., Hospital Credit Exchange, Inc. v. Shapiro, 186 Misc. 658, 59 N.Y.S. 2d 812 (1946); People ex rel. Courtney v. Association of Real Estate Taxpayers, 354 Ill. 102, 187 N.E. 823 (1933); Rhode Island Bar Ass'n v. Automobile Serv. Ass'n, 55 R.I. 122, 179 A. 139 (1935); Automobile Club of Missouri v. Hoffmeister, 338 S.W. 2d 348 (Mo. Ct. App. 1960); People ex rel. Chicago Bar Ass'n v. Motorists Ass'n, 354 Ill. 595, 188 N.E. 827 (1933); Zimroth, supra note 105, at 971–73; Fisher & Gailey, supra note 20, at 452–54.Google Scholar

112 See notes 104–6 supra.Google Scholar

113 ABA Code of Professional Responsibility, DR 2–103 (D)(5), at 25 (Final Draft 1969) (adopted Aug. 12, 1969).Google Scholar

114 Significantly, Iowa (and perhaps some other states) omitted DR 2–103(D)(5) in its adoption of the Code of Professional Responsibility leaving the situation ambiguous and susceptible to various interpretations regarding the status of different kinds of plans. Although there have been no interpretive opinions by the Iowa Supreme Court, the general view is that the omission permits greater leeway for such plans. See Iowa Code of Professional Responsibility for Lawyers, DR 2–103, at 8–9 (adopted Oct. 4, 1971).Google Scholar

115 See Murphy, supra note 10, at 12–13; Cullen Smith, Reflections on the Ethical Development of Prepaid Legal Services, 27 Baylor L. Rev. 427 (1975); C. E. Downey, Killing Off the Competition? 5 Juris Doctor 29 (October 1975).Google Scholar

116 See ABA Code of Professional Responsibility, DR 2–101 to DR 2–105 (as amended February 1975). A discussion draft of amendments to the Code of Professional Responsibility that would permit restricted advertising by lawyers was unveiled at a national conference on lawyer advertising sponsored by the ABA in Chicago on Dec. 6, 1975. Legal Profession Is Considering Code Amendments to Permit Restricted Advertising by Lawyers, 62 A.B.A.J. 53 (1976). Recently, the ABA delegates at the 1976 midyear meeting voted on these amendments, approving display ads in telephone directory Yellow Pages. The new rules permit a limited range of information to be displayed, including a lawyer's office hours and field of concentration, the names of regular clients, and whether credit cards can be used for payment. However, a proposal to allow lawyers to provide information for directories published by “bona fide consumer organizations” was voted down. In addition, although the new rules would permit the lawyer to state in the advertisement the fee for an “initial consultation,” the Yellow Pages do not allow such price quotations in their ads. The amendments proposed by the ABA leadership would have gone somewhat farther but its effort substantially failed. See N.Y. Times, Feb. 18, 1976, at 13, col. 1.Google Scholar

117 See Dunne, supra note 8, at 28–31; Comment, supra note 105, at 537–38.Google Scholar

118 See Justice Department Continues Its Contentions that the Houston Amendments Raise Serious Antitrust Problems, 60 A.B.A.J. 1410, 1411–12 (1974) [hereinafter cited as Justice Department Continues Its Contentions]; Note, supra note 20, at 7–58.Google Scholar

119 See, e.g., Smith, supra note 115, at 429; Justice Department Continues Its Contentions, supra note 118; Sims, ABA Proceedings 1975, supra note 16, at 150–51.Google Scholar

120 See authorities cited, supra note 119; Justice Department and Other Views, supra note 9; cf. Letter from Thomas E. Kauper to Peter F. Sloss, supra note 20.Google Scholar

121 See Rules of Professional Conduct of the State Bar of California, Rule 2–104 (effective Jan. 1, 1975), Cal. Bus. & Prof. Code foil. sec. 6076 (West Supp. 1976).Google Scholar

122 ABA Code of Professional Responsibility DR 2–103(D)(4) (as amended Feb. 1975).Google Scholar

123 Id DR 2–103(D)(4)(a).Google Scholar

124 See United States v. Gasoline Retailers Ass'n, 285 F. 2d 688, 691 (7th Cir. 1961).Google Scholar

125 See Goldfarb v. Virginia State Bar, 421 U.S. 773, 786–87 (1975); United States v. National Soc'y of Professional Eng'rs, 389 F. Supp. 1193, 1197–98 (D.D.C. 1974), vacated and remanded, 422 U.S. 1031, on remand, 404 F. Supp. 457 (D.D.C. 1975); United States v. Oregon State Bar, 385 F. Supp. 507, 516 (D. Ore. 1974); cf. Northern Cal. Pharmaceutical Ass'n v. United States, 306 F. 2d 379, 385–86 (9th Cir.), cert. denied, 371 U.S. 862 (1962); United States v. National Ass'n of Real Estate Bds., 339 U.S. 485, 489–92 (1950).Google Scholar

126 Goldfarb v. Virginia State Bar, 421 U.S. 773, 792–93 (1975).Google Scholar

127 ABA Code of Professional Responsibility EC 2–9 (1975).Google Scholar

128 See, e.g., Zimroth, supra note 105, at 977–82; Comment, A Critical Analysis of Rules Against Solicitation by Lawyers, 25 U. Chi. L. Rev. 674 (1958); Note, Advertising, Solicitation and the Profession's Duty to Make Legal Counsel Available, 81 Yale L.J. 1181, 1181–91 (1972).Google Scholar

129 Remarks by Lewis Bernstein prepared for the National Conference of Bar Presidents, Feb. 1, 1974, in Pre-Paid Legal Plans 2d, supra note 16, at 143.Google Scholar

130 See generally Cole, supra note 15; Tunney & Frank, supra note 3; Note, Group Legal Services and the Organized Bar, supra note 104.Google Scholar

131 Several cases have recently been brought to test the advertising restrictions under the antitrust laws. See, e.g., Person v. Association of the Bar, BNA Antitrust & Trade Reg. Rep., July 1, 1975, at A-8; Consumers Union of the United States, Inc. v. American Bar Ass'n, BNA Antitrust & Trade Reg. Rep., March 4, 1975, at A-9. See generally authorities cited, supra note 128. The Supreme Court has also recently held that a prohibition against price advertising of drugs violates the first amendment. Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 44 U.S.L.W. 4686 (U.S. May 24, 1976). By analogy a ban on advertising by lawyers may now be unconstitutional.Google Scholar

132 See notes 50–64 supra and accompanying text.Google Scholar

133 The ethical rules which specifically curtail advertising and solicitation are usually promulgated by the highest court in the jurisdiction. See, e.g., Order of the Supreme Court of Iowa, Oct. 4, 1971, promulgating the Iowa Code of Professional Responsibility.Google Scholar

134 In some states this is specifically provided for, in others it is the result of interpretation of the separation of powers doctrine. See generally Justine Fischer & Dorothy H. Lachmann, eds., Unauthorized Practice Handbook (Chicago: American Bar Foundation, 1972) (esp. at 3–36).Google Scholar

135 Id., Henry S. Drinker, Legal Ethics 36–38 (New York: Columbia University Press, 1953).CrossRefGoogle Scholar

136 The state legislature had authorized establishment of prepaid plans and had delegated regulatory authority to the state bar and, in some respects, the attorney general. Cal. Corp. Code sec. 9201. 2 (West Supp. 1976). This in itself would probably not be sufficient to invoke Parker v. Brown. See notes 50–64 supra and accompanying text. The specific discrimination problem, however, was the result of rules 2, 3, 20, and 23 of the Rules of Professional Conduct which had been adopted by the Supreme Court. Cal. Bus. & Prof. Code foil. sec. 6076 (West Supp. 1976). This adoption would appear to make the rules themselves state action and thus immune under the Parker doctrine.Google Scholar

137 A basic description and examination of exclusive dealing contracts may be found in, e.g., William B. Lockhart & Howard R. Sacks, The Relevance of Economic Factors in Deter-mining Whether Exclusive Arrangements Violate Section 3 of the Clayton Act, 65 Harv. L. Rev. 913 (1952); Friedrich Kessler & Richard H. Stern, Competition, Contract, and Vertical Integration, 69 Yale L.J. 1 (1959); Phillip Areeda, Antitrust Analysis 634–56 (2d ed. Boston: Little, Brown & Co., 1974). Major federal cases which have dealt with the exclusive dealing question include FTC v. Brown Shoe Co., 384 U.S. 316 (1966); Standard Oil Co. v. United States, 337 U.S. 293 (1949), and Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961).Google Scholar

138 See Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346 (1922).Google Scholar

139 “It shall be unlawful for any person engaged in commerce … to … contract for sale of goods, wares, merchandise, machinery, supplies or other commodities … on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller ….” Clayton Act sec. 3, 15 U.S.C. sec. 14 (1970).Google Scholar

140 The language of section 3 proscribes exclusive dealing contracts for the sale of “goods, wares, merchandise, machinery, supplies, or other commodities.”See note 139 supra. It is doubtful whether legal services can be classified as “commodities” within the meaning of the section, and thus the Clayton Act prohibition against exclusive dealing probably would not apply to a group legal services plan. Moreover, it is doubtful whether a given plan would involve the jurisdictional basis required to invoke the prohibitions of section 3. See note 38 supra.Google Scholar

141 A number of U.S. Supreme Court cases suggest that the major principles of section 3 of the Clayton Act have been incorporated into the prohibitions of the Sherman Act. See Northern Pac. Ry. Co. v. United States, 356 U.S. 1 (1958); Times-Picayune Publishing Co. v. United States, 345 U.S. 594 (1953); International Salt Co. v. United States, 332 U.S. 392 (1947). Cf. United States v. Yellow Cab Co., 332 U.S. 218 (1947); FTC v. Motion Picture Advertising Serv. Co., 344 U.S. 392 (1953).Google Scholar

142 An exclusive arrangement for a short time period may be permissible if it can be established that the exclusiveness of the arrangement is dictated by sufficient business needs of the parties and the terms of the contract are reasonably related to these needs. See FTC v. Motion Picture Advertising Serv. Co., 344 U.S. 392 (1953) (permitted one year exclusive contracts).Google Scholar

It could also be argued that if the contract is terminable by either party on relatively short notice the clog on competition disappears, since competitors would be able to bid the business away at any time. In comparable situations, however, this argument has not been accepted by the Supreme Court. Rather the Court has asserted that the incumbents have a significant advantage over potential bidders. See Northern Pac. Ry. v. United States, 356 U.S. 1, 11–12 (1958); International Salt Co. v. United States, 332 U.S. 392, 396–97 (1947).Google Scholar

143 See generally Lockhart & Sacks, supra note 137. In addition, it is interesting to examine the federal courts' decisions and analyses of somewhat similar antitrust issues. Compare United States v. Topco Associates, Inc., 405 U.S. 596 (1972); United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967); Sandura Co. v. FTC, 339 F. 2d 847 (6th Cir. 1964); Packard Motor Car Co. v. Webster Motor Car Co., 243 F. 2d 418 (D.C. Cir.), cert. denied, 355 U.S. 822 (1957).Google Scholar

144 See, e.g., Aaron Director & Edward H. Levi, Law and the Future: Trade Regulation, 51 Nw. U.L. Rev. 281, 292–93 (1956); Robert H. Bork & Ward S. Bowman, Jr., The Crisis in Antitrust, 65 Colum. L. Rev. 363, 366–68 (1965); Richard A. Posner, Exclusionary Practices and the Antitrust Laws, 41 U. Chi. L. Rev. 506, 527–32 (1974).Google Scholar

145 An examination of three leading exclusive dealing cases suggests that the area is replete with inconsistencies, and that the law can be classified as uncertain, at best. The Clayton Act prohibits those exclusive dealing contracts whose effect “may be to substantially lessen competition or tend to create a monopoly ….” 15 U.S.C. sec. 14 (1970). The Supreme Court has struggled with this language in an attempt to establish a standard of legality, and the results have been less than successful. Compare Standard Oil Co. v. United States, 337 U.S. 293 (1949); Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961); FTC v. Brown Shoe Co., 384 U.S. 316 (1966).Google Scholar

146 Compare Standard Oil Co. v. United States, 337 U.S. 293 (1949) with Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961).Google Scholar

147 See FTC v. Motion Picture Advertising Serv. Co., 344 U.S. 392 (1953); Lockhart & Sacks, supra note 137, at 919–31. See also Areeda, supra note 137, at 634–36.Google Scholar

148 See Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961).Google Scholar

149 187 F. Supp. 545 (E.D. Pa. 1960), aff'd per curiam, 365 U.S. 567 (1961). Tke court held that a tying arrangement was temporarily justified by the special problems of developing and marketing a new product involving specific problems of consumer acceptance. While no case has been found applying this rationale to an exclusive dealing arrangement, it has been suggested in the literature. See Areeda, supra note 137, at 636–37; Lockhart & Sacks, supra note 137, at 923–24; cf. Excelsior Motor Mfg. & Supply Co. v. Sound Equip., Inc., 73 F. 2d 725, 728 (7th Cir. 1934), cert. denied, 294 U.S. 706 (1935). An analogous defense was permitted in Sandura Co. v. FTC, 339 F. 2d 847 (6th Cir. 1964), involving an exclusive territories arrangement. See also the dissent to the FTC's decision in the same case, In re Sandura Co., 61 F.T.C. 756, 826 (1962).Google Scholar

150 15 U.S.C. secs. 1011–15 (1970).Google Scholar

151 Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868).Google Scholar

152 United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533 (1944).Google Scholar

153 15 U.S.C. secs. 1011–15 (1970).Google Scholar

154 15 U.S.C. sec. 1012(b) (1970). The antitrust laws specified were the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. The Ford administration recently under-took a study of the exemption to determine whether modification or repeal of the McCarran-Ferguson Act is advisable. See Washington Insurance Newsletter, March 1, 1976.Google Scholar

155 See, e.g., Note, The Limits of State Regulation Under the McCarran-Ferguson Act: Travelers Insurance Co. v. Blue Cross of Western Pennsylvania, 42 Geo. Wash. L. Rev. 427 (1974); Note, Federal Regulation of Insurance Companies: The Disappearing McCarran Act Exemption, 1973 Duke L.J. 1340; Note, Application of Federal Antitrust Laws to the Insurance Industry, 46 Minn. L. Rev. 1088 (1962); Report No. 831 of the Senate Comm. on the Judiciary, 87th Cong., 1st Sess. (1961). An excellent economic study of the exemption is contained in Calvin H. Brainard & Joel B. Dirlam, Antitrust, Regulation and the Insurance Industry: A Study in Polarity, 11 Antitrust Bull. 235 (1966).Google Scholar

156 SEC v. Variable Annuity Life Ins. Co. of America, 359 U.S. 65, 69 (1959). Many of the cases defining these terms have involved federal regulatory schemes other than the antitrust laws because the McCarran-Ferguson Act also exempts insurance from other federal regulatory programs, such as those administered by the SEC. However, the definition of the critical terms in those cases should be just as applicable in antitrust exemption situations.Google Scholar

157 SEC v. Republic Nat'l Life Ins. Co., 378 F. Supp. 430 (S.D.N.Y. 1974).Google Scholar

158 SEC v. Variable Annuity Life Ins. Co. of America, 359 U.S. 65 (1959). The handling of the issue in Justice Douglas's opinion for the Court, however, leaves much to be desired. The opinion states that there is no substantial insurance-type risk transferred to the insurer in a variable annuity situation but this is clearly wrong. The risk of longevity of the payment period–that is, the risk of mortality–is transferred, similar to other forms of insurance. Nevertheless the investment risk which the insured retains in large measure under a variable annuity does raise the kind of regulatory concerns at which the federal security laws are aimed and at which, arguably, traditional state insurance regulation is not. Thus the Court in fact was faced with the dilemma of choosing between two kinds of regulatory approach to a new form of insurance with mixed characteristics. The choice made by the majority is not necessarily wrong but certainly cannot be explained by the lack of an insurance risk element being involved. The concurring and dissenting opinions handle the risk issue much more satisfactorily.Google Scholar

159 Commander Leasing Co. v. Transamerica Title Ins. Co., 477 F. 2d 77, 82–83 (10th Cir. 1973); Schwartz v. Commonwealth Land Title Ins. Co., 374 F. Supp. 564, 574–75 (E.D. Pa. 1974).Google Scholar

160 But see United States v. Meade, 179 F. Supp. 868 (S.D. Ind. 1960), the reasoning of which was implicitly rejected in Commander Leasing Co. v. Transamerica Title Ins. Co., 477 F. 2d 77 (10th Cir. 1973).Google Scholar

161 SEC v. National Sec., Inc., 393 U.S. 453, 459–60 (1969).Google Scholar

162 Id.; Steingart v. Equitable Life Assurance Soc'y, 366 F. Supp. 790, 792 (S.D.N.Y. 1973); Schwartz v. Commonwealth Land Title Ins. Co., 374 F. Supp. 564, 574, 384 F. Supp. 302 (E.D. Pa. 1974); Travelers Ins. Co. v. Blue Cross, 481 F. 2d 80, 82–83 (3d Cir.), cert. denied, 414 U.S. 1093 (1973); Nankin Hosp. v. Michigan Hosp. Serv., 361 F. Supp. 1199, 1210–11 (E.D. Mich. 1973).Google Scholar

163 DeVoto v. Pacific Fidelity Life Ins. Co., 354 F. Supp. 874 (N.D. Cal. 1973), aff'd as to this issue, 516 F. 2d 1 (9th Cir.), cert. denied, 423 U.S. 894 (1975).Google Scholar

164 Battle v. Liberty Nat'l Life Ins. Co., 493 F. 2d 39 (5th Cir. 1974), cert. denied, 419 U.S. 1110 (1975).Google Scholar

165 Fry v. John Hancock Mut. Life Ins. Co., 355 F. Supp. 1151 (N.D. Tex. 1973). But see Addrisi v. Equitable Life Assurance Soc'y, 503 F. 2d 725 (9th Cir. 1974), cert. denied, 420 U.S. 929 (1975) (plaintiff's complaint was directed only at defendant's practices in connection with the sale of insurance and did not state a claim for which relief can be granted under the antitrust laws).Google Scholar

166 See, e.g., American Hosp. & Life Ins. Co. v. FTC, 243 F. 2d 719 (5th Cir. 1957), aff'd sub nom. FTC v. National Cas. Co., 357 U.S. 560 (1958). The analogy between this issue and the Parker v. Brown doctrine, discussed supra notes 50–64 and accompanying text, should be obvious, albeit because the issue of state regulation here relates to an express statutory exemption, the courts have probably been more amenable to finding the requisite state regulatory action.Google Scholar

167 California League of Independent Ins. Producers v. Aetna Cas. & Sur. Co., 175 F. Supp. 857, 860 (N.D. Cal. 1959) (citing FTC v. National Cas. Co., 357 U.S. 560, 564 (1957)).Google Scholar

168 SEC v. National Sec., Inc., 393 U.S. 453, 460 (1969).Google Scholar

169 See Lawyers Title Co. v. St. Paul Title Ins. Co., 526 F. 2d 795 (8th Cir. 1975) (power to oversee entire title insurance operation); California League of Independent Ins. Producers v. Aetna Cas. & Sur. Co., 175 F. Supp. 857 (N.D. Cal. 1959) (agent commissions); Schwartz v. Commonwealth Land Title Ins. Co., 374 F. Supp. 564, 389 F. Supp. 302 (E.D. Pa. 1974) (seller charge); Ohio AFL-CIO v. Insurance Rating Bd., 451 F. 2d 1178 (6th Cir. 1971), cert. denied, 409 U.S. 917 (1972) (auto premiums uniformly fixed by state-regulated Insurance Rating Board); Fleming v. Travelers Indem. Co., 324 F. Supp. 1404 (D. Mass. 1971) (price fixing); Miley v. John Hancock Mut. Life Ins. Co., 148 F. Supp. 299 (D. Mass.), aff'd per curiam, 242 F. 2d 758 (1st Cir.), cert. denied, 355 U.S. 828 (1957) (invitation to submit bids on group policies); Allstate Ins. Co. v. Lanier, 361 F. 2d 870 (4th Cir.), cert. denied, 385 U.S. 930 (1966) (uniform system of rates and standards); Commander Leasing Co. v. Transamerica Title Ins. Co., 477 F. 2d 77 (10th Cir. 1973) (uniform and excessive prices); Travelers Ins. Co. v. Blue Cross, 481 F. 2d 80 (3d Cir.), cert. denied, 414 U.S. 1093 (1973) (reimbursement to hospitals); Nankin Hosp. v. Michigan Hosp. Serv., 361 F. Supp. 1199 (E.D. Mich. 1973) (enforcement of hospital qualification standard approved by insurance commissioner).Google Scholar

170 Ohio AFL-CIO v. Insurance Rating Bd., 451 F. 2d 1178, 1184 (6th Cir. 1971), cert. denied, 409 U.S. 917 (1972); Travelers Ins. Co. v. Blue Cross, 481 F. 2d 80, 83 (3d Cir.), cert. denied, 414 U.S. 1093 (1973); Commander Leasing Co. v. Transamerica Title Ins. Co., 477 F. 2d 77, 83–84 (10th Cir. 1973). A somewhat related issue presented in some cases is whether, when dealing with a practice that affects more states than one, the jurisdictional reach of the state regulatory scheme is adequate to deal with the problem. If it is inadequate the McCarran-Ferguson exemption is held not to apply. See FTC v. Travelers Health Ass'n, 362 U.S. 293 (1960), on remand, Travelers Health Ass'n v. FTC, 298 F. 2d 820 (8th Cir. 1962); United States v. Chicago Title & Trust Co., 242 F. Supp. 56 (N.D. Ill. 1965); American Gen. Ins. Co. v. FTC, 359 F. Supp. 887 (S.D. Tex. 1973), aff'd, 496 F. 2d 197 (5th Cir. 1974). But see FTC v. National Cas. Co., 357 U.S. 560 (1958); Steingart v. Equitable Life Assurance Soc'y, 366 F. Supp. 790 (S.D.N.Y. 1973).Google Scholar

171 15 U.S.C. sec. 1013(b) (1970): “Nothing contained in this chapter shall render the said Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation.”Google Scholar

172 See Professional Adjusting Sys. of America, Inc. v. General Adjustment Bureau, Inc., 64 F.R.D. 35, 42 (S.D.N.Y. 1974); Monarch Life Ins. Co. v. Loyal Protective Life Ins. Co., 326 F. 2d 841 (2d Cir. 1963), cert. denied, 376 U.S. 952 (1964).Google Scholar

173 See Richard M. Buxbaum, Boycotts and Restrictive Marketing Arrangements, 64 Mich. L. Rev. 671 (1966); James A. Rahl, Per Se Rules and Boycotts Under the Sherman Act: Some Reflections on the Klor's Case, 45 Va. L. Rev. 1165 (1959).Google Scholar

174 The term “boycott” in normal usage usually includes two elements in addition to the simple refusal to deal: (1) a combination of two or more people or entities and (2) a coercive purpose, i.e., trying to change the behavior of the boycotted person or entity. This is the definition most commonly found in dictionaries. However, it is not clear that both of those elements are always necessary. Thus a unilateral refusal to deal is sometimes included in the dictionary definition; and in the antitrust context, although usually not using boycott language as such, unilateral refusals to deal have been held illegal essentially under a boycott kind of analysis. In cases where an agreement must be found to meet the “contract, combination, or conspiracy” requirement of the Sherman Act, the Court has reached very far to find it. See, e.g., Albrecht v. Herald Co., 390 U.S. 145 (1968). Whether the McCarran-Ferguson Act was intended to cover the unilateral refusal is unclear. The wording of the statute gives no hint. However, the use of the “coercion or intimidation” language as mutually exclusive categories of behavior rather than as modifying “boycott” implies that unilateral action may be excepted from the exemption if the coercive element or overreaching is involved. At the same time it is not at all clear in the antitrust context that a boycott must be coercive if it has an anticompetitive effect. Thus, when one combines the unclear meaning of the “boycott, coercion, or intimidation” language of the statute with the unclear meaning of “boycott” and “refusal to deal” in the antitrust context, as well as some ambiguity in the common usage of the terms, the reach of the McCarran Act exception becomes very uncertain.Google Scholar

175 See, e.g., Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961); Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959); Fashion Originators' Guild of America, Inc. v. FTC, 312 U.S. 457 (1941).Google Scholar

176 Monarch Life Ins. Co. v. Loyal Protective Life Ins. Co., 326 F. 2d 841, 846 (2d Cir. 1963), cert. denied, 376 U.S. 952 (1964); accord, Professional Adjusting Sys. of America, Inc. v. General Adjustment Bureau, Inc., 64 F.R.D. 35, 43 (S.D.N.Y. 1974).Google Scholar

177 See Meicler v. Aetna Cas. & Sur. Co., 506 F. 2d 732, 734 (5th Cir. 1975); Transnational Ins. Co. v. Rosenlund, 261 F. Supp. 12, 26–27 (D. Ore. 1966).Google Scholar

178 Transnational Ins. Co. v. Rosenlund, 261 F. Supp. 12, 26–27 (D. Ore. 1966); accord Meicler v. Aetna Cas. & Sur. Co., 506 F. 2d 732, 734 (5th Cir. 1975); Addrisi v. Equitable Life Assurance Soc'y, 503 F. 2d 725, 728–29 (9th Cir. 1974).Google Scholar

179 163 F. Supp. 274 (D. Mont. 1958).Google Scholar

180 Id. at 281. See also California League of Independent Ins. Producers v. Aetna Cas. & Sur. Co., 179 F. Supp. 65, 66–67 (N.D. Cal. 1959).Google Scholar

181 See Travelers Ins. Co. v. Blue Cross, 481 F. 2d 80 (3d Cir.), cert. denied, 414 U.S. 1093 (1973); American Family Life Assurance Co. v. Aetna Life Ins. Co., 368 F. Supp. 859 (N.D. Ga. 1973).Google Scholar

182 The treatment of this subject here is intentionally abbreviated. Considering the complexity of the questions, a full treatment would be much too long to be incorporated here. My intent is to suggest the problems and probable answers for McCarran-Ferguson Act purposes. A much fuller treatment of the question of state regulation of prepaid legal services is presented in Pfennigstorf & Kimball, supra note 2, and a companion piece published in this issue of the A.B.F. Research Journal. Werner Pfennigstorf & Spencer L. Kimball, Employee Legal Service Plans: Conflicts Between Federal and State Regulation, 1976 A.B.F. Res. J. 787. An early, tentative summary of the analysis by the same authors can be found in 1974 (Vol. 1) Proceedings of the National Association of Insurance Commissioners 640 [hereinafter cited as 1974 NAIC Proceedings]. See also Russell Van Hooser, Problems of Regulation and Supervision of Prepaid Legal Services Plans, ABA Compilation, supra note 3, Chapter on Insurance; Cole, supra note 73; William B. Pugh, Jr., Insurance Regulation, ABA Proceedings 1975, supra note 16, at 63–67.CrossRefGoogle Scholar

183 See note 157 supra.Google Scholar

184 See notes 166–70 supra and accompanying text.Google Scholar

185 See, e.g., Jan Hellner, The Scope of Insurance Regulation: What Is Insurance for Purposes of Regulation? 12 Am. J. Comp. L. 494 (1963); Herbert S. Denenberg, The Legal Definition of Insurance: Insurance Principles in Practice, 30 J. Ins. 319 (1963); Spencer L. Kimball, The Purpose of Insurance Regulation: A Preliminary Inquiry in the Theory of Insurance Law, 45 Minn. L. Rev. 471 (1961).Google Scholar

186 Robert E. Keeton, Basic Text on Insurance Law 2–11 (St. Paul: West Publishing Co., 1971).Google Scholar

187 Id. at 543–45. A survey of the state law definitions is found in 1974 (Vol. 2) NAIC Proceedings, supra note 182, at 654–58.Google Scholar

188 Keeton, supra note 186, at 543–45.Google Scholar

189 Id. at 2–3.Google Scholar

190 See Pfennigstorf & Kimball, supra note 2, at 450–52.Google Scholar

191 Id. at 423–25, 456–61.Google Scholar

192 Id. at 470–72.Google Scholar

193 Id. at 452, 470.Google Scholar

194 Initial consultation and minor legal work are usually covered, however. See the description of typical exclusions discussed in the survey of different kinds of plans, supra notes 17–28 and accompanying text.Google Scholar

195 This issue is treated in more detail in Pfennigstorf Kimball, supra note 2, at 470.Google Scholar

196 Id. at 461–99.Google Scholar

197 In automobile insurance the event is fortuitous and similarly in term life insurance. In regular life insurance the event is certain but the timing is fortuitous.Google Scholar

198 See Pfennigstorf & Kimball, supra note 2, at 423–25, 470–72.Google Scholar

199 Id. at 452.Google Scholar

200 See Keeton, supra note 186, at 6.Google Scholar

201 See, e.g., Jordon v. Group Health Ass'n, 107 F. 2d 239, 24449 (D.C. Cir. 1939); California Physicians' Serv. v. Garrison, 28 Cal. 2d 790, 172 P. 2d 4 (1946); People ex rel. Roddis v. California Mut. Ass'n, 68 Cal. 2d 677, 441 P. 2d 97, 68 Cal. Rptr. 585 (1968).Google Scholar

202 Keeton, supra note 186, at 546–49.Google Scholar

203 Pfennigstorf & Kimball, supra note 2, at 425.Google Scholar

204 This would not be the case if the persons rendering the service had agreed under the contract with the plan to accept the plan payment as payment in full. In that situation the insured would probably be a third-party beneficiary of the contract and be able to resist payment. Nevertheless, there is the distinct possibility that the service would simply not be rendered at all.Google Scholar

205 See Pfennigstorf & Kimball, supra note 2, at 454–99.Google Scholar

206 See id. at 487–89; 1974 (Vol. 1) NAIC Proceedings, supra note 182, at 629–32, 646–47.Google Scholar

207 See, e.g., Keeton, supra note 186, at 554–57; authorities cited, supra note 185.Google Scholar

208 Keeton, supra note 186, at 568–70.Google Scholar

209 Id.Google Scholar

210 See generally Cole, supra note 73.Google Scholar

211 See Pfennigstorf & Kimball, supra note 2, at 488.Google Scholar

212 See, e.g., Cal. Ins. Code secs. 100 (19.6), 119.6 (West Supp. 1976).Google Scholar

213 See 1974 (Vol. 1) NAIC Proceedings, supra note 182, at 631, 637–39.Google Scholar

214 See Keeton, supra note 186, at 568–70.Google Scholar

215 Since in both instances the parties have an ongoing relationship aside from the legal services plan, the union or the employer–perhaps at the union's insistence through the collective bargaining process–would cover any temporary financial problems of the plan until more permanent corrective action, i.e., an increase in premiums, could be worked out. The essential point is that when there is such an ongoing relationship, if the parties think the plan beneficial, it is unlikely that they would let it fail.Google Scholar

216 See authorities cited, supra notes 182 and 185; Keeton, supra note 186, at 567–70.Google Scholar

217 See Keeton, supra note 186, at 568–70.Google Scholar

218 Id. at 546–49; Pfennigstorf & Kimball, supra note 2, at 452, 489–90.Google Scholar

219 See Eilers, supra note 7, at 97–115; Keeton, supra note 186, at 549; Pfennigstorf & Kimball, supra note 2, at 489–90; Pfennigstorf & Kimball, supra note 182.Google Scholar

220 See Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. secs. 1001–1381 (Supp. IV, 1975). See generally Pfennigstorf & Kimball, supra note 182.Google Scholar

221 See the model statute proposed by the National Association of Insurance Commissioners in 1975 (Vol. 1) NAIC Proceedings at 902 [hereinafter cited as 1975 NAIC Proceedings] and the model act proposed in Cole, supra note 73. See also Spencer L. Kimball & Werner Pfennigstorf, Regulation of Prepaid Legal Expense Plans; An Analysis of Facts, Goals, and Methods, in 1974 (Vol. 1) NAIC Proceedings, supra note 182, at 640.Google Scholar

The extent to which ERISA may preempt state regulation of employee benefit plans including legal services plans has been the subject of much discussion. See, e.g., Pfennigstorf & Kimball, supra note 182; Mark E. Bowers, ERISA and Its Exceptions, 27 Baylor L. Rev. 475 (1975); Comment, The Effect of ERISA on Prepaid Legal Services, 27 Baylor L. Rev. 566 (1975); Dunne, supra note 8, at 19–20, 25–27; Wayne McCormack, The Effect of the Employee Retirement Income Security Act of 1974 [ERISAI, ABA Proceedings 1975, supra note 16, at 112.Google Scholar

222 See Kimball & Pfennigstorf, in 1974 (Vol. 1) NAIC Proceedings, supra note 182, at 640–41, 648.Google Scholar

223 See generally Pfennigstorf & Kimball, supra note 182.Google Scholar

224 It may be accentuated by the inability to use some cost control mechanism, such as fee control, producing a high risk operation. See the earlier discussions of minimum and maximum price fixing.Google Scholar

225 See authorities cited, supra notes 218–19.Google Scholar

226 Keeton, supra note 186, at 547–48.Google Scholar

227 Both the California plan and the Oregon bar plan illustrate this feature. See notes 19–23 supra and accompanying text. See also Pfennigstorf & Kimball, supra note 2, at 423–25, 490–491.Google Scholar

228 See note 219 supra.Google Scholar

229 See 1975 (Vol. 1) NAIC Proceedings, supra note 221, at 902; Cole, supra note 73.Google Scholar

230 Labor unions and other organizations have for years provided legal assistance to members in certain types of cases such as workmen's compensation and Fair Labor Standards Act cases. No specific holdings were found, but apparently these have not been considered insurance. Many did not involve any contractual obligation to render the services, however. The authority in the health care field would support this. The cases are collected and discussed in Samuel Van Pelt, Prepaid Legal Services: Regulation by a State Insurance Department, in Transcript of Proceedings, National Conference on Prepaid Legal Services, Washington, D.C., April 27–29, 1972, at 143, 158–65 (Chicago: American Bar Association, 1972). See also the recent decision regarding an employer health care plan in State ex rel. Farmer v. Monsanto Co., 517 S.W. 2d 129 (Mo. 1974).Google Scholar

231 State ex rel. Physicians' Defense Co. v. Laylin, 73 Ohio St. 90, 76 N.E. 567 (1905); Vredenburgh v. Physicians' Defense Co., 126 Ill. App. 509 (1906).Google Scholar

232 Physicians' Defense Co. v. O'Brien, 100 Minn. 490, 111 N.W. 396 (1907); Physicians' Defense Co. v. Cooper, 199 Fed. 576 (9th Cir. 1912). See also Texas Ass'n of Qualified Drivers, Inc. v. State, 361 S.W. 2d 580 (Tex. Civ. App. 1962).Google Scholar

233 See Kimball & Pfennigstorf, supra note 182, at 640, 643.Google Scholar

234 In re Feinstein, 36 N.V. 2d 199, 326 N.E. 2d 288, 366 N.Y.S. 2d 613 (1975).Google Scholar

235 36 N.V. 2d at 207, 326 N.E. 2d at 292–93, 366 N.Y.S. 2d at 619–20.Google Scholar

236 See, e.g., Tex. Ins. Code Ann., Arts. 5.13–1, 23.01–23. 26 (1975) (the act is the subject of an entire issue of the Baylor Law Review, 27 Baylor L. Rev. 403–638 (1975)); Cal. Ins. Code secs. 100 (19.6), 119.6, 12120–12124 (West Supp. 1976). For a discussion of the proposed New York legislation see Dunne, supra note 10, at 42–46. See generally Lilly, supra note 16, at 491–622, for a collection of acts, proposed acts, and model acts.Google Scholar

237 1974 (Vol. 1) NAIC Proceedings, supra note 182, at 636–39. The results must be viewed in light of the circumstances under which the survey was conducted. Most of the commissioners were for the first time facing questions regarding the status of prepaid legal services plans without much prior opportunity to study or time to consider the matter. See also Lilly, supra note 16, at 189–209 (a state-by-state analysis of the then-current situation).Google Scholar

238 1975 (Vol. 1) NAIC Proceedings, supra note 221, at 902–14.Google Scholar

239 Id. at 905.Google Scholar

240 The question is discussed in specific relation to the regulation of prepaid legal plans in Cole, Supplement to ABA Compilation, supra note 73, Chapter on Insurance, at 8–9 n.32. See generally Fischer & Lachmann, eds., supra note 134, at 3–5; L. Ray Paterson & Elliott E. Cheatham, The Profession of Law 33–38 (Mineola, N.Y.: Foundation Press, 1971); Pfennigstorf & Kimball, supra note 2, at 450.Google Scholar

241 Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. secs. 1001–1381 (Supp. IV, 1975). See authorities cited, supra note 221.Google Scholar

242 See Pfennigstorf & Kimball, supra note 2, at 423 n. 21.Google Scholar

243 See DeVoto v. Pacific Fidelity Life Ins. Co., 354 F. Supp. 874 (N.D. Cal. 1973), aff'd as to this issue, 516 F. 2d 1 (9th Cir. 1975), cert. denied, 423 U.S. 894 (1975) (contract with a real estate loan agency to obtain list of customers for purpose of soliciting mortgagors to purchase mortgage protection insurance).Google Scholar

244 See notes 137–49 supra and accompanying text.Google Scholar