TIKD v The Florida Bar: the case that challenges the very notion of professional regulation

If you are reading this blog it must be because you are interested in Professional Responsibility issues; and if you are interested in that topic, you probably know by now that there is a controversy in full swing in Florida that challenges the very notion of professional regulation.

I am referring to the antitrust case filed by a company called TIKD against the Florida Bar.  TIKD's website is here.

TIKD is a company that promises consumers to take care of their traffic tickets (with a money back guarantee).  The consumer pays a fee to the company and the company takes care of everything, including hiring a lawyer to represent the consumer.   Based on this business model, a law firm in Florida filed a complaint with the Florida Bar alleging that TIKD was practicing law without a license.  The Florida Bar issued an opinion finding that lawyers who work with TIKD could be in violation of Florida Bar disciplinary rules and requested an injunction to prevent TIKD from continuing to provide services in the state.

Meanwhile, TIKD went on the offensive and filed a federal lawsuit against the Florida Bar, the law firm, and others alleging, among other things, antitrust violations and that the Florida Bar and the law firm are engaged in a “concerted effort” to put TIKD out of business.

In response, the Florida Bar argued it has immunity from antitrust laws under the so-called state action doctrine, which provides that the Sherman Act does not apply to the conduct of a state when it regulates its economy by displacing competition in favor of regulation of a monopoly in the public service.  For the doctrine to apply, however, the state must act as a sovereign, rather than as a “participant in a private agreement or combination by others for restraint of trade.”

Private entities can also be protected by state-action immunity, but only if their conduct is (1) taken pursuant to a clearly articulated and affirmatively expressed state policy and (2) actively supervised by the State itself.  (See, California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980)).  Midcal, however, did not decide whether professional regulators, such as the Florida Bar, whose members are participants in the market they regulate, should be subject to the doctrine’s requirement of active state supervision for private entities claiming state-action immunity.

Thus, the application of the state action doctrine is the key to the controversy, and that’s where North Carolina State Board of Dental Examiners v. Federal Trade Commission comes into play. In that case the Supreme Court held that if a controlling number of decisionmakers are active market participants in the occupation the agency regulates, a state agency must be actively supervised by the state in order to obtain antitrust immunity.  (For a comment on the North Carolina case, you can go to the Harvard Law Review here.)

In the TIKD case, the Florida Bar is arguing that, as an “arm of the Florida Supreme Court,” it is entitled to state-action protection without having to meet the “clear articulation” or “active supervision” requirements recognized by the Supreme Court.  Yet, the U.S. Department of Justice has filed a statement of interest arguing that the Florida Bar is not immune from federal or state antitrust liability based on North Carolina State Board of Dental Examiners.  You can read the statement of interest here.

The National Law Review has a short discussion of the issues raised by the case here.

On the other side of the equation, so to speak, TIKD’s arguments are also problematic.  It argues that it is not engaging in the practice of law because it is merely a referral service rather than a law firm.  But its own representations in its website, do make it sound like it provides legal services to the consumers.  It essentially says, pay us, send us your ticket and we will provide you with a lawyer.  From what I can see in its website, the consumer does not choose the lawyer, TIKD does, and the lawyer doesn’t even have to meet the client.  At best TIKD seems to be operating as a temp agency, which finds lawyers and sends them off to do tasks for clients who have no (or very limited) contact with the lawyers themselves.

Also, if TIKD wants to be considered to be a referral service, then it needs to make sure it is complying with all the rules related to referral services, and the lawyers who are accepting referrals from TIKD need to worry about whether they are violating the rules related to paying for referrals or sharing fees with non-lawyers.

As of now, it seems that both the petition for injunction at the state level and the case in federal court are pending, but the results will have significant implications on the future of the notion of regulation of the profession.