Goldfarb v. Virginia State Bar

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421 U.S. 773 (1975), argued 25 Mar. 1975, decided 16 June 1975 by vote of 8 to 0; Burger for the Court, Powell not participating.

The Goldfarbs were unable to find a lawyer who would perform a real estate title examination for a fee less than that prescribed in a minimum fee schedule published by the Fair-fax County [Virginia] Bar Association and enforced by the Virginia State Bar. They alleged that the fee schedule constituted price fixing, in violation of section 1 of the Sherman Antitrust Act.

The Supreme Court found that the bar association's activities constituted a classic case of price fixing. The fee schedule established a rigid price floor; every lawyer contacted by the petitioners adhered to it; no lawyer would charge less. Moreover, ethics opinions issued by the Virginia bar threatened disciplinary action for regularly charging less than the suggested minimum fee. Since only attorneys licensed to practice in Virginia could legally examine a title, consumers had no alternative but to pay the prescribed fee.

The Court also held that because a substantial portion of the funds used for purchasing homes in Fairfax County came from outside Virginia, interstate commerce was sufficiently affected to bring this action under the Sherman Act. It rejected the contention that Congress never intended to include “learned professions” within the meaning of “trade or commerce” in section 1 of the Sherman Act. Moreover, the Court held that such anticompetitive activities were not exempt from the Sherman Act as “state action.”

In holding that minimum fee schedules violate federal antitrust law, Goldfarb opened the door to price competition in legal services. Perhaps the greatest immediate impact of the Court's decision was the development of low-cost legal clinics that handle relatively routine matters such as wills and divorces.

Beth M. Henschen

Subjects: Law.

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