Regulation of advertising by lawyers survives High Court challenge

By James Stellios.

Key Points:
The decision has implications beyond lawyers, and leaves Federal and State legislators largely free to regulate commercial speech.

In upholding the regulation of advertising for legal services by lawyers, the High Court has displayed a reluctance to expand the constitutional protection for political communication. This leaves Federal and State legislators largely free to regulate commercial speech. The Court also displayed a reluctance to expand the constitutional protection for the judicial process, leaving legislators with significant room to move when regulating many aspects of that process, particularly prior to the formation of a client-solicitor relationship.

Background

In an attempt to address rising insurance premiums and increased personal injury litigation, in 2002 the NSW Government changed its policy on advertising by lawyers. The Legal Profession Regulation 2002 was enacted to prohibit the advertising by barristers and solicitors of legal services relating to personal injuries. A challenge to the constitutional validity of the regulations was rejected by a majority of the High Court in APLA Limited v Legal Services Commissioner of NSW [2005] HCA 44. There were six separate judgments with Chief Justice Gleeson and Justice Heydon delivering a joint judgment.

Freedom of political communication

The plaintiff claimed that the regulations infringed the constitutional freedom of political communication affirmed in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. Importantly, in one of the ads, there was a brief reference to Premier Bob Carr and Senator Helen Coonan in what was otherwise an advertisement for legal services.

A majority of the Court (Chief Justice Gleeson and Justice Heydon, and Justices McHugh, Gummow, Hayne and Callinan) rejected this ground of invalidity on the basis that the advertisement of legal services did not constitute communication about government or political matters. The communication was not relevantly political merely because the subject of the regulation (ie. advertising of legal services) was politically controversial. Nor did the inclusion of some political content transform the character of the advertisement into political communication. The political content in this case could have been severed from the advertisement and communicated without restriction. Furthermore, the regulations do not cover communication to government or to the public about the desirability of the policy of the regulations. Only Justice Kirby held the regulations invalid on this ground, considering that communication about the judiciary (and, in this case, access to the judiciary) is communication about government and political matters, and that the regulations impose an impermissible burden on that communication.

It is clear that the Court has accepted that there is a difference between commercial speech and communication about government and politics. While it is possible that communication might be both commercial and political, in most cases, communication which is commercial in nature will not be protected from government regulation.

Chapter III implications

The plaintiffs argued that Chapter III of the Constitution requires for its effective operation that people have the capacity to ascertain their legal rights and to assert those rights before Chapter III courts. That includes, it was argued, the capacity to communicate and receive information or assistance for that purpose.

A majority of the Court rejected the argument that Chapter III protected the advertisement of legal services from regulation. Most majority judges thought that the provision of legal services and the communication between lawyer and client may be seen as essential to an effective exercise of Commonwealth judicial power and federal jurisdiction. Accordingly, governments may be limited in the extent to which they can regulate those aspects of the judicial process. However, the marketing of legal services was not considered essential to the exercise of federal judicial power and, therefore, is beyond constitutional protection.

In dissent, Justices McHugh and Kirby largely accepted the plaintiffs' argument that the regulations impair the exercise of federal jurisdiction. However, Justice Kirby went further and held that the regulations breached a freedom of communication derived from Chapter III in a similar way to that accepted in Lange.

Other grounds of invalidity

The plaintiffs claimed that the relevant regulations were invalid on three other grounds:

• that the regulations were contrary to the free trade, commerce and intercourse requirements in section 92 of the Constitution;
• that the regulations had an extra-territorial operation and, therefore, were beyond the legislative competence of the NSW Parliament; and
• that there was an inconsistency between the regulations and Commonwealth legislation which rendered the NSW regulations invalid by virtue of section 109 of the Constitution.

Section 92 of the Constitution provides that trade, commerce and intercourse among the States shall be absolutely free. For the judges who considered the section 92 ground (Chief Justice Gleeson and Justices Heydon, Gummow, Hayne, and Callinan), the regulations do not discriminate in a protectionist way and, therefore, do not breach the trade and commerce limb of section 92 as set out in Cole v Whitfield (1988) 165 CLR 360. To the extent that interstate advertising may not be trade and commerce, but only intercourse, a majority (Chief Gleeson and Justice Heydon, and Justices Gummow and Hayne) applied a two tier test which asks, first, whether the purpose of the law is to impede interstate intercourse and, even if it isn't, secondly, whether the law imposes an impediment on interstate intercourse greater than that reasonably required to achieve the purpose of the legislation. It was held that the regulations do not target interstate advertising, and the object of the regulations cannot be achieved without impeding interstate advertising.

In relation to extra-territoriality, all judges considering the issue (Chief Justice Gleeson and Justice Heydon, and Justices Gummow, Hayne and Callinan) accepted that State laws must have a territorial connection with the enacting State, but that the test of territoriality is to be applied liberally. The regulations prohibit advertising of "legal services provided within NSW" and, thus, it was held that the regulations have a clear connection with NSW irrespective of whether the prohibition may apply to advertising outside NSW (eg. internet advertising).

As to the section 109 argument, the plaintiffs relied upon the type of inconsistency considered in Australian Mutual Provident Society v Goulden (1986) 160 CLR 330, that is, whether the State law alters, impairs or detracts from a Commonwealth scheme. It was argued that various Commonwealth provisions (including provisions of the Judiciary Act 1903 (Cth); the Federal Court of Australia Act 1976 (Cth) and the Trade Practices Act 1974 (Cth)) establish a scheme for the creation and enforcement of federal rights and remedies and the provision of entitlements to legal representation, and that assistance of a legal representative is required for the operation of that scheme. The regulations, it was argued, alter, impair or detract from that Commonwealth scheme because they prevent the creation of client/lawyer relationships.

A majority of the Court (Chief Justice Gleeson and Justice Heydon, and Justices Gummow, Hayne and Callinan) rejected that argument. Although some State regulation of legal practitioners may affect the exercise or enforcement of federal rights and remedies, the regulation of advertising by lawyers was considered to be too far removed from the federal scheme. Only Justice Kirby held that an inconsistency arose as, in his view, federal rights can only be effectively enforced if people can receive information about those rights, and advertising plays an important role in providing that information.