Optimal Attorney Advertising

Abstract

Attorney advertising routinely targets tort victims. This paper reviews the Supreme Court’s jurisprudence on attorney advertising, and develops a theoretical model that incorporates advertising intensity, litigation costs, and an endogenous number of lawsuits. Since advertising induces victims to bring suit, it increases the level of injurer care. However, litigation costs are also incurred. At the optimum, the marginal benefit of deterrence equals the sum of marginal litigation and advertising costs. Although blanket prohibitions on attorney advertising are likely to be suboptimal (consistent with the Court’s position), some regulations may be justified.

Keywords: Tort, Liability, Advertising, Attorneys, Lawyer, Legal Services

JEL Classification: K13, K41, L15, L84