The FTC and Piano Teachers

December 10th, 2013 / By Deborah J. Merritt

Wall Street Journal columnist Kimberley Strassel recently described the FTC’s investigation of a nonprofit association of piano teachers. According to the FTC, the Music Teachers National Association (MTNA) was supporting anti-competitive practices through its code of ethics. One provision of that code discouraged music teachers from actively recruiting students from other teachers.

Strassel recounts that MTNA assured investigators that they had never enforced this provision. The association also offered to drop the provision immediately from its code. The FTC, however, persevered in its investigation. The agency required MTNA to produce thousands of documents, including some that were two decades old. MTNA complied with these requests, but the ongoing cost of the investigation prompted it to settle. As part of a consent decree–in which MTNA admits no fault–the nonprofit agreed to appoint an antitrust compliance officer.

Here’s where lawyers and legal educators should take note: The FTC wanted MTNA to appoint a lawyer as its compliance officer, but the nonprofit explained that it couldn’t possibly afford that expense. The regulators then allowed MTNA’s executive director, Gary Ingle, to fill the compliance role. Ingle is a former music professor, choral conductor, and academic administrator with a BA, MA, and PhD in music. He completed some “additional study” at the Cumberland School of Law, but does not hold any type of law degree.

In addition to taking over the compliance position, Ingle seems to have supervised his organization’s response to the FTC’s document request. Lawyers accompanied Ingle to an initial meeting with the FTC, but the nonprofit seems to have minimized legal expense as much as possible–both during the investigation and going forward.

What’s the Moral?

Strassel tells this story as one of outrage against government overreaching–her description of the document request as a “federal colonoscopy” is particularly memorable. You may agree or disagree with that position. This looks to me like a misallocation of government resources, if not downright abuse, but I have no idea what MTNA might have been up to.

I describe the MTNA story because of what it suggests about some of today’s legal work–and about how we might adapt our degree programs and business models to serve clients like MTNA. The FTC’s investigation was a significant “legal” moment for the nonprofit: When the feds come knocking, it’s time to call your lawyer. Attorneys, however, seem to have played only a small part in the investigation; they accompanied MTNA’s executive director to his first meeting with the FTC, and perhaps represented him in other meetings. MTNA, however, handled much of the response to FTC demands, and it will conduct its own compliance work (without lawyers) going forward.

According to Strassel’s column, MTNA has an annual budget of $2 million and a staff of twelve. This is not an indigent organization; it is more akin to the small businesses that many lawyers hope to serve. It also seems that the organization would have welcomed assistance at the right price. Ingle reports that he and his staff spent “hundreds upon hundreds” of hours responding to document requests. Rather than serve as untrained document reviewers, Ingle and his team might have preferred applying their expertise to helping music teachers. The market, however, did not provide an appropriate solution for the organization.

Entrepreneurs are starting to find ways to meet needs like the one MTNA experienced. Small businesses can post discrete legal projects online, seeking bids from experienced lawyers. Businesses and nonprofits can also hire a part-time general counsel or compliance officer. Small companies may also learn that they can hire document review workers directly, without paying a mark-up to their lawyers.

Lessons for Law Schools

As legal educators, we need to get on top of these trends. For too long, law practice has consisted of expensive services and pro bono work. As a nonprofit, MTNA may even have benefited from some of the latter. But there is a vast amount of legal work between those two ends of the spectrum. We need to figure out how lawyers (and non-lawyers) are tapping that market, and how we can prepare students to serve it.

This won’t be easy. It’s not as simple as adding a few clinical courses or experiential credits to the curriculum. Nor can we simply urge our graduates and career services staff to network with nonprofits and small businesses. The type of work that MTNA needed to respond to the FTC investigation, and that it will require for its future compliance role, won’t pay the wages that JD graduates hope to earn during their early years–and that many of them need to pay off large loans. Instead, we need to rethink both the structure of our degree programs and how “lawyer” tasks interact with non-lawyer work.

One response is the layered legal education that I have proposed and that others have recommended. Another is creation of early-career work that allows JDs to develop expertise while serving clients in cost efficient ways. Some law schools are trying to create those opportunities on their own or in partnership with for-profit companies.

Neither of these approaches is cost free. Nor are they guarantees of good careers for all. We know very little about career progression in the new legal market; those tracks will take many years to unfold. Meanwhile, stories like the one about MTNA remind us that we need to keep tabs on what is happening with clients and legal providers in today’s legal market.

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