This June marked the 20th anniversary of a U.S. Supreme Court ruling that remains of interest to the accounting profession because the litigants included a state board of accountancy and a dually credentialed attorney advertising that she was both a CPA and an attorney.
In Ibanez v. Florida Board of Accountancy, 512 U.S. 136 (1994), the Supreme Court limited states’ ability to regulate truthful commercial speech by professionals. Twenty years later, the decision’s impact is a well-established precedent protecting the right of professionals to advertise their dual credentials.
The complainant, Silvia Ibanez, held an active CPA license issued by the Florida Board of Accountancy and a law license issued by the Florida Bar. Ibanez included on her law firm’s letterhead, business cards, and Yellow Pages ad under “Attorney,” the fact that she was also licensed as a CPA and held the Certified Financial Planner (CFP) credential. While Ibanez’s only pursuit was her law practice, she reasoned that her qualifications and experience as a CPA and a CFP could be important to her clients and potential clients as they made an informed choice about whether to seek legal services from her firm.
The Florida Board of Accountancy did not agree, and censured her for “false, deceptive, and misleading” advertising, despite the truthfulness of her claims. The Florida board argued that consumers could be confused or misled into believing that Ibanez was offering to provide public accounting rather than legal services and that she complied with all of the regulations issued by the Florida Board of Accountancy.
This result may seem surprising today given the Supreme Court’s well-developed commercial speech jurisprudence. But at the time of Ibanez, the application of First Amendment protections to professional advertising was still being refined. The Ibanez decision holds that an individual who is qualified and licensed both as a CPA and as an attorney may truthfully advertise the fact that he or she holds both credentials.
Until the late 1970s, however, advertising (a form of commercial speech) by professionals was broadly regulated or even prohibited by state licensing and regulatory bodies. That is why advertisements for CPAs, lawyers, and doctors, among other professionals, were practically nonexistent at the time.
Historically, the American Bar Association and state bars had rules prohibiting attorneys from advertising and justified those restrictions on the basis that advertising reflected poorly on the professional image of attorneys. In the 1970s, though, the Supreme Court struck down state bar rules against attorney advertising while laying out the circumstances under which advertising regulations might be justified.
- In Bates v. State Bar of Arizona, 433 U.S. 350 (1977), the Supreme Court struck down Arizona’s outright ban on attorney advertising but stated that “false” or “misleading” advertising could be restricted and that reasonable time, place, and manner restrictions might be appropriate for personal, direct solicitation (such as direct mailings).
- In 1980, a landmark Supreme Court case, Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), held that a state must justify restrictions on truthful, nonmisleading commercial speech by demonstrating that the state’s actions “directly advance” a substantial state interest and are no more restrictive than necessary to serve that interest.
A series of cases followed Central Hudson, including Ibanez, further refining and augmenting the doctrine’s application to advertisements by professionals.
Among other influencing factors, the attorney advertising cases of the 1970s provided an opportunity for the accounting profession to examine its restrictions on advertising. For example, until 1978, the AICPA’s then-named Code of Professional Ethics forbade advertising by members. Like the rules prohibiting attorney advertising, there was a historical belief that advertising by CPAs diminished the profession’s credibility and dignity. There was also fear that the public could be confused about a CPA’s independence if advertising were allowed.
But the accounting profession adapted quickly. Not long after the Bates decision, the AICPA Ethics Division and a Task Force on Advertising recommended repealing the AICPA’s prohibition on advertising and replacing it with a narrower ban on members advertising in a manner that is false, misleading, or deceptive.
That narrowly tailored prohibition is substantially similar to the current ET Section 502, Advertising and Other Forms of Solicitation, in today’s Code of Professional Conduct. Today’s code states in part that “[a] member in public practice shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading, or deceptive.” See also Interpretation 502-2, “False, Misleading or Deceptive Acts in Advertising or Solicitation”; Interpretation 502-6, “Use of the CPA Credential”; and the following Interpretations under ET Section 501, Acts Discreditable: Interpretation 501-10, “False, Misleading, or Deceptive Acts in Promoting or Marketing Professional Services,” and Interpretation 501-11, “Use of the CPA Credential.”
The AICPA’s rules regarding advertising have been further refined over the years. Just last year, the AICPA Professional Ethics Executive Committee added new interpretations under ET Sections 501, Acts Discreditable, and 502, Advertising and Other Forms of Solicitation, regarding use of the CPA credential. Interpretations 501-11 and 502-6 both refer members to the “applicable state accountancy laws and board of accountancy rules and regulations for guidance regarding the use of the CPA credential.”
Because the use of the CPA credential falls under the jurisdiction of the state boards of accountancy and state accountancy laws, these interpretations replaced prior ethics rulings that addressed use of the CPA credential, so at the same time the new interpretations regarding use of the CPA credential were adopted, a number of ethics rulings were removed. The June 29, 2012, exposure draft in which these revisions were proposed is available at the AICPA website.
One item removed from the code was Ethics Ruling No. 78, “Letterhead: Lawyer-CPA.” It provided that “[t]he code does not prohibit the simultaneous practice of accounting and law by a member licensed in both professions. Either a single or separate letterheads may be used, provided the information with respect to the CPA designation complies with Rule 502 … However, the member should also consult the rules of the applicable Bar Association.”
Today, AICPA members who are dually credentialed as attorneys should continue to refer to the rules of their state boards of accountancy and state bars to ensure they understand and comport with rules regarding advertisements for professional services.
Sydney S. Traum, a life member of the AICPA, is also a past president of the American Association of Attorney-Certified Public Accountants (AAA-CPA), and one of the attorneys on the amicus curiae brief to the U.S. Supreme Court filed by the AAA-CPA in support of Ibanez’s position 20 years ago. In reflecting on Ibanez, Traum opined that, “Full disclosure and the public interest may, in fact, require the practitioner to disclose all credentials.”
Notably, AICPA Ethics Ruling No. 78 predated the Florida Board of Accountancy’s censure of Silvia Ibanez for advertising her status as a CPA and attorney in her Yellow Pages ad and her attorney letterhead. Of course, Ruling 78 was not binding on any state board of accountancy, and despite it, the Florida Board of Accountancy censured Ibanez. The Supreme Court’s Ibanez decision, however, is binding on state boards, state bars, and other governmental entities. Such entities must ensure that any restrictions imposed on commercial speech are consistent with the Supreme Court’s jurisprudence on the subject.
Clearly, the Supreme Court settled in Ibanez that placing both
credentials together on letterhead, business cards, or Yellow Pages
ads was not “false, deceptive, or misleading” in the case of Silvia
Ibanez. Ibanez made binding on state boards of accountancy
the same principles that the AICPA had adopted years earlier. And now,
20 years after Ibanez, it is a well-settled precedent protective of
dually credentialed professionals. Thus, Ethics Ruling No. 78 is no
longer needed, and AICPA members who are licensed as both a CPA and
attorney should consult and comply with the rules of their state board
of accountancy and state bar regarding advertising.
— Michael Buddendeck ( email@example.com ) is general counsel and secretary for the AICPA. Andrea Short ( firstname.lastname@example.org ) is assistant general counsel for the AICPA. The authors would like to acknowledge Sydney S. Traum, Esq., for his contributions to this article.