Ethics and Values in Advertising

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Ethics and values in advertising: two

case studies.

Author: Krueger, David. Source: Business and Society Review no99 (1998) p. 53-65 ISSN: 0045-3609 Number: BBPI98063630 Copyright: The magazine publisher is the copyright holder of thisarticle and it is reproduced with permission. Further reproduction of this article in violation of thecopyright is prohibited.

This article explores the role of ethics in advertising, with a focus on the organizational cultures of advertising agencies as well as the professional and personal identities of the individuals who work within them. My descriptions, analyses, and conclusions are the result of in-depth interviews with

approximately 35 professionals from two ad agencies located in a large American city.

I seek to uncover the role of ethics and values in these two agencies by (1) reporting the general purposes of the agencies as perceived and articulated by their members, (2) identifying theoperative values that members perceive as shaping the cultures of their organizations, and (3)discussing ethical issues that members see pervading their work. As will become evident, membersof both agencies think that ethical considerations can show their faces both in the "products" (theads) they produce and in their business conduct, e.g., their relationships with clients and the internalfunctioning of their agencies. These two agencies also reveal significant debates that seem to beinternal to the profession of advertising and to the cultures of ad agencies regarding the grounds of moral authority for the profession. These debates turn upon the question of whether and to what

extent advertising professionals and agencies should make moral judgments about, or shape themoral intent of, the ads they produce, or whether they should leave these judgments to externalsources of authority (e.g., clients, customers in the marketplace, or government or industryregulators). Significant debate also focuses on the meanings, roles, and applications of honesty andtruth telling.

BRIEF PROFILES OF THE AGENCIES Agency A is a large regional office of a publicly heldglobal ad agency with offices in dozens of countries. This regional office employs more than 200 professionals who work on several consecutive floors of a very large new upscale office building.The surroundings are sleek, stylish, and contemporary, with tasteful appointments and color combinations. Most professional staff have individual offices that ring the outer edge of each floor,

with dramatic views of the city through windows that span most of the outer walls. People areclustered into functional groups (e.g., creative, media, account executives). Important vice presidents and directors have larger corner offices, with even more dramatic two-directional views.The inner areas of each floor comprise open areas for support staff, information technology, andresearch support services, as well as state-of-the-art conference rooms for client presentations andfocus group discussions. Most of Agency A's clients are large, well-known consumer goodscompanies. Examples of current and past print ads are prominently displayed along the inner hallways throughout the agency, along with plaques and other mementos of award-winning ads.



Members are typically young and friendly, greeting each other by first name. While the agencyclearly has no dress code, most employees are dressed expensively and with stylish flair; it is notunusual, however, to see an occasional writer or artist dressed in blue jeans, t-shirt, and high-topathletic shoes. Business is going very well, and the place exudes confidence.

Agency B is a smaller privately held ad agency with a single office. This local agency employsapproximately 35 people and takes up a large portion of a single floor of a mid-sized office building, away from the more "glitzy" part of town where other ad agencies tend to cluster. Thesurroundings, while stylish and contemporary, are more functional and modest in appointments andsubdued in color and material. Most professional staff also have small individual offices along theouter edge of the agency, with views overlooking the city. The president occupies the only largecorner office, which is stylish and well-appointed, but also clearly serves as a hub for agencyactivity. Its large bulletin board is covered with advertising, most of it work in progress andconcepts and ideas to be developed. People are clustered into functional areas, with accountexecutives inhabiting the outer offices on one side and creatives on another side. Administrative

support staff and other support functions occupy the inner areas of the office in open, half-walledcubicles. Most of Agency B's clients are large and mid-sized local companies in a wide array of business sectors. While the agency displays some of its print ads in its lobby, they are not asnumerous or prominent as those in Agency A. Members are young and friendly; clearly everyoneknows everyone else in this agency. Attire is varied but tends to be more conservative. Business isnot strong currently, and morale and confidence levels are not high.

AGENCY A: A LARGE, HIGH-PROFILE PUBLICLY OWNED FIRMBill Smith is a 69-year-oldsenior vice president of broadcast production, who has been with the agency for more than 30years. He currently supervises 15 people who produce TV commercials for consumer goods clients.Bill has always wanted to be in the advertising industry and loves his work passionately, as

evidenced by the fact that he has not yet retired in an industry known for its youth. He started as acopy writer and broke into TV advertising at its primitive beginnings, initially doing every aspect of TV ads single-handedly with no training. He came to Agency A as a creative director, and he hasseen the agency grow dramatically and evolve through various changes in sometimes tumultuousand stormy leadership as well as a shift from private to public ownership. He sees a central part of his job as motivating his creative people to stay focused on core concepts and to foster a level of teamwork and mutual support that will create the best possible product for clients. Indeed, his goalis to produce advertising that will "put our clients where they never thought they would be andexceed their expectations." He pushes his colleagues and his clients to take risks and reach for breakthrough ads that are exceptional, rather than safe and bland. He also acknowledges a strongduty to manage his budgetary costs prudently, a demand that is more essential with public owners

concerned with dividends and stock values. Bill is here because he loves his work and his craft, itsenergy and pace.

Melanie Summers is a senior vice president and group creative director in her mid-40s who has been with the agency for 10 years. She manages three creative directors and 13 creatives. Her clients include consumer product companies known to all. Her groups produce electronic and printads that are industry award winners prominent on television and in magazines. She began in theindustry as a copy writer and worked at other large ad agencies before coming to Agency A. A



highly creative individual, she speaks eloquently about advertising's important contribution toAmerican society and to the people who work in the industry: "We encourage creative expressionand promote the value of the individual. This industry gives a chance for creative expression. Art'scontribution to science is valued; function and aesthetics are linked together. Our craft forces me to

use everything I am as a person, all my senses." She celebrates the "sense of discovery" that pervades the craft and the industry. Melanie appreciates and nurtures a strong sense of teamwork that pervades her own groups and the agency as a whole, with its capacity to generate collaborationrather than competition, as well as the execution of outstanding ideas. "This place operates purely."Married to another high-powered professional and with three small children. Melanie somehowseems to balance valiantly and efficiently the many competing demands placed upon her time. Sheacknowledges that she has become more paternalistic in her views about advertising since she has become a parent, feeling more strongly about the harmfulness of products such as tobacco.

Purpose of advertising: effective advertising that sells products. Members of Agency A articulatehigh levels of coherence and agreement about their agency's purpose and about their own

professional roles in support of that purpose, which is to serve their clients by helping them selltheir products. This purpose is illustrated by the following statements by agency members: "Our bottom line is to sell products." "We sell solutions for clients." "Our goal is to position products inthe minds of consumers that have benefits that meet needs." This commitment to serve the client isembodied well in Bill Smith's aspiration to put their clients "where they never thought they'd be"and even by a production manager's claim that "we pull them clients out of the gutter with style.".

This basic purpose is perceived to impose an obligation on the advertising professionals to put theclient's interests above their own self-interest or even in some cases the interests of the agency. For instance, tensions can exist between "creatives" (the writers and artists who create the originalcontent and format of the ad), who sometimes want to create "great" ads that win awards and

enhance personal portfolios, and account executives (who manage accounts and relate directly toclients), who wish to produce ads that satisfy the client and sell the product. This tension is genericwithin advertising agencies, and Agency A has resolved the tension in favor of the accountexecutives. Indeed, they pride themselves on the number of industry "effectiveness" awards theywin, as opposed to creativity awards. "Our ads are effective and creative, not outrageous." Strongservice to the client can also conflict with agency interests, for instance the need to generate high profit levels for owners. Some think that revenue and profit demands sometimes compromise clientinterests, however, they suggest that this tension was less apparent earlier, when the agency was privately owned and had not yet become a publicly traded corporation.

Perspectives differ significantly as to whether the overarching commitment to sell a client's

products permits any discriminating moral judgments about the moral nature or social value of the product itself. One member, for instance, stated that service to the client means that "we will takeany product. Would we take Philip Morris? Of course. This is a business." The duty to serve theclient would not allow much moral space for the agency to make critical judgments about the socialvalue or harm of a product. However, individuals in the agency are permitted the freedom of conscience to decline work on an account if they have moral objections to the product or reservations about it. "We respect the desire of individuals who don't want to participate on certain



products," Melanie Summers asserts,.

I would not work on cigarettes, which are not in the customer's or society's best interests. I used tothink that advertising impacts only current smokers, but not anymore. When used as directed, they

produce illness and death. I don't feel good about appealing to people's worst fears. I am much more paternalistic and moralistic since I've become a parent.

The agency's work for a large defense contractor was justified by one member: "I trust our country's political judgments and uses of weapons.".

Some argued the contrary position, asserting that they could not imagine the agency sellingcigarettes. Yet another member argued that "the market" or consumers themselves generally serveas adequate moral safeguards against harmful or bad products. "Our goal is to sell products thatought to be sold. Products that have no merit won't be sold for long anyway." Most in the agencyseem to perceive that customers' choices (the market) or government policy (political judgments

and laws) function as the primary moral arbiters of the goodness or badness of the products theyadvertise. These larger external social forces generally were perceived to make internal, agency-wide moral judgments unnecessary, although individuals within the agency were provided themoral free space to dissent without reprobation and to excuse themselves from participation in anaccount to which they had personal moral objections. In other words, the predominant, but implicit,moral philosophy in Agency A perceives primary (but not exclusive) moral agency to lie outsidethe agency. This reliance upon external moral sources is perceived to free the agency from thenecessity of making on-going moral judgments about social well-being within the practice of advertising. In this sense, morality acts not as a "thicker" vision of the social good that would guideorganizational culture and decision-making about advertising products, but as a set of negativeconstraints, created by society and imposed externally, which define a "thinner" notion of moral

permissibility. The agency is called upon to advance client interests as effectively as their creativeand technological capabilities permit within broad constraints of moral permissibility.

Others acknowledged various ways that moral considerations might conflict with the duty to createeffective ads. Without providing answers to her queries, one member reflected, "We have aresponsibility to understand the impact of our products and ads and whether we leave a positive or negative impact on society. Are we creating culture or merely reacting to it? Are there products thataren't needed or that are bad for you?" She went on to acknowledge that her professional role andits benefit to society are harder to measure than a physician's, for example: "What I do does nothave a direct benefit on consumers like a doctor does a patient." Rather, its social benefit and moral justification are its general contribution to the well-functioning of our economic system: "I am a

part of the cog that creates jobs, opportunity, and the country's wealth. We create needs and desiresthat people sometimes can't afford; nevertheless, it is a positive part of the capitalist system."Another member defended this economic contribution less ambiguously and in a more morallyforceful way: "We allow entrepreneurs to introduce new products. This takes power away from theretailer and gives it to the consumer." In other words, advertising can be a form of empowermentfor the creative contributions of entrepreneurs and thus a means to redistribute power in society,away from traditional centers (mature products and producers) to new sources (new products and producers) that may generate new benefits for users and society. Another, though, could not escape



from this ambivalence of purpose: "How important is advertising really to society? We rationalizeit by saying we serve an economic function, our sales provide jobs, etc. But our value to society isconstantly questioned." Another noted, "We sometimes try to add value where there's really novalue to be added." These women were joined by another agnostic, who commented, "My first

opinion was that advertising was one of the most unethical industries--selling what I don't believein. I'm not sure we're any worse than any other industries, though. I thought it attracted peoplelacking in ethics. I still see questionable people, though--divorces, affairs, sexual harassment,arbitrary terminations.".

Corporate culture: teamwork and creativity in service to the client. All organizations acquire traits,values, and patterns of behavior that collectively shape the individual behaviors of their membersand the work in which they are engaged. Members at Agency A identified the following key valuesand organizational traits: client satisfaction, teamwork, creativity, honesty and truth telling, good judgment, and avoiding conflicts of interest.

Client Satisfaction. Client satisfaction is a strongly articulated value among agency members. Morethan any other, this value functions as the unifying purpose that members identify within their agency. (The reader should refer to the discussion of agency purpose.).

Teamwork. Teamwork involves the capacity of individuals to function effectively in groups to produce ads that satisfy the client. Due to the subjective nature of advertising, teamwork is perceived as an indispensable value, for its absence could result in strong individual egosdominating and corrupting group effectiveness and productivity, ultimately compromising theagency's service to its clients. The strong emphasis on teamwork supports the agency's commitmentto produce "effective" ads that satisfy the client rather than more "creative" ads that win moreindustry creative awards but might not sell the product so effectively. This agency commitment

affects the internal balance of power between creatives and other personnel, primarily accountexecutives: "We're less likely to have creative stars here with big egos that run the place."Individuals speak proudly and appreciatively about the strong bonds of collegiality, excitement, andmutual support that exist among cross-functional work groups serving their clients. This valueserves as a strong incentive for personal excellence and employee satisfaction. One professionalwith years of experience in several agencies stated, "This is the most apolitical agency I've ever worked for. We don't foster individual kingdoms and power struggles. People give away ideas toeach other and put the agency's good above their own personal good.".

Creativity. While creativity is not the dominant value that "trumps" other organizational values, asis the case at other agencies, it is nevertheless vital to the success of the agency: "We produce

break-through advertising that makes our clients' businesses successful. We channel creativity inthe service of effectiveness." Recall Melanie Summers' eloquent portrayal of the expression of creativity as one of advertising's important contributions to society and to its own creative professionals. Said a senior media director whose decades-long career has been spent in theindustry, "Advertising is the poetry; marketing is the information.".

Honesty and Truth Telling. Honesty is generally affirmed as a value embodied in the ways that products are advertised to the public and in relationships with clients. For instance, many



articulated a strong duty to communicate research findings to clients with unswerving honesty. Onthe other hand, members expressed various perceptions of and moral reactions to the agency's practices in billing and expensing client accounts. One member indicated that clients are notoverbilled at Agency A but acknowledged that overbilling occurs at other agencies. Another

suggested that overbilling occurs in the form of "absorbing costs," e.g., when a charge is falselyexpensed to another account of the same client in order to keep an account under budget. The same person shared a frequently expressed view of those interviewed, "Economizing is not a strong valuehere." She went on to claim, "I've never been pressured here to do something unethical," in contrastto a former agency. There, she had been required to create false invoices for a client's account,which she considered an unconscionable request; she complied, but she left the agency shortlythereafter. This response suggests a moral distinction between blatant falsification of totallyfictitious expenses, which is considered an egregious moral fault, and "cost absorption" that merelyshifts actual expenses from client to client or among accounts of the same client, which some seemto consider morally permissible within certain limits. Some claimed that expense reports are paddedoccasionally, for instance by rationalizing that the expenses are generally only "nickel and dime"

items or that one comes to feel he/she is "owed" such minor perks for long and hard work for a particular client that is sometimes not appropriately accounted for in the billings to the client or inthe member's compensation package.

The roles of honesty and truth telling also surface in the tension between taking creative license and providing harmful or misleading advertising. Some acknowledged the potential for "puffery,"subtleties and ambiguities of information and truth claims, and "shades of gray" that are often present in the ways a product is advertised: "We the industry sometimes create perceptions in theminds of consumers that should mean something but really don't." One person cited a recent highlyeffective Kodak ad by a competitor that portrays photography as the "selling of memories" butretorted that "all film sells memories; it's just that one company took advantage of that concept."

Yet the overwhelming consensus is that honesty and truthfulness are important moral values thatshould not be compromised with customer or client: "We must support the claims we make aboutour products . We cannot lie or mislead." "We must exhibit realism in our ads, especially withchildren. We cannot overpromise." One person proposed that creative license with a product is permissible as long as it is not harmful or misleading: "We must be utterly honest when wecommunicate consumer preferences from our research to our clients." Another individual claimedthat the industry engages in "mega-puffery" but believes that "the consumer will recognize it as puffery." Advertising itself is "a world of fabrication." In other words, there seem to be differenttypes of "puffery" and creative license that could be harmful and should be avoided, and some thatare perceived to be less harmful or even harmless and a part of the nature of their industry, function,and craft. Indeed, some expressed comfort in acknowledging the role of external regulations, such

as the networks and federal government, which aim to safeguard the public by preventing certaintypes of intended or unintended deception, e.g., the National Label Education Act, which requiresfull disclosure of nutritional content for food products. Another individual even appealed toChristian values that prohibit her from lying or taking advantage of people: "I won't do thatfabricate based on my personal morality and ethics. Furthermore, telling the truth is the best way to position the product in the marketplace.".

While there seemed to be consensus that dishonesty and even blatant puffery are inappropriate in



advertising, the moral reasons for this prohibition generally were limited to appeals to personalvalues, religion, or economic self-interest. Only one person made any references to industry or professional standards or norms (e.g., network regulations, professional association codes of ethics)or to any legal constraints, noting the National Label Educational Act.

Good Judgment. Good judgment is colored by the general perception that advertising is aninherently "fuzzy," subjective enterprise. While agency members express strong pride andcommitment to doing "good work" for their clients, they acknowledge the inevitable diversity of judgments about what constitutes good work and a good ad. They acknowledge the reality thatadvertising is more art than science, even though the field has become more scientific. For instance,the science of market research has become more sophisticated in its empirical ability to understandand identify consumer preferences. New technologies such as retail information scanning at the point of sale give the producer more precise and sometimes instant feedback about consumer preferences, permitting ever more efficient response to consumer needs. Agency A, like most other large agencies, devotes considerable expense and personnel to utilizing various techniques (e.g.,

focus group discussions with samples of prospective customers) that try to take the guesswork outof predicting whether their ads will be effective in the marketplace. Nevertheless, all acknowledgethe large scope of subjectivity that lies at the heart of their enterprise. This subjectivity can be thesource of lively and creative--indeed, sometimes heated and adversarial--debate among accountteams as they create ads for their clients.

Some expressed the view that this subjectivity implies the importance of "making good judgments":"We work in an essentially subjective business, which raises issues about the objective measureswe use for judgment, which are themselves subjective. This was more difficult in the past when wewere highly politicized and our culture was dominated by cults of personality. Decisions seemedarbitrary." Another stated, "Since there is no 'right or 'wrong, you must trust your judgment." In

other words, judgment becomes a valuable professional skill based upon experience and expertise, but one that is acknowledged to be highly subjective and intuitive, not based on readilydemonstrable, objective criteria and standards, as is the case in some other professions and fields.

Avoiding Conflicts of Interest. A final ethical value is the need to avoid conflicts of interests. Thisissue was discussed especially among buyers in the media department. One media supervisor stated:.

We get a lot of vendors "doing favors" for us, taking us to sporting events, dinner, etc. These become gray judgment calls because you could compromise your judgment and begin to justify it toa client. This potential to cloud one's judgment is especially pronounced in our business because the

factors upon which we base decisions are already so subjective. Such gifts and favors are constantlyavailable as temptations that can compromise the buyer's sense of objectivity and duty to theagency.

AGENCY B: A MID-SIZED, FAMILY-OWNED FIRMByron Newcombe is the 51-year-old president of Agency B. Approximately 15 years ago, he purchased the agency from his father, whothen retired after running the agency for more than 40 years. An active Roman Catholic layman, Newcombe seeks to create advertising that is consistent with his own humane, moral vision of the



world. This goal involves an intentional, but sometimes subtle, effort to inform the moral contentand tone of the advertising the agency creates. For instance, the agency tends to eschew ads that promote violence or aggression, sexist portrayals of women or men, harmful products such astobacco or alcohol, or marginally or questionably beneficial products. Instead, the president seeks

to advertise in ways that tie the product to positive social values such as personal growth, respectfor persons, good health, solidarity among people and family units, nonviolence, and communitywell-being. Byron is a youthful, charismatic individual who is also widely read intellectually in philosophy, religion, and American history and culture. He has an MBA in marketing from a prestigious business school. Under his leadership the agency has grown from $3 million in annual billings to approximately $30 million.

Jane Jacobsen is a highly successful 38-year-old account executive who has been with the agencyfor two years, after working at other larger agencies for several years. According to Jane the purpose of advertising is to help clients sell their products by communicating effectively with their publics. She feels uncomfortable with the president's conviction that the agency should seek ways

to substantively shape the moral character or tone of the messages they communicate or toinfluence the values of their clients. Rather, she subscribes to the belief that an agency's duty is tocreate advertising that sells a client's products. In this sense, the agency's role should be reactive,responding to both clients' wishes and market preferences. Jane is a hard-working, bright, articulate,well-organized, highly competent professional who knows the business well and who takes pride indoing her work of coordinating the development of advertising that meets the needs of her clients.

Purpose of advertising: servicing the client and creating the good society. Agency B's culture isshaped by an internal debate about the purpose and mission of its advertising. This privately heldagency is run by a descendant of its founder, who self-consciously seeks to shape a culture with adistinctive mission and values. The president is a socially progressive and religiously serious

individual who seeks to imbue his agency with values consistent with his own religiouscommitments. Indeed, this agency's values are widely perceived among its members to emanatefrom its president. By contrast, members at Agency A never attributed their organization's stronglyarticulated values to any individual in the agency, either present or past. Agency B has a succinctstatement of corporate mission and values; its president and some of its members claim that thisstatement drives the organization and shapes its advertising and business activities. This statementappeals to such values as exceeding client expectations, employee growth and development, benefiting the end-user, and contributing to the well-being of society.

Hence, where Agency A's mission of service to the client tended not to include much space for discriminating moral judgment about the moral nature or social value of the product itself, Agency

B's morally laden mission statement as well as the strong persona and influence of its president notonly permit but seem to require such moral judgment.

This "morally thick" values-driven vision of advertising's purpose and agency mission has a varietyof effects on the corporate culture of the agency. It variously creates debate, inspires, stimulates andmotivates, and causes skepticism and even occasional reactions of hypocrisy among members.

First, some are inspired by and feel they have reasonable levels of understanding of and



commitment to the agency's and president's commitment to a strongly values-based vision of advertising. (Indeed, this factor attracted them to work there.) For instance, the agency has declinedopportunities to advertise food products with little or no nutritional value because they do not promote physical health. They persuaded one client to alter the way it advertised a military toy,

portraying its humanitarian capacities to rescue lives of comrades rather than its destructivequalities. The president did not want to portray a product in a way that contributed to what he believed were already excessively high levels of violence in the media and popular culture.

All in the agency believe that the agency would never consent to advertise harmful products such astobacco or alcoholic beverages. Some believe the mission can provide a unique market niche thatlinks the agency to likeminded clients who share a commitment to creating a society that embodieshumane values. For instance, members cite a recent business pitch they made to a large sportinggoods manufacturer in which they portrayed the primary value or benefit for the consumer of a product as the joy of physical activity and fitness and as a means for family and friends to celebratetheir bonds of relationship. This approach contrasts with conventional emphases on hard and

painful conditioning, competitiveness and individual achievement, and winning at the expense of others, or the use of sexist portrayals of men and women. Unfortunately, the pitch was unsuccessful because the prospective client hesitated to work with such a small agency. One media director defined the difference in their approach to their products:.

Our president's point of view gives a different spin on how we look at marketing and companies.We try to get outside classic formulas and boxes and bring in the human elements. We ask, "Howdoes a product impact people?" We're starting to get at the core of what's really important with our products and get at the heart and emotion of the product, seeking a "higher element.".

A second cluster of members is unconvinced that such moral agency is even possible in today's

marketplace, given typical agency-client dynamics. One account executive stated, "I'm not sure wehave any ability to influence our advertising. Rather, we are strongly reactive to our clients. Theydrive the product, not us. In fact, in our effort to satisfy our client, we give in too much. We cave inand don't stand up enough to them." When asked if there was anything distinctive about their product, he responded, "I don't think so. The process is the same; the variables that shape the product are the same." Another account executive states, "I haven't seen our values have any practical applications to my clients. None of the work we've done has anything to do with that.".

A third cluster of members exhibits moral discomfort with, if even principled objection to, theclaim that the agency should actively attempt to shape the moral character or message of a client's products. Jane Jacobsen declares, "It's not my job to force my clients to subscribe to a set of

values ; it's my job to help clients sell their products. Our role is reactive. I have not seenopportunities to lead clients to socially responsible opportunities." She goes on to suggest the moralappropriateness of avoiding harm ("I would not do things inherently harmful, like advertise thingslike tobacco or hand guns") but the moral inappropriateness of attempting to define the human goodwith her clients. She regards that as a paternalistic infringement of freedom: "Advertising shouldcreate positive moral values? Whose values are they? I don't share some of our president's moralvalues." Rather, she believes the market should be the moral arbiter of values: "I should offer the benefit that the customer wants even if it's not what I want. My beliefs should not override what the



market wants. I am not willing to make judgments for people.".

In effect, persons representing the latter two positions generally believe that the purpose of advertising cannot be or should not be morally laden in its basic character. It is not an exercise of

practical reason that aims at the moral good. Rather, advertising is basically amoral. It is a matter of technique, albeit good technique. Its value is judged by how well the client and/or thecustomer/market is satisfied, and thus according to criteria that are independent of the moral agencyof the ad agency itself.

This internal debate about how far Agency B should go in shaping the moral content of itsadvertising was adversely colored by two recent developments. First is the fact that the agency has been in a period of economic stagnation for the past few years, during which they have not securedany new clients. This problem has resulted in downsizing, notably two painful workforcereductions two years ago, the first in the agency's history. Morale is low; members fear for their jobs and criticize the agency's unsuccessful efforts to secure new business. Many conclude that

their values-driven philosophy is ineffective and that their president's optimistic belief that they cancarve out a special niche in the marketplace is misplaced: "These values haven't brought us any new business. It shouldn't be this hard." Many see no tangible positive results for the agency, likegrowth in clients and revenues, and thus are quick to discard the values as insignificant if not problematic for the agency: "We need new business right now, not values." Many see the agency'svalues as inconsequential, as luxuries that are not affordable for the time being, if not harmful totheir efforts to acquire new clients. Perhaps they are trying to be something that nobody wants.

A second development was a recent experience with a very difficult major client, with whom theagency had an unpleasant and trying relationship from the start. Trust levels were chronically low.The client was extraordinarily hard to please. Account executives came to dread their contacts with

client representatives. Creatives came to expect their work would always be rejected; they werealways going back to the drawing board to generate entirely new concepts. There was constant bickering about billings and payments. The relationship was fraught with power struggles in whichthe agency tried to be accommodating. Late in the relationship, the client asked the agency virtuallyto copy the successful ad of a competitor, which it did, with the knowledge and at least tacitapproval of the agency's senior management. This ethical lapse surprised most in the agency, particularly those who already doubted the efficacy of the agency's "high-minded moral stance."When the competitor discovered the similarity, the client was forced to withdraw the ad. Indeed,this client and this event are the most talked-about internal story that defines the culture of theorganization. In the minds of some, the event seriously compromised the integrity of the agency's philosophy and substantially deflated the seriousness with which many members, especially the

avowed "atheists" and border-line "agnostics," were willing to entertain the practical viability of theagency's espoused philosophy and the president's role as charismatic moral leader. Later, when theagency decided to resign this account (an action very unusual in the industry), nearly everyonesupported the decision as long overdue, in spite of the substantial loss of revenues for an agencythat was already struggling to retain its personnel. The overall consensus was "Our values and self-respect told us to do this. Why didn't we do it long ago?".

Corporate culture: a caring community fighting for survival. Members at Agency B characterize the



corporate culture of the agency in terms of the following operative values: respect for theindividual, openness and low levels of organizational structure, service to the client, and honesty.

Respect for the Individual. While there are open debate and difference of opinion as to whether the

agency's product differs at all from what competitors produce, there is nearly unanimous agreementthat Agency B is qualitatively different from any other agency any have worked for: "This placehas a heart." "I am respected and cared for as an individual." This atmosphere emanates from thetop. The president and other senior managers are known for their "personal touch" with members.Many describe the place as "family" and speak appreciatively of long conversations theyoccasionally have with the president, who cares about their lives and ideas. Individuals generallyleave his office stimulated and impressed with the president's personal concern, charisma, and probing and intellectually provocative mind. He challenges them to consider issues from radicallydifferent perspectives. Indeed, until recently the agency had never experienced a layoff other thanthe occasional termination of an unproductive member. Longevity in the agency was considerablylonger than the norm in the industry: "People are not disposable here like they are in other

agencies.".

While this commitment to respect and value the individual is generally appreciated, it is also thecause for internal debate and strife. Privately, some in the agency wonder if some longer-termmembers are productive and talented enough to justify their employment and/or level of compensation. Some believe that loyalty is more highly valued than talent and wonder whether theagency can afford this choice during a period of extreme financial difficulty. Some note that thisvalue made the process of effecting the workforce reduction extremely slow and painful and perhaps inordinately delayed, to the detriment of agency morale and productivity.

Openness and Low Levels of Organizational Structure. Agency B is a highly fluid organization,

marked by low levels of bureaucracy and hierarchy. Members work in cross-functional teamsservicing client accounts, but these teams are not highly rigid in structure. Many members may beinvolved in an account. Individual initiative is generally welcomed. The president's door is alwaysopen, and people know him to be highly approachable. He seeks input, suggestions, and criticismfrom all in the agency without recrimination, to the point that some wonder whether there is enoughrespect and deference for this position.

At the same time, this low level of structure results in very little attention given to formal procedures like goal-setting, strategic planning, the creation of job descriptions, and performancereviews. As a consequence, some complain that the agency is not serious enough in its efforts tomeasure and monitor performance, which is especially worrisome at a time of financial

vulnerability and fear of job loss. Some suspect that a stronger system of regular performanceappraisal might have eliminated the shocking necessity of the layoffs two years earlier.

Service to the Client. Members generally believe that the agency distinguishes itself in its capacityto serve the client by developing strong relationships with client representatives. A media director says.

Our clients are usually here and not at a large agency for a reason. I think we develop our



relationships with our clients differently. We have strong involvement and closeness. This ability todevelop relationships gives our agency personality. Some clients want "hand-holding" and desirehigh levels of service. Our relationship with clients becomes more real more quickly.

Like Agency A, Agency B does not have a culture that is driven by its creative department. Indeed,creatives often lament the fact that their best ideas and work are rarely accepted by their clients,who tend to be conservative. They complain that agency account executives and clients drive thedirection of the creative work, stifling their creative energies, and that the account executives tooquickly "cave in" to clients' desires.

In Agency B, commitment to serve the client also entails the tendency to "underbill" clients: "We'lleat costs we don't think a client should pay for, almost to a fault." "I don't know why we have someof our clients. We haven't made a penny from them." This frugality is contrasted with the expensingand billing practices at Agency A.

Honesty. Apart from the earlier example of the pirated ad, members assert that honesty pervadesthe work of the agency. For instance, they claim that the agency will never overbill a client. Onemember even cited an incident in which the president returned an overpayment of several thousanddollars to a previous client when it was discovered two years after the fact. He goes on to marvel atthis event, claiming it would never occur in a typical agency. Furthermore, some believe the agencydoes not charge enough for some of its services, noting that some client accounts perennially fail togenerate a profit for the agency. They suspect that this pattern stems from the president's desire tomaintain long-term relationships and high levels of client satisfaction, in the hopes that theseaccounts might grow and become profitable in the future. Unlike Agency A, members of Agency Bnever mention incidents of expense account padding.

In light of this consistent record of fiscal honesty and the president's personal vision of strong moral purpose, the incident of the pirated ad seems even more curious and out of place in this agency.Both creatives and account executives expressed surprise and shock that the event could haveoccurred within this organizational culture. Even those who do not share the president's morally"thick" vision of the role of advertising in creating the good society regarded the event as a faux pasand a clear error in judgment. For creatives, this constitutes a violation of the values internal to the practice of the profession insofar as stealing someone else's creativity and attributing it to oneself denies the expression of creativity--it is artistic plagiarism. Even account executives acknowledgedthat pirating ads is something that "just isn't done in our industry," even though it was demanded bythe client. In the end, this moral lapse seemed to be a function of a very difficult and trying clientrelationship, which was also harming the agency financially. Many perceived it as an act of

desperation for a client who could not be satisfied by any other course of action.

CONCLUSIONS Corporate culture shapes the ethical understandings and practices of theseagencies. A key ethical question is the fundamental purpose of advertising itself. How this purposeis defined, in turn, shapes the grounds of moral authority of the advertising professional. AgencyA's corporate culture espouses a more "conventional" philosophy, which views the agency'srelationship with is clients as fiduciary. As such, its role is to advance the clients' interests bycreating advertising that sells their products as effectively as possible, thus maintaining long-term



client relationships. The relationship is "morally neutral" in that it makes minimal judgments aboutthe "moral goodness" of the products, assuming that such judgments about social benefit and harmare made primarily through external mechanisms (consumers, government). In effect, the moralauthority of the advertising professional is attributed to, and to some extent surrendered to, external

sources.

Agency B's corporate culture is strongly shaped by its CEO, who attempts to translate his personalmoral convictions into the agency's philosophy of advertising. That vision is more morally laden.Agency B attempts not only to serve the client well but also to do so in ways that advance a particular vision of the good society. This latter philosophy is more prone to make moral judgmentsabout the goodness or badness of products and also about the values that are communicated in theadvertising of the product.

Predictably, the moral ambiguity that surrounds advertising's social purpose also results in someexpressions of ambiguity about individual professional identity. Some members of both agencies

expressed ambivalence and uncertainty about their own contribution to society, questioningadvertising's varied impacts, value, and benefit to society. Others, however, spoke with great professional pride of its contribution to the economy by facilitating the buying and selling andgoods as well as its capacity to promote artistic creativity in the service of client. Almost all attestedto their own personal growth and development within their agencies.

Members of both agencies are able to identify clear operative values at work within their organizations. What are the sources of these values? The most visible source seems to be theorganizations' unique corporate cultures. Notably absent in either agency was any appeal toindependent moral standards or professional codes that one would find in a professional ethic (e.g.,law, medicine, or accounting) and that stand beyond the norms of one's particular work

organization or any mention of memberships in professional advertising organizations. Nevertheless, these advertisers exhibited strong pride in their work. They generally viewed their work as a highly skilled craft, merging science and art in the service of their clients. Notable in bothagencies was a strong commitment to pro bono work done for various nonprofit organizations,typically ones that were identified and publicly featured by the agencies for special sponsorship andassistance. Some also cited "personal values" as sources of morality, with religion included as a"personal value," i.e., a value external to the agency that an individual member "brings to work."Typically, personal values, including religion, acted as moral "trump cards." As such, they providea type of immunity for the individual, which permits him or her to be excused from a practice thatmay be standard within the agency. For instance, individuals could be formally excused fromworking on an account whose product they found morally questionable or problematic. Some might

decide not to pad expense accounts, although others might do so occasionally. Byron Newcombe isthe one dramatic exception to this more individualized notion of morality with his understanding of morality as the shape of corporate and social vision.

The interviews from these two agencies suggest that questions of honesty and truth telling createfundamental moral challenges for the practice of advertising. Indeed, these moral challenges seemembedded in the very nature of the practice of advertising and its role in a consumer society. Thischallenge stems in large part from the extent to which advertising engages in puffery, which



embellishes, fabricates, and fantasizes in its effort to persuade the customer to purchase a producton the one hand, and the moral boundaries that society wishes to place around that enterprise on theother hand. These boundaries try to define permissible limits to the intent and honesty of advertising's claims and attempt to prevent some social harm. This issue itself begs the larger

question of advertising's moral purpose in society. To what extent is advertising merely creativelicense to portray the product in ways that will most effectively persuade the buyer? To what extentdoes society have other expectations of advertising's role, such as provider of factual information or as vehicle to create a more substantive vision of the good society? In other words, the fact that puffery seems inherent to the practice of advertising itself relativizes or limits advertisers' andsociety's expectations of truthfulness or honesty of the product claims. At the same time, thisrelativizing is limited, for it does not permit advertisers to make claims that cannot be substantiated,contradict empirically substantiated evidence, or mislead in ways that may cause harm to the user.Creative license is not unconditional, but is itself constrained by moral considerations that aim to protect the public welfare. How and to what extent this creative license should be limited, however,is subject to considerable reflection and disagreement, both within the industry and in society.

Indeed, this ongoing question will frame much of the moral debate about the character,contribution, and value of the profession to the larger society.

While most professionals in these two agencies acknowledge that advertising engages in puffery,they also strongly affirm honesty and truth telling as important values internal to the practice of advertising. For instance, one is duty-bound never to misrepresent information (e.g., marketingresearch) to the client, nor should one fabricate fictitious expenses. Showing favoritism withvendors is also rejected as an inappropriate course of action. Plagiarism of competitor's ads is alsoconsidered inappropriate but occurred surprisingly under conditions of business duress. Paddingand even shifting of expenses among accounts seem more common practices. Hence, honesty andtruth telling are not unconditional values; exceptions are made. In sum, how professionals and

agencies define the expectations and limits around the embodiment of these values within their own practices often seems unclear and open to internal probing and debate. Clarifying moralexpectations around honesty and truth telling will be an important task for the profession and theindustry. Ad agencies would do well to make such moral concerns explicit topics for reflection anddebate as they shape the fabric of their cultures and clarify what they see as their fundamental purpose to society.

Added material.

David Krueger is the Charles Spahr Professor of Managerial and Corporate Ethics at Baldwin-Wallace College.

Adapted from the Poynter Center March 1998 study entitled "Religion, Morality, and theProfessions in America." Used by permission.

FirstSearch® Copyright © 1992-2001 OCLC as to electronic presentation and platform. All Rights Reserved.E-mail address: [email protected] Location: http://FirstSearch.oclc.org Return

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Ethics Violations to Avoid on Law Firm Web Sites

From case studies to core practice-area content to e-mail

newsletters, law firms have a variety of Internet-based content

tools they can use to inform potential clients of who they are and

what they do. Other online marketing tactics, however, fall

outside of state ethics rules, as well as the ethical guidelines the

American Bar Association (ABA) promotes the states to adopt.

As an attorney working to develop client relationships online, it’s

your responsibility to educate yourself about these rules and apply

them. One good resource is the AMA Web site, which provides links

to the rules governing lawyer advertising, solicitation and

marketing in all 50 states:www.abanet.org/adrules

While the ABA’s prohibition against posting "false and misleading"

information on a legal Web site is interpreted differently in various

states, there are some established guidelines your law firm can

refer to make sure that you are operating ethically on your site.

Some of the key areas that your firm should address include:

Illegal communications. If the Internet is anything it’s

information-rich — and the unauthorized "borrowing" of content is

a recurring problem. Utilizing plagiarized materials, stolen

testimonials or copyrighted images from other Web sites is not

only unethical, but illegal.

Omissions. Statements such as "No Recovery — No Fee" can be

misleading if the client is exempt from legal fees only and is still

liable for courts costs or administrative fees. Many states require

disclaimers when contingent fee arrangements are publicized.

Another common omission on legal Web sites is the posting of

positive awards and settlements without a prominently displayed

disclaimer on all relevant pages of the site stating that results may

vary or that the facts and circumstances of each case dictate the

results.



News & Features

• How has the internet changed word-of-mouth advertising?

• Lions, Tigers and Bears, oh my... What was that attorney thinking?

Baby Milk Powder Contamination at China’s Sanlu: Violation of Business EthicsPublication Year : 2010

Authors: by Sudeshna Bhattacharya, Snehasish Chaudhuri and Seshagiri Rao Chaganty

Industry: Manufacturing

Region: China

Case Code: GOV0049IRCTeaching Note: Not Available

Structured Assignment: Not Available

Abstract:

In 2008, Sanlu, a Chinese dairy farm was accused of producing melamine contaminated milk. After drinking this

milk formulation, nearly 53,000 infants across the country were affected with 13,000 infants immediatelyhospitalised. Negligence of the company, lack of proper food safety measures and cut-throat competition within

the industry were some of the factors which led to such a scandal. The company was badly affected as a result.Sanlu was driven into a huge financial crisis and ultimately became bankrupt. To save the company, the Chinese

government invited other companies to acquire Sanlu. Finally, Sanyuan Food Co agreed to acquire it. The

Chinese government launched a thorough in-depth investigation to find out the actual cause behind the scandal.

Stringent quality check measures were adopted by the government. Investigators were instructed to check each

and every batch of milk produced in the dairy farms. These measures finally helped the government to ensure thatcontamination free milk was produced after 14 September 2008. Although the Chinese government was able to

stop the further spread of the contamination, the future of Sanlu remained doubtful. Critics were sceptical about

Sanlu's ability to regain its lost status and goodwill in the industry. The pedagogical objectives are to: (1) analysethe factors that led to the milk contamination at Sanlu; (2) estimate the measures taken by Sanlu to bring things

under control; and (3) understand the measures adopted by the Chinese government to prevent further occurrence of such a milk scandal.

Pedagogical Objectives:

http://www.kevinmullikin.net/CM/Articles/The-Limbo.asp

http://www.kevinmullikin.net/CM/Articles/Lions.asp

http://www.ibscdc.org/corporate_governance_case_studies.asp

http://www.kevinmullikin.net/CM/Articles/The-Limbo.asp

http://www.kevinmullikin.net/CM/Articles/Lions.asp



Keywords : Melamine contamination; Chinese dairy industry; Fonterra; Baby milk powder scandal; Product recall;

Inner Mongolia Yili Industrial Group; Sanyuan Food Co; Food contamination; Protein content; Rich in nitrogen;

Adulteration; Kidney stones; Fraudulent middlemen; Cut throat competition; Cyanuric acid

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Recently

Ethics In Attorney Advertising & Solicitation

© 1997 Charles F. Luce, Jr.All Rights Reserved Worldwide

A. The Basics: Advertising & Solicitation

Probably more attention has been given to the regulation of attorney advertisingin recent years than is deserved, at least based on the volume of advertising actuallydone. While more Colorado attorneys advertise today than prior to the SupremeCourt's unshackling of attorney commercial speech in Bat es v. State Bar of Arizona,433 U.S. 350 (1977), mass media advertising is still relatively shunned, or is done in alow key manner,e.g., sponsor ship announcements for Public Television or NationalPublic Radio.

One demonstrable effect of the Supreme Court's letting attorney advertising outof the closet, was a marked change in attorney ethics codes. At its pre- Bates height,the former Colorado Code of Professional Responsibility resembled a laundry list of "thou shalt nots." In sharp contrast, the Colorado Rules of Professional Conduct,

based upon the ABA's Model Rules, is shorter, simpler, and clearer. R.P.C. 7.1establishes a general rule of "don't lie, don't mislead, don't create unjustified

http://www.ibscdc.org/Case_Studies/Corporate%20Governance/GOV0033.htm





http://www.lawyermarketing.com/


















expectations regarding a potential result." Rule 7.2 sets forth the rules for advertising,Rule 7.3 the prohibition against in-person solicitation. Rules 7.4 & 7.5, not discussedhere in detail, deal with the particulars of identifying fields of practice, and firmnames and letterheads, announcements, business cards and the like.

Rule 7.1. Communications Concerning a Lawyer's Services

A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it:

(a) contains a material misrepresentation of fact or law, or omits a factnecessary to make the statement considered as a whole not materiallymisleading;

(b) is likely to create an unjustified expectation about results the lawyer canachieve, or states or implies that the lawyer can achieve results by means that

violate the Rules of Professional Conduct or other law; or

(c) compares the lawyer's services with other lawyers' services, unless thecomparison can be factually substantiated.

The general rule set forth in R.P.C. 7.1 requires little embellishment. The only potentially subtlety, clarified by the Comment, is that "testimonial," type advertising,or other factually correct recitations of the attorney's prior successes, are likely tocreate impermissible unjustified expectations. Attorneys using such advertisementswould be well advised to include precautionary disclaimers regarding the uniqueness

of each case, and the unreliability of past performance to predict future results in a particular case.

Rule 7.2. Advertising

(a) Subject to the requirements of Rules 7.1 and 7.3, a lawyer may advertiseservices through public media, such as a telephone directory, legal directory,newspaper or other periodical, outdoor advertising, radio or television, or through written or recorded communication.

(b) A copy or recording of an advertisement or communication shall be kept for

two years after its last dissemination along with a record of when and where itwas used.

(c) A lawyer shall not give anything of value to a person for recommending thelawyer's services, except that a lawyer may pay the reasonable cost of advertisements or communications permitted by this rule and may pay the usualcharges of a not-for-profit lawyer referral service or other legal service



organization.

(d) Any communication made pursuant to this rule shall include the name of atleast one lawyer responsible for its content.

Rule 7.2(a) merely recognizes a constitutional truth. Subsections (b) & (d) are recordkeeping and content requirements. Subsection (c) is the current embodiment of the"anti-feeder operation" prohibition. It prohibits participation in any for-

profit advertising service where something greater than the value of the "reasonablecost of the advertisements or communications" is charged.

Rule 7.3. Direct contact with Prospective Clients

(a) A lawyer shall not by in-person or live telephone contact solicit professionalemployment from a prospective client with whom the lawyer has no family or prior professional relationship when a significant motive for the lawyer's doingso is the lawyer's pecuniary gain.

(b) A lawyer shall not solicit professional employment from a prospectiveclient by written or recorded communication or by in-person or telephonecontact even when not otherwise prohibited by paragraph (a), if:

(1) the prospective client has made known to the lawyer a desire notto be solicited by the lawyer; or

(2) the solicitation involves coercion, duress or harassment.

(c) Every written or recorded communication from a lawyer soliciting professional employment from a prospective client known to be in need of legalservices in a particular matter and with whom the lawyer has no family or prior professional relationship, shall include the words "Advertising Material" on theoutside envelope and at the beginning and ending of any recordedcommunication.

While largely self-explanatory, R.P.C. 7.3 warrants a few observations. First, thegeneral rule prohibiting in-person solicitation is applicable only where "a significantmotive for the lawyer[] . . . is . . . pecuniary gain." Thus, so long as subsection (b) isnot violated, an attorney may, for example, solicit clients in-person for a pro

bono cause.

Second, subsection (c) is primarily directed to targeted direct mail advertising,where the lawyer "knows" the prospective client is in need of legal services "in a

particular matter." Untargeted commercial communications to less than the entireworld is simply advertising, and is governed by Rules 7.1 & 7.2.



Finally, a Colorado lawyer using direct mail solicitation should also becognizant of Colo. Rev. Stat. 12-5-115.5. This statute, enacted in 1996 in response tothe Supreme Court's decision in Florida Bar v. Went For It, Inc., ____ U.S. ____, 115S. Ct. 2371 (1995), establishes a 30-day "cooling off" period during which solicitationof legal employment may occur. To the Colorado General Assembly's credit, thefocus of this law is truly protection of vulnerable consumers and, unlike the FloridaBar's restriction pertaining only to attorneys, it does not appear to have theconsequence of merely creating an "insurance adjuster 30-day head start" rule:

12-5-115.5. Solicitation of accident victims - waiting period.

(1) Except as permitted by section 13-21-301 (3), 10-3-1104 (1) (h), or 10-4-706, C.R.S., no person shall engage in solicitation for professional employmentor for any release or covenant not to sue concerning personal injury or wrongful death from an individual with whom the person has no family or prior

professional relationship unless the incident for which employment is soughtoccurred more than thirty days prior to the solicitation.

(2) No person shall accept a referral for professional employment concerning personal injury or wrongful death from any person who engaged in solicitationof an individual with whom the person had no family or prior professionalrelationship unless the incident for which employment is sought occurred morethan thirty days prior to the solicitation.

(3) As used in this section, "solicitation" means an initial contact initiated in person, through any form of written communication, or by telephone, telegraph,

or facsimile, any of which is directed to a specific individual, unless requested by the individual, a member of the individual's family, or the authorizedrepresentative of the individual. "Solicitation" shall not include radio,television, newspaper, or yellow pages advertisements.

(4) Any agreement made in violation of this section is voidable at the

option of the individual suffering the personal injury or death or such

individual's personal or other authorized representative.

B. Applying the Basics to the New Frontier

1. Advertising on the Internet

The seductive force of the Cyberbahn has caused many staid firms who havenever before considered advertising in a mass medium to face attorney advertisingissues for the first time. Having a "presence on the web" is now de rigueur .Conversely, not having a presence on the Internet is a professional embarrassment, aninstant loss of credibility, particularly as to business clients having an e-mail culture.(1)

http://www.mgovg.com/ethics/11advert.htm#N_1_




For lawyers new to advertising regulation, the Rules of Professional Conductoffer no direct guidance. The words "Internet" and "website" are nowhere to be found.Fortunately, there is no shortage of analysis by Web ethicists.(2) Also, once familiar with the medium, the basic concepts of "advertising" and "solicitation" are notdifficult to apply.

There is little doubt that the Internet is a "public media," in which attorneys are permitted to advertise. R.P.C. 7.2(a). "The Basics," discussed above, apply with equalforce to the Internet. The real challenge in applying Rules 7.1 to 7.5 to "Netvertising"is that the lines between solicitation and advertising occasionally blur.

Most persons think of the Internet as the "World Wide Web," the graphical,hypertext component of the Internet accessed by "browsers." A firm website, so far one of the most common use of the Internet by attorneys, is analogous to a printedfirm brochure. Whether or not the firm website constitutes "advertising," depends

upon its content. Beyond the World Wide Web, the Internet includes electronic mail,news groups, list servers, real-time interactive "chat," telenet, push servers, and avariety of other applications, each of which has the potential to be used for advertisingor solicitation. While e-mail is generally used in the same manner as traditional "snailmail," other Internet applications don't comfortably fit a single traditional printtemplate. For example, there is some debate about whether seeking new clients over real-time chat should be considered advertising or solicitation, i.e., is it "in-person" or "live telephone contact"? See R.P.C. 7.3(a).

As yet, Colorado has not established any Internet-specific regulations pertainingto practice of law. Iowa, Pennsylvania, South Carolina and Tennessee have issuedethics opinions applying existing ethics rules to Internet applications. Moreover,Texas and Florida have published website advertising guidelines, requiring thesubmission of attorney websites for approval. See, e.g., Iowa Ethics Opinion 96-1(1996); Pennsylvania Ethics Opinion 96-17 (1996); South Carolina Ethics Opinion94-27 (1995); Tennessee Ethics Opinion 95-A-570 (1995); Texas Disciplinary Rulesof Professional Conduct, Part 7.

Applying the Colorado Rules to Colorado attorney websites, there is anargument that a website is neither solicitation nor advertising. Currently, a lawyer'swebsite must be sought out by potential clients. This is more analogous to a firm

brochure being mailed at the request of a prospective client, than a broadcastadvertisement. Still, most attorneys do, at least impliedly, advertise the availability of their services on their website. Based upon treatment by other jurisdiction, an attorneywebsite will probably be fairly considered advertising, though probably notsolicitation. Accordingly, the requirements of Rules 7.1 & 7.2 must be adhered to,including rules regarding truthfulness, testimonial advertising, record keeping, content








requirements.(3) The requirement of identifying jurisdictional limitations on practiceimposed by R.P.C. 7.5(c) is be no more burdensome in electronic than in print media,and should not be neglected on the lawyer's website. Rule 7.5(b)'s restrictions ontradenames, arguably, could create some interesting disciplinary actions for creativedomain name selection , e.g., winning-lawyers.com or scorched-earth.com, however,domain names cannot be equated to tradenames across the board, and the greater issues raised by such domain names would arise under Rules 7.1(a) and 7.5(a).

With regard to solicitation through the Internet, the verb "to Spam" -- 'Net parlance for "to send commercial messages to vast numbers of persons on a generallyindiscriminate basis" -- is virtually linked in infamy with the activities of the Phoenixlaw firm of Canter & Siegal which, in April 1993, posted an advertisement for immigration services to thousands of Internet news groups without regard to thesubject of the news group.(4) While the indiscriminate nature of the posting probablywould place this incident in the category of advertising, rather than solicitation, amore discriminating and targeted "Spamming" would have to comply with R.P.C.7.3(c)'s requirement of identifying the message as "Advertising Material."

Another interesting and as yet unanswered question is whether participation inreal-time chat forums, list servers or the like constitutes solicitation? While it isdifficult to discern motive, and although some attorneys at least privatelyacknowledge participating in such forums as a means of generating business, theauthor believes that, absent clear evidence of a primarily pecuniary motive, attorneyswill not be compelled to include the header "Advertising Material," each time they

partake in an Internet discussion that might generate some business, any more than anattorney should feel compelled to flee a cocktail party should someone walk up ask for "curbside" advice. As shown in the "Green Card Incident," the enforcementmechanisms of the Internet community in regulating unwanted or obnoxioussolicitation are not ineffective.

Another practical consideration is the distinction between a permitted "law list,"or other directory, and an impermissible for-profit referral service. A state or local bar hypertext link to a lawyer's website, or a presentation of the type of traditionalobjective information normally found in lawyer directories should present no ethical

problems, while an electronic feeder operation should be recognized as improper if it purports to recommend counsel.

One troubling unaddressed ethics issue on the Cyber frontier is "whose lawapplies?" ABA Model Rule 8.5(b)(2)(ii) provides a choice of law rule for attorneyslicensed in more than one state, whereby the rules of the jurisdiction "in which thelawyer principally practices" apply unless the "particular conduct clearly has its








predominant effect in another jurisdiction in which the lawyer is licensed." Coloradohas not adopted this rule, however Colorado Rule 241.17(a) provides, in part:

Except as otherwise provided by these Rules, a final adjudication in another jurisdiction of misconduct constituting grounds for discipline of a lawyer shall,

for purposes of proceedings pursuant to these Rules, conclusively establishsuch misconduct.

Conceivably, under this rule, a state in which the attorney is not licensed could purport to assert jurisdiction over a lawyer licensed in only in Colorado, with awebsite physically located in Colorado (but which, of course, can be accessed "worldwide"), and sanction the attorney for not complying with its individual advertisingrequirements. Although 241.17 does permit the attorney to collaterally attack theforeign jurisdiction's findings, the problems created by the world wide nature of theWeb have caused most cyberethicists to advocate against a state attempting to regulate

attorney websites "long distance," and none has yet purported to do so,notwithstanding that various state long-arm statutes have already been quite properlyapplied to transactions involving commerce on the Web.

The conservative approach is for those lawyers licensed in more than one stateto follow the advertising rules of the most restrictive state in which they are licensed.Attorneys licensed only in Colorado should adhere to the Colorado Rules regardingwebsites, but exercise caution in other Internet applications which could legitimatelysubject an attorney to another jurisdiction's regulations regarding the unauthorized

practice of law(5) or solicitation. The regulation of attorney websites by jurisdictions in

which the attorney is not licensed, however, remains an open question. See generally,ABA/BNA Lawyers' Manual on Professional Conduct, 81:565 - 570; PennsylvaniaEthics Opinion 96-17 (1996).

2. MultiState Advertising and Solicitation

Even more mundane types of advertising raise multistate ethical issues regardingthe regulation of solicitation and advertising. The author recently reviewed the laws of thirty states to assist in the preparation of a direct mail solicitation on behalf of anattorney-client. Notwithstanding the simple beauty of the ABA Model Rules, the

author's exercise was reminiscent of his earliest days of legal practice spent "BlueSkying" securities offering circulars, with the marked difference that the laws of thevarious states regarding attorney advertising and solicitation are considerably lessuniform and more convoluted. It is virtually impossible to prepare a single direct mailsolicitation to more than approximately three states because, not only are the variousstates' regulations different, they are more often than not inconsistent in even the mostmundane details, e.g., the color, font size, location(s) and precise language that must





disclose to the recipient that she is about to be subjected to "legal advertising,""ADVERTISING MATERIAL," or LEGAL ADVERTISING.

Any attempt to chronicle the various state differences would be a futile asshooting a pea at comet Hale-Bopp; it couldn't possibly reach the target and, even if it

could, the target would be long gone by the time the pea arrived. Suffice it to say thatit appears that the limited commercial speech Bates giveth, state bureaucracy hathtaken away. Because of this situation, many have called for a national system of regulation of attorneys, or at least of attorney advertising or solicitation. TheConstitutional tradition of state regulation of attorneys, and state protection of itsconsumers, however, makes acceptance of federal preemptive regulationexceptionally difficult. Moreover, strong policy arguments support differences in stateregulation, and the Supreme Court's decision in Florida Bar v. Went For It, Inc., ____ U.S. ____, 115 S. Ct. 2371 (1995) suggests that differences in state laws regulatingattorney advertising and solicitation will be respected. Accordingly, conservative

practitioners engaging in direct mail solicitation targeted to citizens outside thestate(s) in which they are licensed, should budget the time and expense necessary totailor each piece of direct mail advertising to comply with the laws of each state towhose citizens it is directed. This will involve careful scrutiny of each state's rules andstatutes, and may require submission to a state agency, either before or concurrentwith the solicitation, and payment of a fee.

3. Commercial Attorney Referral Services

The most interesting questions regarding commercial attorney referral servicesunder the Colorado Rules is (1) their persistence and (2) how it is that so manyColorado attorneys do not know that such services are prohibited.

A lawyer shall not give anything of value to a person for recommending thelawyer's services, except that a lawyer may pay the reasonable cost of advertisementsor communications permitted by this rule and may pay the usual charges of a not-for-

profit lawyer referral service or other legal service organization. (Emphasis added.)

R.P.C. 7.2(c). The Comments to this rule make it clear that a "legal serviceorganization" is not a for-profit business which recommends certain lawyers. Thus,while an attorney may pay the usual charges of a nonprofit lawyer referral services,such a Metro Lawyer Referral, the restrictive, selective, for-profit referral services aretaboo. Note that the Colorado Rules do not restrict the for-profit business soliciting anattorney to join, but rather the attorney giving anything of value to such anorganization for referrals. See generally Colo. Bar Ass'n Ethics Committee Opinion83, Lawyer Advertising, Solicitation and Publicity (November 18, 1989; addendum



issued July 24, 1993) (discussing variations on the for-profit plans under the former Code).

1. Overstatement? Media hype? Technology de jour ? Hardly. The parallel to the

deployment of inexpensive fax machines is, as Yogi said, " deja vu all over again." In1985, fax machines were temperamental, slow, expensive and unreliable. No one hada "fax number." Today, a business which doesn't have a dedicated fax line is notviewed as a serious enterprise. Just a few years ago, few outside of academia or thetechnology subculture had a clue what the "Internet" was. Today, your e-mail addresscomes either before or after your dedicated fax number on your business cards andletterhead. The absence of e-mail capability is rapidly overtaking the absence of voicemail as something to be apologized for.

2. Among of the best of the early analysis is Rogers, How Do Advertising Rules

Apply to Lawyers on the 'Net?, 12 ABA/BNA Lawyers' Manual on ProfessionalConduct, Current Reports, p. 37 (Feb. 21, 1996); Read, Pushing the Advertising

Envelope: Building Bill Boards in the Sky Along the Information Superhighway, 23Western St. U.L. Rev. 73 (1995); and the ongoing analysis included in the ABA/BNALawyers' Manual on Professional Conduct, 81:551.

3. Even if Rule 7.1's requirements regarding truthfulness did not apply toattorney websites, Rule 8.4(c)'s does. Rule 7.2(b)'s record keeping requirementsshould be met by a regular program of archival backups, which a competent attorneyshould have in place regarding all computer files anyway.

4. The response of the Internet community to this flagrant breach of "Netiquette"was fast and furious. Thousands of incendiary responses -- "flames" in 'Netspeak --

brought the firm's Internet service provider's server crashing down, which caused thefirm's ISP to revoke its access rights.

5. A discussion of the unauthorized practice of law is beyond the scope of thisarticle. It is important for Colorado lawyers to know, however, that violation of thelaw of state in which the attorney is to alleged to have practiced without authority is

punishable under the Colorado Rules:

A lawyer shall not:

(a) practice law in a jurisdiction where doing so violates the regulations of thelegal profession in that jurisdiction . . .

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. . . .

The definition of the practice of law is established by law and varies from one jurisdiction to another.

R.P.C. 5.5 & Comment.

Return to the first page of Charles Luce on Legal Ethics and the

Practice of Law.

Business Case Studies, Corporate Social responsibility Case Study, Colas in India,The Pesticide ResidueControversy

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Home » Case Studies » Corporate Social responsibility

Corporate Social responsibility Case Study

Case Title:

Colas in India – The Pesticide Residue Controversy

Publication Year : 2006

Authors: Saravanan I B

Industry: Beverages

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Region:India

Case Code: CSR0033C

Teaching Note: Available

Structured Assignment: Not Available

Abstract:

India, with its GDP growing annually at 7.5% and its middle income group’s disposable income also increasing,

remains a priority market for the colas. In this context, in 2003, following an analysis on bottled water

manufactured by the cola companies, CSE, through its lab, PML, had released a report stating that colas

contained four toxic pesticides, Lindane, DDT, Malathion and Chlorpyrifos, in quantities far exceeding allowable

limits. These pesticide residues, PML reported, could cause cancer, damage the nervous and reproductive

systems, cause birth defects and disrupt the immune system.

The cola companies refuted the allegations and confirmed that their drinks are safe to consume and since there is

no regulation on pesticide content in soft drinks, they had not violated any law. The controversy led to public

awareness campaigns and partial bans, restrictions and seizure of soft drinks from bottlers and stockists. The

government constituted a Joint Parliamentary Committee and assured the public that if the drinks were found to be

unsafe, the government could even stop their production in the country. The committee found that there were

pesticide residues, which were ‘‘unsafe for young, vulnerable sections of Indian population’’ and suggested that

the government set standards for allowable pesticide content in soft drinks through BIS, its agency for standards,

and make them legally enforceable. A committee was formed, and after 20 discussions spread over more than two

years, it announced through the BIS’ website that the standards were set but yet to be declared. The CSE claimed

that the standard setting procedure was stalled by a government initiative and resumed its series of testing in

2006, with widespread collection of samples from various regions and brands of soft drinks from different

manufacturing plants.

The result published on August 2, 2006, created a huge furore in the country since it alleged that the soft drinks by

the cola companies had more than 37 times of allowable pesticide content in the soft drinks and it was widely

spread across the country and different brands. Apart from the regular pesticides, Caffeine and Aspartame,

flavoring and sweetening agents in colas were also projected as being addictive and having genetic effects on

human beings. Colas strongly denied the allegations and questioned the veracity of CSE’s report. They even

employed individual testing labs in UK and furnished to the Indian public test reports stating that the drinks were

utterly safe. Some states in India have introduced bans and partial restrictions. The Government constituted an

expert committee, which after an analysis declared that the report of CSE was inconclusive and not balanced, but

affirmed to the country’s judiciary that before 2007, it would notify the standards for pesticide content in colas.

Sales of colas have dropped but not significantly and the cola companies have run ad campaigns with brand

ambassadors endorsing that the drinks were safe.

Pedagogical Objectives:

• The case anticipates familiarising the students with

• The Cola manufacturing process and the market size globally

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• The pesticide residue issue in colas

• The harmful effects of pesticide residues

• Effects of flavoring and sweetening agents in soft drinks

• Standard setting procedure and decision making process in India

• Analysing the possible ways the cola companies and the government can jointly address the issue.

Keywords : Corporate Social Responsibility Case Study Pesticide residue carbonated soft drinks, Coca-Cola,

Pepsi, Center for Science and Environment, Ban and Restriction on colas, Caffeine Aspartame (Nutrasweet), Cola

manufacturing, Pesticide residue in water and sugar, Lindane, Malathion, Chlorpyrifos, DDT Joint parliamentary

committee, BIS standards on potable water, EU Norms on potable water Carcinogens

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