The case against MDPs
Lawyers are being asked to sell the soul of our profession to the Big Five
accounting firms – the real driving force behind the MDP issue, not the
public. Watering down the ethical rules governing our profession will lead
to our demise.
by Earl H. Munson
The State Bar Executive Committee proposes and endorses a multi-part resolution,
the first of which reads:
"BE IT RESOLVED, that the Board of Governors at the State Bar of Wisconsin,
on behalf of its members, adopt the following policies for improvement
of the legal services:
"1. Multidisciplinary practice. Supports multidisciplinary
practice by attorneys and other professionals with the ability of sharing
fees for such services, management and supervision attorneys, other
professional or lay managers, by entities, which may be owned by attorneys,
other professionals, investors or any combination of the same."
Read it again. It is somewhat clumsy, but the intent is clear: Lawyers
should be allowed to provide legal services as employees of entities owned
and controlled by banks, insurance companies, securities brokers, real
estate brokers, accountants, doctors, and so on, including "investors"
who will define the policies and practices of firms offering legal services.
Investors will set the agenda of MDPs to generate the maximum return on
the investment dollar. In short, the resolution purports to put a "for
sale" sign on the soul of a proud and noble profession.
Very little of this article is original thought. It borrows bits and
pieces from the "pro" and "con" reports of the Florida and Illinois bar
associations as well as a report submitted to the New York Bar Association.1
There are many other reports and articles, most of which are scholarly
and lengthy. This short article only scratches the surface of a profound
issue. I can only hope to alert lawyers that your State Bar is tinkering
with the very guts of our profession. You owe it to yourself and your
profession to study the issue and make yourself heard.
How the Bar arrived at this state of affairs is as troubling as the
resolution itself.
The Big Five are Driving
the MDP Issue
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Earl
H. Munson, U.W. 1959, is a partner in the Madison law firm of
Boardman, Suhr, Curry & Field LLP. He tries cases involving business
and commercial torts and disputes. |
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According to the Florida Con Report,2 the driving force
behind the MDP issue is best conveyed by an August 1999 article in CPA
Today, the title page of which conveyed the spirit of the issue: "The
Future of the CPA Profession in the United States: Fee, Fi, Foe, Fum!
Look Out Lawyers, Here We Come!"
Approximately 10 years ago the large national accounting firms decided
to offer legal services to increase then-stagnant earnings and profits.
As a result, the Big Five accounting firms now employ more than 5,000
lawyers worldwide. No law firm in the U.S. or anywhere else can match
the overwhelming size and capital of the Big Five accounting firms, but
their extraordinary growth in the provision of legal services was achieved
largely outside of the United States. In this country, lawyers are an
arm of a branch of government. Here the accountants' attempt to make inroads
into the legal profession is hampered by the lawyers' role as officers
of the court and the resulting ethical rules governing our profession.
For that reason, the large accounting firms made a conscious decision
to change the ethics of the American legal profession: "To execute their
[the accountants'] plan, they needed to bring lawyers into the fold, convert
them to their cause, and make these the advocates of change."3
The accounting firms anticipated that the thousands of lawyers they
hired to provide "consulting advice" ultimately would demand the right
to status as lawyers. They were right. "As predicted, at the hearings
before the Commission on Multidisciplinary Practice, lawyers working for
accounting firms testified overwhelmingly in support of MDPs."4
Thus, those lawyers who now urge that MDPs are necessary in order to
compete with the accounting firms ignore the fact that those same accounting
firms seek that very result. Once MDPs are established and our ethics
rules are watered down, the accounting firms have the power and the money
to buy and sell any law firm they choose. The fox will be in the henhouse.
"Will the end result be the creation of a ... regulatory system [similar
to accountants"]? I believe it will. Why? Because the same forces that
have driven many professions and businesses to 'adapt or die' are pressing
the legal profession to modify and accommodate MDPs ... . [T]he incentives
are huge and the resources exist. First and foremost, the incentive is
a piece of the roughly $100 billion-a-year market for legal advice which
the law firms have monopolized for centuries."5
At the ABA multidisciplinary hearings, the accounting firms modified
their approach. They argued that it is not the accounting firms that are
driving MDPs. Rather, the public demands "one-stop shopping," a consolidation
of the legal services with other services to create efficiency and savings.
The accountants - and the lawyers asserting their cause - argue that unless
the attorneys change, we will not be prepared to compete, and the legal
profession will be irrelevant. They urge that the tide of change is so
far advanced that the momentum cannot be stopped. Lawyers should just
give up. "Let there be no doubt about it. The MDP issue did not arise
out of a groundswell of public demand. Even the ABA Commission Report
on MDPs admits this. The MDP issue was a skillfully maneuvered operation."6
The experience in Wisconsin is not an exception. For the past year we
have been subjected to a steady drumbeat of articles, conferences, and
speeches using phrases such as "the revolution has started," "the hordes
are at the gate," even the proposed resolution "will not be sufficient
to save the profession," "the clock is ticking," we have to "keep the
legal profession from going the way of the dinosaurs," "we must change
now," if we do not, "within 10 years, 60 percent of us will be out of
business." As stated by the Florida Con Report, "[t]he theme [read Wisconsin
Theme] is almost exactly as the accountants predicted - it's already happening,
we can't stop it, we might as well allow it so that we can control it."7
Fundamental Principles Stand
in the Way of MDPs
The argument for MDPs is based on economics, not principles, but there
are fundamental principles standing in the way. The rules of professional
conduct for attorneys which express the core values of our profession
would have to be modified - some of us might say nullified - to accommodate
MDPs. Limited space permits only a mere summarization of some of the principles
involved.
Professional Independence. SCR
20:5.4, which prohibits the sharing of legal fees, was designed to "protect
the lawyer's professional independence of judgment."8
"Whatever may be said about the practice of law metamorphosing from
a learned profession into a money-getting trade, the fact is that lawyers
continue to play a critical role in the preservation of our free society
... . The vindication of individual rights, especially against the state,
requires that lawyers be able to assert and pursue client interests free
of external controls ... . The independent bench and bar historically
and today are the primary institutions for preserving individual liberty
and civility against government oppression, and it is the mission of the
legal profession 'to participate in the constant improvement of society's
legal system and to make that system readily accessible to society.'
"At least as important as the role of the legal profession in protecting
our essential freedoms from government's excesses is the need of lawyers
to remain independent from their clientele ... . Lawyers have an obligation,
deriving from their central role in our society, to uphold the integrity
of our legal system even if doing so may be contrary to the interests
of their clients.
"Thus, it is argued, society should weigh the risks of losing its independent
legal profession against the perceived benefits of 'one-stop-shopping'
that multidisciplinary practice groups arguably may provide."9
This New York Report suggests that the perceived efficiencies of one-stop-shopping
"is ultimately too simplistic to be determinative."10
Client Confidentiality and the Attorney-client
Rule of Evidence. These are two separate but related concepts. Ethically,
a lawyer must maintain the confidentiality of her client's communication.
In addition, the client may assert an evidentiary privilege in a court
of law. "MDP proponents admit that there will be an impact on client confidentiality.
Combined services, by definition, will implicate combined discussion,
sharing of documents, etc."11 Further, the complications
caused by the mixing of business advice with legal advice will inevitably
erode, if not eliminate, the attorney-client privilege.
Loyalty to Client - Conflicts of Interest.
"Presumably, the multidisciplinary practice will attract clients who seek
the advice and guidance from multiple professionals, acting alone or in
concert. This practice raises significant questions of whether a lawyer
has a conflict in representing the interest of a prospective client where
a nonlawyer partner has provided advice that could be deemed in conflict
with the interest of the prospective client."12
Imputed Disqualification. "Is it
realistic in that context [MDPs] to limit imputation of conflicts to putative
working teams? Will such measures square with the claim of seamless service
based on the mobilization of global resources linked by intranets and
extranets alive with the pulse of instantaneous, modern communications?"13
There are other issues: It is generally agreed that the courts will
not be capable of regulating the MDP entity. Therefore, regulations must
concentrate on the lawyer - not the firm. Legislatures may step in to
fill the gap. As a result, whatever vestiges of self-regulation remain
will be further eroded. An integrated bar will be difficult to support.
This article is not against change; all lawyers should strive to think
outside of the box; but please do not sell the soul of our profession.
Endnotes
1 "Facing
the Tide of Change," Fla. Bar Con - MDP Subcommittee (12/99); "Facing
the Inevitability, Rapidity and Dynamics of Change," Fla. Bar Pro
- MDP Subcommittee (1/7/00); "Report
of Special Committee on Multi-Disciplinary Practice and The Legal Profession,"
N.Y. State Bar Ass'n (1/8/99); "Con
Report to Ill. State Bar Ass'n Task Force on Multidisciplinary Practice"
(5/10/00); "Report Favoring
Adoption of ABA Recommendation on MDP," Ill. State Bar Ass'n (5/17/00).
2 Fla. Con, 12-13.
3 Fla. Con., 14.
4 Fla. Con, 15.
5 Fla. Con, 15, quoting "Fe, Fi, Fo, Fum," at 33.
6 Fla. Con, 17.
7 Fla. Con, 17-18.
8 See "Comment" to SCR 20:5.4.
9 N.Y. Report, 12-13. [Emphasis
added.]
10 N.Y. Report, 4.
11 Fla. Con, 24.
12 N.Y. Report, 24.
13 Ill. Con, 4.
What is a multidisciplinary practice?
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