Multidisciplinary Practices:
Service Package of the Future?

By Dianne Molvig

he consumer movement and the computer age have spawned a plethora of do-it-yourself legal handbooks and software packages that help consumers do everything from handling their own divorces to applying for patents. Today, yet another movement is knocking on the door of what used to be lawyers' exclusive domain. It's a concept called multidisciplinary practice, and it's now undergoing the scrutiny of the American Bar Association's Commission on Multidisciplinary Practice, formed last August.

Sherwin Simmons, the Miami attorney who chairs the Commission, believes multidisciplinary practice is the most significant issue facing the bar in the 21st century. "You've got the public and the lawyer's ability to practice intersecting, big time," he says. "We're seeing the intrusion of personal service organizations into the practice of law."

The "personal service organizations" Simmons refers to previously were known as accounting firms. Currently, these firms - especially the Big Five, including PricewaterhouseCoopers, Arthur Andersen, KPMG Peat Marwick, Ernst & Young, and Deloitte Touche Tohmatsu - are branching out beyond traditional accounting. They're aiming to be one-stop shops for their corporate clients, offering a full-range of consulting services on taxes, computer systems, employee benefits, human resources ... and legal matters. They are doing things corporations used to hire law firms to do, such as giving advice on mergers and acquisitions, personnel problems, and expert witness preparation.

"To some extent, this is nothing new," points out James Wilber, a principal at the Midwest office in Milwaukee of Altman Weil Inc., management consultants to law firms. "The Big Five have been practicing tax law for years. What is different is that they are moving to openly come above board and become true multidisciplinary practices. In some countries that's legal. In others where it's not legal, they are doing it in all kinds of artful ways."

The Big Five and beyond

In the United States, rules of conduct in all jurisdictions - except one - prohibit lawyers from sharing fees with nonlawyers or owning a business with nonlawyers that involves the practice of law. While true MDPs are prohibited in all 50 states, the Big Five have been hiring hundreds of lawyers onto their staffs. Are these staff attorneys providing legal services for the Big Five's clients? That's an issue of debate. The Big Five and the attorneys working for them claim they do not hold themselves out as providing legal services. Consulting on matters having legal components, they say, does not necessarily involve the practice of law. Skeptics, on the other hand, contend that the "practice of law" is precisely what is going on under the roofs of the Big Five - not just abroad where it's allowed - but also here in this country where, supposedly, it's not.

Besides professional rules of conduct, a key issue hovering over MDPs is the states' unauthorized practice of law (UPL) statutes. Some observers claim the Big Five are engaging in UPL. But that front has seen little action to date. Texas filed a complaint against Arthur Andersen and Deloitte & Touche in 1997, but it was dismissed 11 months later. According to the ABA Commission's "Background Paper" published in January 1999, a UPL charge against Ernst & Young is under investigation in Virginia. "I think a big part of the problem," says Keith Kaap, State Bar of Wisconsin ethics consultant, "is that not only in Wisconsin, but in most states, there is no good mechanism for determining what is or is not the unauthorized practice of law."

In addition to bringing lawyers on staff here at home, some of the Big Five are forming strategic alliances between accounting and law firms, with each entity remaining separate. Many of these alliances aren't well publicized. One exception was the alliance in 1997 between PricewaterhouseCoopers and Washington, D.C.-based Miller & Chevalier, one of the major tax firms in the United States.

Elsewhere in this country, MDPs don't exist de jure, observers say, but they exist de facto. Which is precisely why this phenomenon is unstoppable, says Wilber. "One reason we think this will be impossible to stop is because this has been going on for years. The Big Five have been hiring lawyers for years. There's more tax law practiced in accounting firms than in all the U.S. law firms, and that's been the case for 20 years."

As the Big Five migrate toward MDP set-ups on an international level - and on a de facto basis in the United States - Wilber surmises others will follow suit, albeit on a smaller scale. "Maybe that's the next step," he says. "For example, regional CPA firms might get into this. Are they looking into it? Who knows. But I can't imagine they're not."

Here in Wisconsin, the Big Five have a smaller presence than in major urban areas like New York, Boston, or Chicago. Still, it's no secret that accounting firms have gradually expanded into handling clients' legal-related matters. "I think they get bolder from year to year in what they're comfortable having their people do," says a Wisconsin attorney who is a former chair of the State Bar Taxation Section. "For example, they haven't been shy about advising clients on legal matters related to mergers and acquisitions and estate planning, and in some circumstances providing suggested forms of documents - things they would never have thought of doing 10 years ago."

In addition, last summer's new law overhauling the Internal Revenue Service (IRS) included a provision for accountant/client privilege in tax matters. Client privilege once was a benefit only lawyers could offer their clients. Accountant/client privilege, however, applies only in limited IRS matters.

Wisconsin rules, fashioned after the ABA Model Rules on Professional Conduct, prohibit outright MDPs. Lawyers can't go into business together with nonlawyers if the partnership practices law; they can't share fees with nonlawyers. They can hold ownership in ancillary businesses - that is, outside law-related operations. Wisconsin has no ancillary business rule, but ethics opinions have allowed such arrangements. "I know of a good number of attorneys who have ownership interest in title companies, real estate brokerages, tax firms, or insurance businesses," says Kaap. The rules prohibit Wisconsin attorneys, however, from bringing any of those services inside their law firms.

But are de facto MDPs cropping up here in Wisconsin? "I'm not sure that's not happening," Kaap says. "But it's a separate question as to whether they're really permitted. Frankly, I think there are a lot of things happening that we're not completely aware of. People do send us inquiries from time to time regarding certain proposed arrangements. We don't know whether or not they just go ahead and do what they're proposing to do, because they don't follow up on getting advice from the (State Bar) Ethics Committee."

Big questions

On the surface, the MDP issue seems to be a fight between the legal profession and the Big Five. But it's much more complicated than that. "This is not a turf battle," emphasizes ABA Commission Chair Simmons. "Our obligation is to the public. Is it in the public's interest to allow lawyers to practice in a multidisciplinary configuration, whether the lawyers put it together or somebody else does? If you get into a turf battle, you're getting down in the gutter arguing about how you stop someone from taking your clients. That doesn't advance the ball for anybody - and certainly it doesn't advance the ball for the public."

Another misconception about the MDP debate, Wilber adds, is that it's being waged between lawyers and accountants. "That's not what this is about at all," he says. "This is a debate between lawyers who want to practice law in a different setting than they've been able to do to date - that is, in a multidisciplinary practice setting - versus lawyers who think the traditional way is the only way that should be allowed."

Lawyers' opinions on MDPs vary widely. On one end of the spectrum are those who argue that if lawyers participate with nonlawyers in MDPs, the result will be the ruination of the legal profession's core values, such as loyalty to clients, confidentiality, and independent judgment of lawyers. On the other hand, proponents contend that MDPs match with the way organizations like to solve problems in today's world: by bringing together teams of professionals from multiple disciplines. If lawyers can't be part of MDPs, proponents say, they risk becoming dinosaurs. Possible MDP relationships for lawyers include far more than accountants. Financial planners, psychologists, gerontologists, and others are natural candidates for partnership.

The attraction of MDPs doesn't stop with large-firm lawyers. A solo practitioner in Chippewa Falls, for example, may see an advantage in setting up shop with other local professionals, such as a tax specialist, financial planner, or insurance agent. To date, both the ABA Taxation Section and the ABA General Practice, Solo and Small Firm Section have formally endorsed the MDP concept.

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