President's Perspective
Where Do We Stand on MDP?
by Gary L. Bakke
With permission of the author, let me share with you portions of
an email message I received in September:
The Business Law Firm Model No Longer Works for
Us
"I am an officer and director of a company with
headquarters in Golden, Colo., and offices in Milwaukee and California.
From that perspective, I am concerned that the traditional business
lawyer and business law firm could disappear rapidly as today's business
environment evolves."
"We do business in the United States and Europe. We fax and email
around the globe every day. Our business literally changes week to week.
Many times, the big law firms we hire cannot keep up with developments
in our market, our technology, or our increasingly international
business. We don't have time to educate our lawyers as to the nuances of
our markets. We need experts who know more about our markets than we do.
We spend huge sums of money on hourly work that does not provide much
value because it's not integrated with financial and tax considerations.
We look at a $25,000 legal bill as a capital expenditure, and we look
for a 25 percent-plus return on that capital.
"Some law firms cannot grasp that. Often, they get back to us in days
or weeks when we need help in hours. When they do get back to us, it's
in Word Perfect when we need Word and Office to be global. Some senior
partners can't even use email. The business law firm model no longer
works for us. We need integrated solutions to do business globally.
"So we look for alternatives. This is happening with companies all
over the globe. Most law firms cannot provide the strategic financial
advice and strategic partnering that other entities provide. They are
only allowed to opine. The Big Six and other consulting firms provide
much more value in tax planning, capital raising, strategic
relationships, and certain regulatory issues. Lawyers practice there,
too, and they make multiples of the income law partners make. I think
business lawyers of the future will either become micro-specialists or
they will work for consulting firms that are not burdened by the strict
one-size-fits-all regulatory model of the State Bar. It may be more
efficient in the future for us to use European consulting firms that can
provide integrated financial, banking, and legal services that are all
coordinated.
"If lawyers cannot offer modern, global universal services to
clients, the CPAs and consultants will. Is it good for the legal
consuming public to NOT be able to one-stop shop? I think not.
"The Microsoft case is a good example of the problem of our
increasingly obsolete legal system. By the time the Justice Department
obtains a final order, Linux may well be the dominant operating system
and Microsoft will be two or three businesses down the road. The final
result won't matter anymore. Regulatory results are less and less
relevant in a lightning-fast world. As a former regulator, I know the
frustrations firsthand, and so does business. Why litigate when hoards
of other competitors, who are smart enough to avoid litigation, capture
your market share?
"I would like to be a part of the solution, but I fear there is not
much time for debate."
Our Profession is in Crisis
That opinion, multiplied thousands of times, is a fact that we must
acknowledge and deal with. Ours is a profession in crisis, and the
crisis is all the more dangerous because few lawyers truly understand
the seriousness of the challenges we face. I believe that we may have a
short window of opportunity in which to respond. My main purpose is to
convey to you a sense of urgency.
Multidisciplinary practice has been the most contentious issue
confronted by the ABA in my memory. At the July meeting in New York, the
House of Delegates passed a very strongly anti-MDP resolution by a wide
3-1 margin. The actual resolution proposed by the ABA Commission on
Multidisciplinary Practice did not even make it to the floor.
Wisconsin's delegates voted unanimously with the majority; however, the
Wisconsin delegation casts a unanimous vote in favor of the position
supported by a majority of our delegates. I understand that sentiment
was not unanimous. At our September meeting, retired Chief Judge Patrick
Sheedy, the Milwaukee Bar Association's delegate to the ABA, told the
Wisconsin Board of Governors that the ABA House of Delegates is composed
almost exclusively of very successful, old, white males who are probably
not in a very good position to anticipate and respond to rapidly
changing economic reality.
Those who saw this vote as a victory proudly proclaimed that our
profession is not for sale. Many who saw it as a defeat fear that our
profession is on the road to irrelevancy.
My view is that the MDP debate and resulting ABA resolution is a
sharp wake-up call to state and local bars that the ABA has forfeited
its leadership role for our profession, at least on this issue. Now,
Wisconsin and other states need to take a leadership role. Would I like
to go back to the profession that I joined in 1965? Certainly, I loved
it. Would I like to be 25 years old again? Sure. Neither one is going to
happen. We need to deal with reality, not nostalgia. The reality is that
many other businesses and professions are going to be doing what we have
traditionally thought was the practice of law. No, not going to –
they already are. We must respond, not only for our own self-interest,
but for the public. We need to find a way to compete in this new arena
while preserving our core values and our professionalism.
The MDP debate about whether lawyers can practice law in an entity
that is not owned and controlled by lawyers, interesting as it is, is of
little consequence if nonlawyers are permitted to do what lawyers now
do. The key question is, "What is the practice of law?" If nonlawyers
can do estate planning, of what significance is whether an
estate-planning lawyer practices in an MDP setting? If our ethical rules
permit or require a lawyer to relinquish his or her license to practice
in order to do estate planning for an accounting firm, have we advanced
the interests of either the public or the legal profession? The
unintended consequence of a no-MDP stand will be to assure that our
competitors are not subject to our training, our professional standards,
or our ethical rules.
Face the Economic Realities
To date, most of the MDP debate has been conducted without reference
to the economic realities of our rapidly changing economy. We cannot
successfully ignore the obvious. The MDP Commission report to the ABA
House of Delegates crisply describes the problem:
"The forces of change are bearing down on society and the legal
profession with an unprecedented intensity. They include: continued
client interest in more efficient and less costly legal services; client
dissatisfaction with the delays and outcomes in the legal system as they
affect both dispute resolution and transactions; advances in technology
and telecommunications; globalization; new competition through services
such as computerized self-help legal software, legal advice sites on the
Internet, and the wide-reaching, stepped-up activities of bankers,
investment companies, and financial planners providing products that
embody a significant amount of legal engineering; and the strategy of
Big Five professional service firms and their smaller-sized counterparts
that has resulted in thousands of lawyers providing services to the
public while denying their accountability to the lawyer regulatory
system.
"The Commission believes that the legal profession must take a
proactive role in regard to these events in order to best serve the
public interest and maintain its crucial role in the maintenance of a
democratic society. Amending the Model rules in accordance with the
Commission's recommendation is the most progressive, preservative, and
practical way to accomplish these goals. The recommendation recognizes
the realities of a changing marketplace, opens up new avenues of service
to clients, responds to the suggestions of consumer advocates, and
provides new opportunities for lawyers."
Remember the email I quoted at the beginning of this column? Can you
guess who is the author of this message? Typical business school
graduate? Someone with an anti-lawyer bias? Someone who does not
understand our ethics or their importance to our clients? It was Dan
Eastman, the current chair of the State Bar's Business Law Section. He
was Wisconsin Commissioner of Securities, now the Department of
Financial Institutions, and was a commissioner of the Public Service
Commission. Think about it.
Wisconsin
Lawyer