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
Definition:
Multidisciplinary Practice (MDP) - a partnership owned by lawyers
and professionals from other disciplines who work together to
solve client problems. |
A multidisciplinary practice (MDP), in its true form,
is a partnership owned by lawyers and professionals from other
disciplines who work together to solve client problems. Such
associations are allowed in Australia, Canada, and many European
countries. There the Big Five professional service organizations
are aggressively hiring lawyers, even merging with entire law
firms.
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.
Washington, D.C., is the only U.S. jurisdiction that
has rules allowing lawyers to be part of MDPs, but with restrictions.
The rules allow lawyer/nonlawyer partnerships and fee sharing
only if the organization's sole purpose is to provide legal services
to clients. It can't be in the business of offering accounting
or other services. That in effect has curbed interest in Washington
in full-fledged MDPs, in which lawyers and nonlawyers are business
partners, according to Susan Gilbert, ethics counsel for the
District of Columbia Bar Association.
Also tempering enthusiasm there for MDPs is ABA Formal Opinion
91-360, which states that a law firm with offices in more than
one jurisdiction cannot have nonlawyer partners in its Washington,
D.C., office.
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."
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. |
In fact, if the debate over MDPs comes across as economic
protectionism on the part of lawyers, "the lawyers are going
to lose badly," Wilber points out. "To the extent they
can show that the problems are problems for clients, they may
win some of these battles."
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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