Volume 18, Number 1
January/February 2001

Multidisciplinary Practice

The Debate Continues

By Florencio Ramirez

After more than two years of study, the ABA House of Delegates in July 2000 considered the Report of the Commission on Multidisciplinary Practice filed on May 11, 2000. In its report (www.abanet.org/cpr/mdpfinalrep2000.html), the Commission recommended:

1. Lawyers should be permitted to share fees and join with nonlawyer professionals in a practice that delivers both legal and nonlegal professional services (multidisciplinary practice), provided that the lawyers have the control and authority necessary to assure lawyer independence in the rendering of legal services. "Nonlawyer professionals" means members of recognized professions or other disciplines that are governed by ethical standards.

2. This recommendation must be implemented in a manner that protects the public and preserves the core values of the legal profession, including competence, independence of professional judgment, protection of confidential client information, loyalty to the client through the avoidance of conflicts of interest, and pro bono publico obligations.

3. Regulatory authorities should enforce existing rules and adopt such additional enforcement procedures as are needed to implement these principles and to protect the public interest.

4. The prohibition on nonlawyers delivering legal services and the obligations of all lawyers to observe the rules of professional conduct should not be altered.

5. Passive investment in a Multidis-ciplinary Practice should not be permitted.

At the 2000 Annual Meeting in New York, the ABA House of Delegates voted to reject the Commission’s report and adopted the following recommendation (complete text can be found at www.abanet.org/cpr/mdprecom10F.html) sponsored by the Illinois State Bar Association, the New Jersey State Bar Association, the New York State Bar Association, The Florida Bar, the Ohio State Bar Association, the Bar Association of Erie County, and the Cuyahoga County Bar Association.

RESOLVED, that each jurisdiction is urged to revise its law governing lawyers to implement the following principles and preserve the core values of the legal profession:

1. It is in the public interest to preserve the core values of the legal profession, among which are:

a. the lawyer’s duty of undivided loyalty to the client;
b. the lawyer’s duty competently to exercise independent legal judgment for the benefit of the client;
c. the lawyer’s duty to hold client confidences inviolate;
d. the lawyer’s duty to avoid conflicts of interest with the client;
e. the lawyer’s duty to help maintain a single profession of law with responsibilities as a representative of clients, an officer of the legal system, and a public citizen having special responsibility for the quality of justice; and
f. the lawyer’s duty to promote access to justice.

2. All lawyers are members of one profession subject in each jurisdiction to the law governing lawyers.

3. The law governing lawyers was developed to protect the public interest and to preserve the core values of the legal profession, which are essential to the proper functioning of the American justice system.

4. State bar associations and other entities charged with attorney discipline should reaffirm their commitment to enforcing vigorously their respective law governing lawyers.

5. Each jurisdiction should reevaluate and refine to the extent necessary the definition of the "practice of law."

6. Jurisdictions should retain and enforce laws that generally bar the practice of law by entities other than law firms.

7. The sharing of legal fees with nonlawyers and the ownership and control of the practice of law by nonlawyers are inconsistent with the core values of the legal profession.

8. The law governing lawyers, which prohibits lawyers from sharing legal fees with nonlawyers and from directly or indirectly transferring to nonlawyers ownership or control over entities practicing law, should not be revised.

FURTHER RESOLVED that the Standing Committee on Ethics and Professional Responsibility of the American Bar Association shall, in consultation with state, local and territorial bar associations and interested ABA sections, divisions, and committees undertake a review of the Model Rules of Professional Conduct (MRPC) and shall recommend to the House of Delegates such amendments to the MRPC as are necessary to assure that there are safeguards in the MRPC relating to strategic alliances and other contractual relationships with nonlegal professional service providers consistent with the statement of principles in this Recommendation.

FURTHER RESOLVED that the American Bar Association recommends that in jurisdictions that permit lawyers and law firms to own and operate nonlegal businesses, no nonlawyer or nonlegal entity involved in the provision of such services should own or control the practice of law by a lawyer or law firm or otherwise be permitted to direct or regulate the professional judgment of the lawyer or law firm in rendering legal services to any person.

FURTHER RESOLVED that the Commission on Multidisciplinary Practice be discharged with the Association’s gratitude for the Commission’s hard work and with commendation for its substantial contributions to the profession."

The adoption of this recommendation by the House of Delegates effectively ended the debate on this topic in the House of Delegates for at least two years due to a House rule that prohibits reconsideration of this topic for that period. In addition, the recommendation dissolved the Commission, thus leaving no entity within the organization through which further discussion on this topic could be conducted.

A Dead Issue?

Will MDPs cease to exist because of the House action, thus having no future impact on the profession? Hardly. The debate continues, but the venue has shifted to the states and local bar associations. Currently, 28 states have no stated position with regard to the issue of multidisciplinary practice. Most of these states, however, have appointed committees or task forces to study this issue and to prepare reports later this year.

The State Bar of Louisiana has issued a report indicating that it found "no interest among its members" regarding this issue, and cited the need for extensive member education. The State Bar of Missouri issued a report on June 30, 2000, and stated that neither the latest recommendation of the Commission nor the McCrate Report (an alternate report submitted to the House of Delegates) are acceptable. The Missouri Bar Special Committee on Multidisciplinary Practice did not endorse either of the proposals, but it did not absolutely rule out the concept of MDPs either (www.mobar.net/news/boardmdp.htm). For more information on the status of multidisciplinary practice studies by state, go to www.abanet.org/cpr/mdp-state_action.html.

Ten states—Arkansas, Connecticut, Florida, Illinois, Kansas, Kentucky, Nebraska, New Jersey, Tennessee, and Texas—have adopted positions either opposing MDPs in any form or opposing the Commission report. Tennessee, for example, opposed the Commission’s report, but indicated that if the ABA House of Delegates adopted the report, Tennessee favored a separate classification for lawyers involved in MDPs (www.tba.org/mdp.html). Texas oppos-ed the Commission’s June 1999 report due to a "lack of empirical evidence" (www.texasbar.com/attyinfo/aba/ mdprpt.pdf).

Eleven states and several local bar associations have endorsed the concept of MDPs, either totally or in some form. New York, South Carolina, Ohio, Pennsylvania, Arizona, Colorado, Maine, Michigan, Minnesota, Oregon and Utah, along with the Nassau County, Philadelphia, San Diego County, Denver Bar Association, District of Columbia, Boston Bar Association, Association of the Bar of the City of New York, and the New York County Lawyers Association, have issued reports either adopting the concept of MDPs or at least recognizing the inevitability of MDPs and calling for further study on this issue. In August 2000, the Canadian Bar Association Council approved a resolution (as amended), stating that lawyers should be permitted to practice in MDPs provided that the MDP’s delivery of legal services is controlled by lawyers.

The New York proposal would call for permitting two forms of MDPs, but partnerships with nonlawyers and MDPs in which nonlawyers have any degree of ownership or control over the practice of law would be prohibited. Lawyers and law firms would be permitted to provide ancillary nonlegal services and to provide services to clients in cooperation with nonlegal firms, while providing safeguards for the public to protect against the risks of nonlawyer involvement in the practice of law (www.nysba.org/media/newsreleases/2000/mdp.html).

The Ohio State Bar Association Special Committee on Multidisciplinary Practice and the Legal Profession issued a report on April 17, 2000, and found that the accounting "industry," through its consulting affiliates and subsidiaries, is holding itself out as providing legal service to the public. The committee also found that MDP is not just inevitable, it is here and now. The committee concluded that MDP should not be authorized or sanctioned at this time, and that additional study of the subject should continue (www.ohiobar.org/members/specreports/mdp.html).

The State Bar of Arizona, on May 19, 2000, approved the majority report of the State Bar of Arizona Task Force on the Future of the Legal Profession. The task force recommended that the state bar recognize that multidisciplinary practice already exists de facto in the United States. In addition, the task force recommended that the Rules of Professional Conduct, specifically Arizona Ethical Rule 5.4, be modified to permit nonlawyers to have an equity interest (but not passive investment) in firms that engage, at least in part, in providing legal services, as long as the lawyers have sufficient authority to protect client interests and maintain their ethical obligations. In essence, Arizona adopted in toto the recommendations of the ABA Commission on Multidisciplinary Practice (www. azbar.org/AttorneyResources/ mdp_recommends.cfm).

Finally, the great State of South Dakota, through its Committee on Multidisciplinary Practice, chose to deal with this issue by presenting a revised definition of the practice of law that was adopted by its membership at its 2000 annual convention (www.abanet.org/ cpr/mdp-state_action.html). In choosing to deal with the MDP issue in this fashion, the committee stated:

There is no question that MDP now, and in the future, will affect the practice of law dramatically. Unlike the current ABA position, it is our feeling that MDP is not something that should be totally eliminated or can be ignored. The committee felt that we should deal with what is reality and attempt to define the area so that all parties, particularly our clients, can benefit. In that respect, we felt that the first hurdle was to define what the practice of law is. If we can define the practice of law, the next step is regulating and controlling the MDP practice so that the ultimate users of that service benefit by being provided quality services at affordable prices.

Impact on Solo and Small Firm Practitioners

So what does all this mean to you, the generalist in a solo and small firm practice? Or, like those lawyers practicing in Louisiana, are you overwhelmed by a lack of interest? Of course, there is much uncertainty as to what your state bar association may choose to do in terms of MDP. Frankly, the focus of this issue has been on the large accounting firms who conduct business worldwide acquiring the mega firms in Europe or the United States. In fact, when I testified before the House of Delegates in Atlanta, several members of the House approached me and were incredulous that solos or small firm practitioners would have any interest in this issue, or would feel that they would be affected by this issue at all.

Lawyers won’t be squeezed out of the market. Clearly, most of us will not be approached by large accounting firms wanting to hire us or wanting us to enter into an arrangement to provide legal services to their clients. The majority of the concerns that have been expressed to me with regard to solos and the MDP issue seem to fall into two areas. First, concerned parties worry that Wal-Mart or Sears, for example, may choose to open up a law office in Small Town, America. While approval of MDPs may or may not permit this type of activity, there are certain factors that I believe would mitigate against this type of venture.

Certainly, there is the profit motive. The potential client for these types of services from Sears or Wal-Mart would be the client who is least able to afford legal representation. The primary types of services sought would likely be domestic relations, criminal, and landlord/tenant cases. If you don’t believe me, just ask any legal aid lawyer what types of cases they are inundated with. Then, there is the exposure in terms of professional liability that is inherent with these types of activities. When I served as chair of the Disciplinary Board of the Supreme Court of the State of New Mexico, it seemed that divorce lawyers and criminal defense lawyers had the most complaints lodged against them.

Even if these entities chose not to engage in these types of activities and rather to limit the areas of the law in which they would provide services, they would still face significant competition in the other service areas. There has been a tremendous growth in legal services plans or prepaid legal services, and these plans would be in direct competition with the Sears and Wal-Mart providers.

In addition, lawyers would not simply fold up their tents and go away. MDP would permit the solo and small firm lawyer to enter into arrangements of their own to compete and to provide better and more cost efficient services to their clients. This is more of a "bottom up" approach, rather than the "top down" approach that has dominated the discussion on this issue. Solos could use the MDP approach to make themselves more competitive by forming strategic alliances with other professionals, rather than worrying about other professionals purchasing their practice or about violating client confidences and who is controlling how work is performed.

"Core values" remain strong. The concern is that somehow MDPs will destroy the core values of our profession—confidentiality and independence of judgment. Obviously, this has been an area of concern, particularly with those state and local bar associations that have approved "lawyer controlled" MDPs. However, the question must be asked: Does it necessarily follow that lawyers engaged in a multidisciplinary practice will violate their ethical responsibilities to their clients, or that they will permit ethical violations to occur? If that is the case, then I would submit the problem is not the accounting firms. We are the problem.

I prefer to view the glass as half full rather than half empty. I prefer to believe that most lawyers are ethical and feel that their duty to their client is paramount. My feeling in this regard is based on 23 years of practicing law and being involved with hundreds of lawyers over that time. I do not have any empirical data, but when you compare the number of lawyers in this country to the number of complaints filed against lawyers by clients, it is clear that the vast majority of lawyers do not violate their ethical responsibilities to their clients.

So what do we really fear? Is it the fact that we may lose control over how legal services are delivered to our clients? Can we truly control the mechanism of delivery in this age of computers and the Internet and the advances in technology that will surely occur? Someone once wrote—was it William Shakespeare?—that when the revolution comes, kill all the lawyers first. Is this the revolution, as some opponents of MDPs seem to suggest? I do not think so. However, the debate will continue. I hope you choose to be involved in the debate, and that this article will provoke some questions of your own and some critical thinking on the issue of MDPs.

 

Florencio "Larry" Ramirez is a former chair of the ABA General Practice, Solo and Small Firm Division. He has participated in several programs dealing with the issue of multidisciplinary practice and delivered testimony on behalf of the Section to the ABA Commission on Multidisciplinary Practice. He currently serves on the newly formed ABA Commission on Multijurisdictional Practice.

 

 

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