General Practice, Solo & Small Firm DivisionMagazine

 
Volume 17, Number 3
April/May 2000

The Business of Law

MDPs: Are You Now or Have You Ever Been...?


EDWARD POLL

Remember the opening salvo in the early 1950s anti-Communist hearings when, in a very brusque voice, Senator Joseph McCarthy dramatically asked, "Are you now or have you ever been a member of the Communist Party?" That same refrain, with almost the same pejorative connotation, is being asked today of many lawyers. "Are you now a member of a multidisciplinary practice group?"

Lawyers traditionally were well-versed in many disciplines; in fact, the "Renaissance Man" concept might have been applied to lawyers. Lawyers had to know many things about many subjects in order to advise their clients well. Since a lawyer was the "counselor" of the client, the lawyer had to have many skills. But in today's world of specialization, this well-roundedness has become rare. General practitioners, or counselors, must now gather people of many skills around themselves in order to effectively represent clients.

Also, lawyers are facing competition from accountants, among others, who are vying for the title of "counselor." And that places lawyers in an almost untenable position. Our rules of professional conduct forbid lawyers to "share fees" with non-lawyers. In fact, many jurisdictions prohibit the sharing of legal fees with anyone, even with other lawyers, unless the proration is based on actual work performance for the benefit of the client. And yet, clients increasingly want lawyers to refer to, include, and participate with other professionals to secure the best outcome. They want the leader to be responsible for the team.

The accountants have seized the mo-ment. How? The Big Five accounting firms have hired lawyers to work on their staffs; they have purchased and created captive law firms in Europe and elsewhere where permitted by the country's codes; and they have created alliances where direct relations are not permitted, such as in the United States. The A.I.C.P.A. (their national organization) has spent more than $20 million to analyze their roles for clients, to reinvent their role to be more of a consultant and "counselor," and to publicize their new role in an aggressive advertising campaign. The organized bar needs to take notice and, dare I say, possibly emulate their process.

In order to serve clients better, and to protect their traditional role, lawyers must return to the leadership role they once had. And in order to do this, it seems to me that they must do the following:

  • Be competitive with the pricing of legal services.
  • Bring other professionals into the circle of opportunity when appropriate to serve the client's needs. This may mean that the client pays the other professionals directly, or it may mean that lawyers pay them from their own pockets.
  • The rules of professional conduct should be interpreted or must be revised to affirmatively permit the lawyer to engage the services of other professionals without it being considered a sharing of fees.
  • Where the lawyer takes work on contingency, other professionals should be permitted to share in the percentage without violating the rules of professional conduct.

In my opinion, the fear of sharing fees with others has caused lawyers' focus to be a bit jaundiced. Instead of a cause for worry, lawyers need to see the MDP threat as a wake-up call to do what they do best: Gather the team for the protection and improvement of the client's interests. When lawyers do this, they benefit and the clients benefit.

Working with accountants, financial advisers, consultants, and other nonlawyer professionals is exactly what lawyers already do for many clients. Many solo and small firm practitioners regularly delegate tasks to such nonlawyer professionals in order to better divide the work according to each person's special area of expertise. So what is so sacrosanct about dividing fees?

Trust and estate lawyers already use accountants and financial planners. Family law practitioners use accountants and psychologists/psychiatrists. Elder law attorneys use financial planners, medical care providers, geriatric counselors, and others. Why not allow the lawyer to gather his or her own "stable of experts"? Why give the leadership role to the accountants?

One of the main reasons for prohibiting the MDP concept is that the client's confidences could be violated. While this privilege is an important distinction and differentiation of the role of the lawyer as compared to others, the privilege can be retained if the lawyer is the head of the team since all of the lawyer's employees, staff, and agents fall within the privilege.

Further, the privilege has been eroded in a number of important areas anyway, so much so that one might legitimately wonder whether the privilege still exists. For example, confidentiality is no longer as important or even applicable in the following areas:

  • Internal Revenue Code § 1099 and its regulations require a lawyer to issue a Form 1099 to her clients when she collects money on their behalf. The fact that the money goes into the lawyer's clients' trust account does not alleviate this requirement. Sending the form to the IRS discloses the identity of the client. So much for the attorney-client privilege. Failure to issue Form 1099 may trigger an audit of the lawyer.
  • Lawyers who suspect that a client will commit a "serious" crime in the future are obligated to warn the authorities in advance of the commission of the crime. Client confidentiality in this case no longer exists.
  • A lawyer who represents a client against another lawyer can no longer make a settlement on the basis that the alleged negligence of the first lawyer will not be disclosed. Thus, the ability to keep the client's confidence about the facts that allegedly occurred in an earlier matter has now evaporated.
  • In some cases, lawyers who advise clients about their options for asset protection are subject to prosecution. Confidences learned from clients in the process of such advice are no longer fully protected and the process of giving advice about the methodology of protecting assets from creditors is, itself, subject to prosecution for conspiracy to commit a crime.

Ultimately, what does matter in any discussion of the appropriateness of multidisciplinary practice is how the clients' needs are best served. The rules of professional conduct must allow lawyers to do this in the most effective way possible.

Edward Poll, J.D., M.B.A., CMC, is a certified management consultant in Los Angeles who advises lawyers and law firms on how to deliver their services more effectively while increasing their profits at the same time. He is the author of Secrets of the Business of Law: Successful Practices for Increasing Your Profits and The Profitable Law Office Handbook: Attorney's Guide to Successful Business Planning. He can be reached via e-mail at edpoll@lawbiz.com.

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