Summary of the Testimony of Steven A. Bennett

Before the Multidisciplinary Practice Commission

Steven Alan Bennett, former General Counsel of Banc One Corporation, one of the nation’s ten largest bank holding companies, next addressed the Commission. His remarks focused on five points. First, "pure" legal problems no longer exist, yet the number of problems with legal aspects is increasing. Multidisciplinary solutions are being sought by corporate counsel more and more as legal solutions cannot be arrived at in a vacuum and multifaceted problems are being looked at by a team. As an example he used the complexities of a bank merger now and fifteen years ago when the cash price made the paperwork relatively straightforward. Today’s transactions, because of size and complexity, require multidisciplinary teams to handle deals in the billions of dollars, usually stock for stock, with involvement from numerous state and federal regulators, accounted for as a pooling of interests rather than purchase accounting. Second, while now almost every problem has a legal face (that in simpler times it did not), lawyers do not always drive the solution nor are they always the best experts for the field. To illustrate Point Two, he described the Fair Lending/Community Reinvestment Act (CRA) arena with its nonlawyer compliance officers who head teams comprised of customer service personnel, managers of branch facilities and auditors to ensure that ethnic persons have equal access to products and services. Third, the size or diverse character of many problems facing American business demands a multidisciplinary approach, as demonstrated by the pooling of interests method of accounting for merger transactions, which involve issues of securities law, merger law, the rules of the Securities and Exchange Commission and the pronouncements of the Financial Accounting Standards Board. In a merged team accountants may outnumber lawyers and whether the nonlawyer accountants or the non-accountant lawyers are practicing the other’s profession at any given moment can be impossible to discern. Fourth, American businesses to an ever greater extent are seeking comprehensive solutions from their professional advisors, a need being addressed by the broad-based consultancies of the accounting firms with their array of services and convenient delivery. In contrast, current rules hobble the legal profession with the limitations created by fee sharing restrictions, unauthorized practice rules and the like so that their one note product offerings are inconvenient to obtain and difficult to integrate. In summary end Mr. Bennett urged that the focus of the legal profession be on how it can expand its scope to better serve its clients. Rather than question of what happens if accountants are allowed to acquire law firms he would prefer asking how the lawyer’s ability to deliver diverse services to businesses can be enlarged possibly in a fashion akin to the MDP approach? He warned that in the current environment corporate businesses are demanding comprehensive, integrated solutions that frequently cannot be optimally delivered by the classic law firm structure, and that the international community abroad and the corporate community at home have been fashioning ‘work arounds’, such as broadened product offerings or in-house teams, that effectively foreclose outside counsel from the big picture projects that are the most interesting and the most lucrative.

In response to questions he stated that he had no control problems with his corporate employer and had been able to assert where the legal staff stood if any questions arose. He was also able to ferret out and present legal errors on behalf of the client. As the bank’s accounting firm, whose services he at times used, had a decades-old relationship with his employer, which was overseen by the CFO, he did not review the accounting firm’s conflicts of interest, but was unaware of any. Upon request, he agreed to try and obtain model retainer agreements to illustrate the sort of conflicts provisions included as contractual limitations. To the question of whether a consumer protection regime should be created with exceptions based on the size of the purchaser of MDP services, Mr. Bennett expressed concern regarding a consumer protection regime because, it would divest lawyers of their self-regulation. He felt that the greatest potential for abuse by an MDP existed with regard to the elderly when estate planning, asset management and tax filing were bundled as offerings. He suggested that the most achievable approach would be to permit the affiliation of nonlawyers with lawyers under the rubric of a law firm with the firm vending the services under the control of a lawyer. The ethics rules of the legal profession would govern such a bundling of services under an MDP. Regarding the distinction between use of outside and in-house counsel (Mr. Bennett said he would not use outside counsel in the same multidisciplinary way as those in-house because they are too expensive per hour) Judge Friedman commented that outside counsel, used for litigation purposes, might not be used inside the MDP in order to preserve the distinction between business and legal advice and to otherwise preserve the attorney-client privilege. Mr. Bennett added that, given current rules, the segregation of the lawyer with the legal question tends to provide better conflicts protection. The solution capability of an outside firm, whether or not an MDP, would determine choice of counsel and he would waive a conflict if he needed a specific legal expert who could not be gotten without such a waiver. Regarding the issue of control he identified and contrasted a lawyer-driven model of MDP (lawyers control and lawyer rules apply) and a market-driven model. Mr. Bennett thinks that if the market continues to drive events, a model in which lawyers are divested of all control is likely to emerge. If necessary he would permit fee-splitting and joint firm ownership by both lawyers and nonlawyers, as he prefers the lawyer driven model over the market driven model.

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