Position of CCBE on integrated forms of co-operation between lawyers and persons outside the legal profession, adopted in Athens on November 12th, 1999 - Center for Professional Responsibility

Position of CCBE on integrated forms of co-operation between lawyers and persons outside the legal profession, adopted in Athens on November 12 th, 1999.

The problem of integrated co-operation between lawyers and professionals of other disciplines has been considered by CCBE on previous occasions, and CCBE has affirmed its position on the subject in 1993 and 1996. In view of continuing developments since those years, it is appropriate that CCBE examine its earlier findings in the light of those developments. That examination has been duly carried out. The conclusion reached by CCBE in this respect is based on the following considerations:

The regulation of co-operation between lawyers and persons not being lawyers (hereinafter to be termed: non-lawyers) requires a delicate balancing of interests, made more difficult by the fact that the interests concerned are all both serious and legitimate.

On the one hand there is the interest in promoting freedom of economic activity, including the provision of services. It is considered in the interests of society at large that lawful economic activities may be conducted without unnecessary restraints, a.o. because freedom of initiative in this respect, in a society allowing free competition, is believed to be best calculated to promote that economic activities correspond to the needs and preferences expressed within that society.

On the other hand it has traditionally been recognised that the profession of lawyer is conditional upon respect for professional independence. That independence is required, principally, to permit lawyers to serve the interests of their clients unreservedly, without being influenced by other interests to which the lawyer, were he not in an independent position, might legally be bound, or factually be inclined to recognise a duty of loyalty. Onesided loyalty to the interests of clients, which is one of the lawyer’s principal duties, can be jeopardised when a lawyer is closely tied to persons or institutions which require him to respect other loyalties - in particular where those other loyalties are, viewed on their own merits, legitimate or even salutary.

With a view to the duty of lawyers to serve only their clients interests, the legal profession has always maintained strict rules on the avoidance of conflicts of interests. These rules concern situations where a lawyer might be bound to serve the interests of more than one party in a matter where those interests are significantly different. In such a situation, serving the best interests of one party is likely to jeopardize the interests of the other parties, seriously affecting the lawyer’s principal duty of loyalty. Here, again, the lawyer’s position will necessarily be compromised if he serves in an integrated organization with other professionals whose professional rules do allow them to serve clients with conflicting interests.

A further duty of lawyers recognized as crucial to the proper provision of legal services, is the duty to maintain confidentiality with respect to all information professionally received in confidence. In fact, the rules with respect to conflicts of interests referred to in the previous paragraph, usually also serve to avoid the possibility – or even the appearance – that clients with differing interests could benefit from (let alone have access to) information imparted to the relevant law firm by the other client.

This duty also is a source of major difficulties when lawyers combine their services in integrated co-operation with other professionals, if those other professionals have different rights and duties as concerns confidentiality. This can readily be envisaged when the co-operation involves professionals having a duty to positively denounce (to public authorities) illegal activities of their clients - which is the case, f.i., with accountants in some jurisdictions.

The problem becomes more complex where co-operation involves a broad range of professionals from a variety of different disciplines, either subject to differing rules and standards, or even including professionals not subject to any specific regulatory framework at all. It can generally be said that the existence of organisations combining professionals with different professional rules, or not being subject to regulatory supervision at all, is calculated to make the supervision of the rules applicable less effective, and in due course to erode both the regulatory framework and its effective supervision.

The duty to maintain their independence, to avoid conflicts of interests and to respect client confidentiality are particularly endangered when lawyers exercise their profession in an organisation which, factually or legally, allows non-lawyers a relevant degree of control over the affairs of the organisation. Interests conflicting with the stated duties of lawyers, arising from the concerns of the non-lawyers involved, may then directly influence the organisation's aims or policies. As already indicated, the interests involved may, viewed by themselves, be legitimate and salutary, rendering their potential influence particularly insidious.

CCBE notes that concerns on similar lines have been voiced as to the independence of other professionals for which such independence is an essential requirement, in cases where those other professionals are integrated into organisations serving different purposes. This has, f.i., been noted as an issue of primary concern in respect of the accountancy profession (in its role as independent auditors). CCBE subscribes to these concerns. These are equally justified, with respect to auditors, as they are with respect to lawyers. Indeed, the requirement inherent to both the legal profession and the accountancy profession, for the relevant professionals to be guided by objective and independent consideration of (in the case of the lawyer) the interests of the client or (in the case of the accountant) the interests which the provision of audited financial statements aim to serve, cannot but be detrimentally affected where those professionals attempt to integrate their practices. Thus, the qualities for which these professionals are principally valued in their respective roles in society, are visibly diminished.

The concerns addressed in the previous paragraphs are reflected in the facility provided by article 11 of Council Directive 98/5 EC of 16 February 1998, which recognises the legitimacy of restrictions upon multidisciplinary practice.

The negative aspects inherent to interprofessional co-operation as indicated above, must be balanced against the legitimate interest in the free pursuit of economic activity, as referred to in the opening paragraphs of this paper. In this respect it has been advanced that there is a relevant demand on the part of users of professional services, for the forms of service made possible by integrated professional organisations, and that this demand may not justifiably be denied. CCBE observes, however, that there is no actual evidence of the existence of any public consensus as to the desirability or the legitimacy of the forms of integrated co-operation examined here; whilst it is a matter of overriding public interest, that the negative aspects considered above be effectively dealt with.

CCBE recognizes that the problems considered above vary from country to country, depending on the circumstances encountered there. For instance, some countries extend protection of confidentiality to other professionals than lawyers. There, the problem of confidentiality is obviously not of the same dimension which it has in those countries that exclude protection of client confidentiality for non-lawyers.

CCBE nevertheless concludes that, in the jurisdictions with which it is familiar, the problems inherent to integrated co-operation between lawyers and non-lawyers with substantially differing professional duties and correspondingly different rules of conduct, present obstacles which cannot be adequately overcome in such a manner that the essential conditions for lawyer independence and client confidentiality are sufficiently safeguarded, and that inroads upon both, as a result of exposure to conflicting interests served within the relevant organization, are adequately avoided.

CCBE respects that in a number of jurisdictions forms of integrated co-operation between lawyers and non-lawyers are permitted, and are effectively carried on. In some of the relevant jurisdictions the local regulatory situation obviates some of the problems discussed above, as for example where rules on confidentiality are applicable to other professionals on the same footing as they apply to lawyers. Where integrated co-operation is permitted, there is also often a body of rules intended to provide for the problems discussed, such as rules on internal partitioning of the relevant organization (colloquially referred to as the use of "Chinese Walls"). CCBE does not accept that, given circumstances and/or specific professional rules such as these, the likelihood of the actual occurrence of breaches of lawyer independence, of client confidentiality or of the respect for the avoidance of conflicts of interests, will be appreciably lessened. The complexities alone that are necessarily attendant upon an organization as under consideration here, and upon the application of rules of the type indicated, make it unlikely that the relevant problems can truly be adequately met.

The legal profession is a crucial and indispensable element in the administration of justice and in the protection available to citizens under the law. Safeguarding the efficacy and integrity of this factor within a democratic society, is a matter of the highest concern and priority. It is part of CCBE’s mission to ensure, that both are given their due.

CCBE consequently advises that there are overriding reasons for not permitting forms of integrated co-operation between lawyers and non-lawyers with relevantly different professional duties and correspondingly different rules of conduct. In those countries where such forms of co-operation are permitted, lawyer independence, client confidentiality and disciplinary supervision of conflicts-of-interests rules must be safeguarded.

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