September 24, 1999
Comments Concerning an Article on Multidisciplinary Practice
Sydney M. Cone, III
Counsel, Cleary, Gottlieb, Steen & Hamilton
C.V. Starr Professor of Law, New York Law School
A. The Explanatory Text
In the lead article in the Summer 1999 issue of International Law News, Steven C. Nelson, a member of the ABA Commission on Multidisciplinary Practice (the "Commission"), explains the Commission’s report on multidisciplinary practice ("MDP"). The article provides insight into the Commission’s standards for evaluating the core values of the legal profession in the MDP context, and thus enables members of the bar to gain an appreciation, first, of how those core values were viewed by the Commission, and, second, of steps that the Commission might consider taking in the future.
In its eleventh paragraph, the article takes up the issue of whether a lawyer’s participation in an MDP "may tend to reduce the lawyer’s independence of judgment by creating economic pressures that impair the lawyer’s ability to render advice that is truly objective." In the two sentences quoted immediately below, the article explains how the Commission dealt with this issue.
None of those making submissions to the Commission [was] able to articulate a persuasive reason that a lawyer who participated in an MDP would necessarily be either subject to greater economic or other institutional pressures, or more likely to shade the advice given to a client because of such pressures, than a lawyer in a law firm. The Commission was, however, persuaded that an MDP that was not controlled by lawyers might, if left to its own devices, be less likely than a law firm to create a firm "culture" that was supportive of strict observance of the rules of professional conduct.
The quoted text and the work of the Commission might be viewed by the bar from three perspectives: first, that of the analytical standards used by the Commission in dealing with submissions made to it; second, that of firm "culture" and the core values of the legal profession; and, third, that of the large, multi-profit-centered MDP controlled by non-lawyers.
B. The Commission’s Standards
The text quoted under A above summarizes the analytical standards applied by the Commission in dealing with submissions made to it. As applied to MDPs controlled by non-lawyers, these standards are said to be those of (1) the "persuasive reason"; (2) "greater economic or other institutional pressures"; (3) a "more likely" result; (4) a "less likely" result; and (5) a result that "necessarily" occurs.
(1) The bar has not been informed as to how the Commission applied the standard of the "persuasive reason" to specific reasons why an MDP controlled by non-lawyers might create the "economic or other institutional pressures" with which the Commission was dealing.
(2) Similarly, the bar has not been informed as to how the Commission measured and compared those pressures in (a) MDPs controlled by non-lawyers and (b) independent law firms.
(3) (4) In respect of the non-lawyer-controlled MDP, the bar would benefit from an explanation of the basis on which the Commission concluded (a) that those "pressures" were not "more likely" to cause an MDP lawyer to "shade advice," but (b) that the MDP "left to its own devices" was "less likely" to foster a proper level of professional "culture."
(5) Finally, because the standard of the result that "necessarily" occurs qualifies standards (1), (2) and (3), a "persuasive" reason is one that persuades the Commission that an MDP lawyer would "necessarily" be subject to "greater ... pressures," or would "necessarily" be "more likely" to "shade advice," than a lawyer in a law firm.
These standards used by the Commission would seem to raise at least two concerns for the bar. First, the bar might find it desirable to achieve more transparency in the work of the Commission. Second, the bar might question the strictness of the "necessarily" standard and the consequences of integrating that standard with other standards used by the Commission in the context of the profession’s core values.
Transparency. The bar might want to be informed as to the Commission’s analysis of reasons considered by it, and as to the norms and procedures used to determine whether a given reason might or might not be deemed "persuasive," particularly in the context of the core values of the legal profession. For purposes of its own deliberations and as a matter of procedural fairness to persons attempting to understand its conclusions, the Commission might adopt a policy of transparency in respect of these norms and procedures and the resulting analysis. The bar would thus be informed as to how the Commission arrives at a conclusion that a given reason presented to it is or is not "persuasive."
The "Necessarily" Standard. Members of the bar might question the impact of the "necessarily" standard on other standards adopted by the Commission, and its consequential impact on the Commission’s treatment of the core values of the legal profession. A reason, no matter how persuasive, apparently does not suffice to persuade the Commission if the reason merely shows a serious risk, or even a substantial likelihood, that the MDP lawyer would be under "greater ... pressures," or would be "more likely" to "shade advice," than a lawyer in a law firm. Accordingly, members of the bar might conclude that the "necessarily" standard is not adequately attuned to the core values of the legal profession, and that the Commission should adopt a standard more responsive to risks or probabilities of harm to those values.
C. Firm "Culture"
If (as suggested by the explanatory text quoted in A above) the problem addressed by the Commission was that an MDP controlled by non-lawyers, "left to its own devices," might not create a "culture" conducive to strict observance of professional rules, then the principal recommendations of the Commission would not seem susceptible of solving that problem.
To begin with, any MDP (or for that matter any independent law firm) might not "necessarily" create such a culture. Were professional culture the goal, measures conceived to attain the goal would seem to require universal application, and not just application to MDPs controlled by non-lawyers. The fact that the Commission limited its cultural conclusion to MDPs controlled by non-lawyers strongly suggests that there are, after all, "greater" problematic "pressures" in such MDPs than in legal practices controlled by lawyers, and that the Commission failed to recognize the nature of the cultural problem.
Perhaps for this reason, the Commission’s recommendations do not address the supposed cultural objective. So far as the "culture" of a firm is concerned, the recommendations would leave the MDP controlled by non-lawyers entirely to its "own devices." The essence of the Commission’s recommendations is administrative, not cultural. Their effect would be to generate certifications filed by non-lawyers, which could be filed irrespective of firm culture. The culture and core values of the legal profession are not a matter of administrative filings, but of the legal education, legal training, legal ethics, and professional experience of lawyers.
The explanatory text (quoted in A above), like the work-product of the Commission on which it is based, fails to establish a relationship between the Commission’s actual recommendations and the goal of promoting a professional culture supportive of core professional values. Members of the bar who appraise those recommendations in terms of core professional values and the underlying common law of legal practice can reasonably question whether the recommendations are adequate in the context of MDPs controlled by non-lawyers.
D. The Control of MDP Resources
The explanatory text (quoted in part A above) does not examine, from the perspective of the bar, the large MDP with multiple profit centers owned and controlled by non-lawyers. A legal practice within such an MDP would be based on firm resources managed by non-lawyers. A few aspects of such a legal practice and such an MDP (some of which might indeed be deemed cultural) can be summarized as follows.
In the selection of clients and the resolution of conflicts of interest, non-lawyers would influence both the choice and the application of criteria for weighing the MDP’s relative interest in serving (for example) a client that was both a legal and a non-legal client, as against a client that was exclusively a legal client. It seems reasonable to expect the non-lawyers ultimately responsible for reaching decisions to be mindful of the objective of promoting non-legal profit centers, an objective that often might not be in accord with the objective of respecting lawyers’ rules governing conflicts of interest.
The raising and allocation of firm capital (both debt and equity) would be ultimately controlled by non-lawyers, who could thus orient the development of the MDP as between the practice of law and engagement in other pursuits, and who for these purposes might well view the practice of law less in professional terms than in terms of being but one of several MDP profit centers. Investment in the legal profit center might thus be controlled for purposes other than maximizing legal professionalism and fostering its core values.
Competing budgetary requests would be under the ultimate control of non-lawyers deciding on the resources to be allocated (for example) to controversial public-interest cases and to pro bono work, and who might be influenced less by legal professional goals than by the net earnings of the several MDP profit centers.
The compensation and advancement of the MDP’s professionals would be ultimately controlled by non-lawyers, whose decisions on pecuniary and professional reward (or non-reward) would be highly determinative of morale, efficacy and outlook affecting the MDP’s legal and non-legal activities, and the efforts and expectations of individual professionals within the MDP.
The resources of the MDP could be employed in a manner having a potential impact adverse to the public interest, as demonstrated by the position taken by the staff of the Securities and Exchange Commission that an MDP should not be permitted to engage in the practice of both auditing and law.
The simple existence of ultimate economic power in the hands of the non-lawyers in MDP top management would form a constant backdrop for lawyers within the MDP balancing the objectives of top management against considerations of professional ethics and the formulation of independent judgments in the best interests of legal clients and the legal system.
International Law News has provided the bar with an explanation of the work of the Commission, written by one of its members. The explanation reveals that, in comparing an MDP controlled by non-lawyers with a law firm, the Commission applied standards that lack transparency and that are inadequately attuned to the core values of the legal profession. (See part B above.) Further, the explanation, while stating that the Commission was motivated by concerns for firm "culture" conducive to the maintenance of high professional standards, fails to establish a relationship between the Commission’s recommendations and its cultural concerns. (See part C above.) Finally, the explanation omits any analysis of the profession’s core values in the context of the large, multi-profit-centered MDP controlled by non-lawyers. (See part D above.) For these reasons, the bar may conclude that the work of the Commission has not been grounded in a sufficiently rigorous appreciation of the profession’s core values, and that the Commission in the future should strive for greater procedural coherence and a more complete and perceptive analytical product.