James A. Klein RE: Report of the ABA Commission on Multidisciplinary Practice - Center for Professional Responsibility

August 4, 1999


Mr. Arthur Garwin
Commission on Multidisciplinary Practice
American Bar Association
541 North Fairbanks Court
Chicago, IL. 60611

RE: Report of the ABA Commission on Multidisciplinary Practice


Dear Mr. Garwin:

I am writing on behalf of the Association of Private Pension and Welfare Plans (APPWP) concerning the recommendation of the Commission on Multidisciplinary Practice that will shortly be considered by the ABA House of Delegates.

The APPWP is a public policy organization representing company sponsors of employee benefit plans, as well as firms that provide a wide array of services to those plan sponsors. Combined, our members either sponsor directly or provide services to retirement and health plans that cover more than 100 million Americans. Our service provider members include law, accounting and employee benefit consulting firms; as well as insurers, banks, investment companies and plan administration firms. All of these service provider organizations are members of the APPWP in order to ensure a legal and regulatory environment that helps their clients and our principal members – employers – sponsor employee benefit plans for their workers, family members and retirees.

It has recently come to our attention that certain aspects of the ABA Commission on Multidisciplinary Practice’s recommendation may adversely and unnecessarily affect our service provider member firms and their employees. This, in turn, would interfere with their ability to best serve employer sponsors of retirement and health plans whose interests are our chief concern and the principal purpose of our filing these comments. Service provider organizations, such as accounting and employee benefit consulting firms, already disclose to current and prospective clients any potential conflicts of interest. They also make clear to both clients and potential clients that they are not law firms. These organizations work regularly with outside counsel on legal-related matters and, of course, they run the risk of losing business relationships or being held legally accountable if client matters are not satisfactorily performed.

The chief sources of our concern are the Commission’s proposed definition of the "practice of law" and its explanation of "holding out" as a lawyer. These aspects of the proposal appear to prohibit non-lawyers from offering law-related services – including employee benefits-related services – that they have long provided to clients and that clients have long valued. In addition, they seem to authorize state bars to regulate lawyers who provide client services in non-traditional practice settings, even if they do not create any client expectation that they are providing legal services. And finally, they appear to allow state bars to regulate the non-law firm organizations for which such lawyers work, including the non-legal portions.

Specifically, adoption of the proposed definition of the "practice of law" may significantly limit the permissible activities of non-lawyers who work for firms that administer private employee benefits plans and that advise on issues related to such plans. Because these non-lawyers provide certain services that are also provided by lawyers in law firms, their work is captured by the proposal’s definition of the "practice of law." That, in turn, might mean that these non-lawyers and their firms could no longer provide such services, at least not without risking possible sanctions for the unauthorized practice of law.

Further, the "practice of law" definition, combined with the proposal’s definition of "multidisciplinary practice" and its discussion of what it means to "hold out" as a lawyer, seem to authorize state bar regulation of our non-law firm members and their lawyer employees, neither of whom is currently subject to such regulation. That is, the Commission recommends that any firm employing a lawyer who offers services also offered by law firms would be considered an MDP, and regulated just like a law firm. Because some of APPWP’s non-law firm members do hire lawyers to assist in matters pertaining to employee benefit plans, and because law firms provide the same services, these non-law firms might suddenly find themselves subject to regulation by state bars. We see no basis for this broadened definition of the practice of law or for this new regulatory system.

In light of the substantial implications of the Commission’s proposal, we have not had ample opportunity to fully study the proposal and analyze its potential impact on service provider organizations and the clients they serve. We urge the ABA, therefore, to defer action on the Commission’s proposal. Such a deferral would allow APPWP and our members to consider fully the possible effects of the proposal, to submit specific comments and suggestions for improvement to the ABA, and to work together with the ABA and other interested organizations to develop an appropriate regulatory framework for multidisciplinary practices. Thank you very much for your consideration of these comments on this very important matter.

Sincerely,

James A. Klein
President

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