Oral Testimony of Steven Krane, a member of the executive committee of the
New York State Bar and vice-chair of the NYSBA Special Committee on the Law
Governing Firm Structure and Operation,
Before the American Bar Association
Commission on Multidisciplinary Practice
August 8, 1999
Steven Krane, a member of the executive committee of the New York State Bar and vice-chair of the NYSBA Special Committee on the Law Governing Firm Structure and Operation, presented his prepared remarks to the Commission. Asked whether a law firm's strategic alliance with a nonlaw firm doesn't pose the same danger as the integrated professional service firm because of the dependency it engenders, Mr. Krane said that the risk of the affiliated firm has been accepted by the profession and acknowledged the importance of such a cross-referral relationship. However with an independent firm, at the end of the day when decisions get made regarding such things as allocation of firm resources, amount of release time associates are allowed for pro bono, or whether a particular matter is profitable or costing too much, it is lawyers making those decisions. He likened affiliated firm cross referral to just another business relationship, such as landlord or vendor, that pulls the law firm in one direction or another. Asked by Mr. Traynor his view on MDPs controlled by lawyers, he expressed uncertainty as to what lawyer control really means. That difficulty in understanding is one of the problems he personally had with the Commission's Report. Is control a question of equity stock or a question of who is the major profit center of the organization? He was unable to see what an MDP controlled by lawyers provided for clients that a law firm that employs nonlawyer professionals who serve clients doesn't provide.