General Practice, Solo & Small Firm DivisionMagazine
Volume 15, Number 3
It’s Like Having a Partner without Having a Partner
BY KENT ABNEY
Have you been wondering what The Equitable Life Assurance Society, a corporate sponsor
of the ABA General Practice, Solo and Small Firm Division, has to offer you as a Section
member? Equitable representative Kent Abney explains how marketplace demands are encouraging lawyers, accountants, and financial planners to work together. Keep on reading for more information on why you might want to partner with Equitable.
You probably won’t find the words "practice my sales pitch" on most lawyers’-to-do lists. But that doesn’t mean you don’t have to adapt your law practice to meet the competitive threats posed by the marketplace. During the past decade, the legal community has watched others enter the domain of practicing law, from CPAs offering their clients tax preparation and legal advice, to software packages and online services offering self-help solutions for bankruptcies, divorce, and numerous other legal matters.
Within the next decade, we will see the increased need for estate planning lawyers and financial planning and asset management professionals as an estimated $10 trillion passes to heirs in the United States. While restrictions govern the unauthorized practice of law, there are certainly some gray areas. Increasingly, the "One-Stop-Shop for Advisory Services" movement is gaining momentum.
What measures should you be taking to protect your practice from eroding and your clients from turning elsewhere for advice that you can provide? In order to compete and maintain their law practices, lawyers are increasingly discussing how to widen the scope of their services while maintaining a high quality, focused practice.
A growing number of lawyers are expressing both concern over and interest in the blurring lines of the professional advice marketplace. Many are responding to the market-driven call for multidisciplinary practices. For example, some of the market forces driving the changes include the hiring of lawyers by accounting firms, corporate and individual clients requesting additional services from their lawyers, and improvements in technology that allow clients to do their own tax returns and investment research. It’s a call for lawyers to depart from traditional forms of practice, offer additional services and receive fees, regulate practices to maintain objectivity and confidentiality, and define how to properly disclose these new positions and services to clients.
The Section’s Perspective
Karen J. Mathis, Secretary of the ABA General Practice, Solo and Small Firm Division and also Chair of the ABA Commission on Women, reports: "The issues presented by multidisciplinary practice may be the most important issues facing the profession today. Price Waterhouse Coopers and Arthur Andersen are advertising themselves as the third and fourth largest law firms in the world—trailing only Baker & McKenzie and Clifford Chance."
She continues, "This is not just an issue for large, global law firms. The solo and small firm practitioners in our Section are following the ABA Commission on Multidisciplinary Practice’s findings very closely and want to weigh in before the Commission presents its report at the House of Delegates meeting in Atlanta this summer. We believe our members have valid interests and concerns about these issues, which will affect the legal profession and the public for the foreseeable future. General practitioners are looking for alternatives to the traditional forms of law practice, which will allow them to serve clients and protect client rights to confidentiality and conflict-free legal representation. Our Section’s association with The Equitable has given us a ‘leg up’ in understanding the market forces driving the multidisciplinary practice debate and the public’s desire for ‘one stop shopping’ when it comes to financial and estate planning."
What Equitable Offers You
Equitable is responding to these market demands. Through a first-of-its-kind program with the ABA, Equitable provides lawyers with access to a portfolio of consultative services, the Financial Fitness Profile®, and the knowledge and experience of highly rated professionals in the financial service business, many with backgrounds in law and accounting. This program was especially designed to help meet the needs of those in solo and small practices. Section members now have the opportunity to offer clients the added value of estate, retirement, and small-business owner planning without the costs usually incurred when expanding the scope of their practice. By offering these services, lawyers can position themselves as more valuable to clients, gain new clients, become an indispensable resource in planning their clients’ financial futures, and respond to the changing marketplace.
Financial Fitness Profile® (FFP) is a technology-based tool that was developed to bring an enhanced level of support and professionalism to the financial service process. FFP is actually a series of different financial planning strategies supported by individual software packages: Charitable Strategies, Estate Strategies, Personal Strategies, Business Strategies, Retirement Strategies, and Investment Strategies. Each has been carefully evaluated and judged to be among the best in its specialized area. Our customized version of FFP provides both the clients and their advisors a structure for meetings and presentations and facilitates the process of developing financial service proficiency. Lawyers work jointly with our financial professionals to uncover their clients’ financial needs and develop strategies to achieve their clients’ goals.
Research indicates that many of your clients want and need financial assistance. Often, this type of planning results in the need for legal work and representation. Clients who are introduced to these services by their accountant or another financial professional may opt to use that professional’s lawyer referral for the ancillary legal work. The solo, small firm, and general practitioner must be proactive in this area so that their clients know that they can provide this type of service.
Equitable professional Tom Goldman, J.D, LL.M., says: "Certainly, the ability of an attorney to participate in financial services fees is a dramatic change in the law practice. Obviously, some firms would not want to deviate from their main focus, whether that would be criminal law, real estate, or family law. But for others, especially boutique firms specializing in estate planning, it would make sense to work with a financial service representative to recommend the investment and insurance products that could be used. The problem is maintaining a degree of objectivity, but having a clear disclosure policy and procedural guidelines to follow could do this. I believe the solo and small firm practitioner is uniquely situated to provide additional information and advice in the financial services area."
When it comes to fulfilling client needs with financial products, Equitable offers objective resources and access through its affiliated networks. EQ Financial Consultants, Inc., a broker dealer, investment adviser, and subsidiary of Equitable, offers a vast selection of both name-brand investment products and services. Alliance Capital Management, L.P., the nation’s largest publicly traded asset manager and one of the leading global investment advisors, provides proprietary mutual funds, pension funds, and private investment management services. Through Donaldson, Lufkin & Jenrette, Inc., one of the nation’s most prestigious investment banks and a rapidly growing financial service and securities firm, clients have access to online brokerage and a host of clearing, execution and prime brokerage services. Where there is a need for traditional or innovative solutions using insurance and annuity-based products, Equitable is one of the most trusted names in the industry. Through EquiSource, a national brokerage organization and Equitable subsidiary, the Equitable associate can access state-of-the-art products from some 100 insurance companies. (Note: The Equitable Companies, Incorporated, is an insurance and investment management organization and the parent company of The Equitable Life Assurance Society, Alliance Capital Management, Inc., and Donaldson, Lufkin & Jenrette, Inc.)
Taking the Leap
It’s not easy to decide when and how to expand the scope of your law practice to include financial services. Steven Alan Bennett, former general counsel of Banc One Corporation, said to the ABA Commission on Multidisciplinary Practice, "There are no ‘pure’ legal problems today because legal solutions cannot be arrived at in a vacuum." "Our clients come to us with very complex problems to solve," concurs Gerard Nicolay, chair of Price Waterhouse Coopers LLC’s network of law firms. "They want lawyers and finance people and consultants who are working together to solve that problem." Many firms dealing with these issues have found a path to growth by expanding their capabilities into financial services. Clients are increasingly depending on all of their trusted advisors for financial advice and are looking to hear their lawyer’s point of view about financial products and services.
Cameron Harris, J.D., LL.M., CPA, the Texas Regional Director of Advanced Planning for EQ Financial Consultants, Inc., observes, "Because the marketplace demands an increasingly broadening definition of financial services, lawyers, accountants, and other financial professionals need to work together in teams to produce the best result for the client. If we fail to do so, we will be left selling buggy whips on the Interstate."
There are still many unanswered questions regarding a lawyer’s relationships with other financial professionals. Lawyers should perform careful due diligence before agreeing to any type of alliance with a financial services provider. One clear point, though, is that many practitioners share the feelings of elder law attorney Charles F. Robinson, former chair of the ABA Law Practice Management Section, when he says, "I would like to form a consortium with a CPA and a money manager, and provide comprehensive service on a fee basis that is split among the members of the consortium."
Kent Abney, ChFC, CPA, PFS, J.D., LL.M., is the Executive Vice President of Equitable-Texas Region. He is a financial planner and registered representative of EQ Financial Consultants, Inc., 212/314-4600, a broker dealer and investment advisor, and an agent of The Equitable Life Assurance Society. Financial Planners offer fee-based financial planning, which includes asset management services and traditional and variable insurance and annuities of Equitable and more than 100 other companies through Equisource.