Volume 18, Number 2
MDPs and the Minority Lawyer
By Virginia Grant
Supporters of multidisciplinary practice (MDP) received an unwelcome response from the American Bar Association House of Delegates at its Annual Meeting, held in July 2000—"Not Now, Not Yet." Specifically, the House voted to maintain the ABA’s position that lawyers not be permitted to share fees with nonlawyers, and that nonlawyers not be permitted to own or control entities that practice law. This decision effectively rejected the concept of multidisciplinary practice, which has been under review by lawyers and legal organizations for at least the last two years.
Yet, some people close to this heated debate doubt that the profession has fully retired the matter. At least 45 states have reviewed the MDP question, and more than 30 have yet to make a report or take action. MDPs will likely remain a hot topic in the profession while individual states consider the question: Should the legal profession condone multidisciplinary practices? For minority lawyers and minority-owned law firms, the question is more specific: How would changes in the guidelines affecting MDPs impact minority lawyers and minority-owned law firms?
Minority lawyers constitute a very small percentage of the associates and partners in the largest firms in the country. If minority lawyers are not in the largest law firms, then where are they? A fair percentage are in corporate law departments, the public sector, academia, and consulting, Yet, many lawyers of color practice as solo practitioners or in minority-owned law offices.
Minority-owned law practices must address the escalating issue of MDPs or face possible demise. Minority-owned law firms are generally individualized and autonomous firms that pride themselves on working in niche practice areas that fit the needs of their clients. These law firms actually look for ways to differentiate themselves from their competition and to stand out as leaders and contributors in the community. Blessing or curse? The adoption of MDPs would allow law firms to partner with nonlawyer professionals (such as accountants or investment brokers) to bring full-service benefits to legal clients in areas that the profession previously could not touch. For minority-owned law firms to keep up with the profession, these firms would have to be willing to bring other professionals into their partnerships to share in the piece of the pie that is often already minimal.
Minority lawyers in large law firms could potentially face additional challenges in climbing the ladder. Stephen Pugh, of Pugh, Jones & Johnson, a successful minority-owned law firm in Chicago, points out that it might be more difficult for minority lawyers to make it through the MDP revolution. "It has traditionally been more difficult for minorities to become partners in law firms and in the majority of accounting firms. Neither profession has seen drastic improvements in diversity. Combining these practices could mean increasing the difficulty in minorities making partner in these MDPs."
Many minority-owned firms focus their practices on specific areas of the law. MDPs will add pressure to compete with the firms that provide "one-stop shopping" for legal services. Clients will probably choose law firms that not only provide a broad range of legal services but also can assist them with other aspects of their business and personal lives. This can potentially drive business away from minority-owned law firms that have not incorporated MDPs into their practice. Small practices could be squeezed out by the onset of large franchised practices offering full-service deals combining a wide range of services.
MDPs can also be positive for minority-owned law firms. MDPs could be an opportunity for minority-owned law firms to develop new marketing packages of business services centralized around one legal core. "There is no overall negative effect, " says Martin Greene of Greene and Letts, a minority-owned law firm in downtown Chicago. "MDPs will not hurt us necessarily; they may make us more marketable." Bringing other professionals into the firm can expand the client base and potential reach of minority-owned law firms. Preparing for the future. Partnering with other professionals will also allow minority-owned firms to collaborate and quote one fee to a client without having to send them down the street to have their needs handled—an economic benefit to the client. "This is already happening indirectly in many law firms," explains Karma Rodgers of Butler, Rodgers & Johnson, a minority-owned law firm in Milwaukee. "Lawyers already recommend other professionals or even their own personal accountants, financial planners, etc., to their clients. MDPs provide the opportunity for lawyers to share fees for these services."
Allowing minority-owned law firms to diversify the services that they offer through MDPs might even be the salvation for the firms struggling to make it. Stephen Pugh notes that "MDPs could give minority law firms the opportunity to handle more sophisticated work with the possibility of attracting larger clients."
To prepare for possible MDP changes, lawyers can examine their client bases and decide which clients will benefit from combining services and which clients will definitely demand a combination of services. Examine your practice areas, your market, and the basic forces that drive profitability—rates, realization, cost control, and productivity. Take the pulse of the internal culture of your firm. Pay attention to associates, staff compensation, and leverage. Then, start planning the right strategy for your firm. Should you grow, merge, or expand geographically? Some firms may be forced to do one or more of the above to keep key clients. Growth and expansion might be the right course for some firms, but downsizing and targeting a specific market might be best for others. Either way, a commitment to planning is vital.
"The future belongs to those who prepare for it today."
— Malcolm X
Virginia Grant, J.D., is a consultant at Altman Weil, Inc. at the firm’s Midwest office in Milwaukee, Wisconsin.
- This article is an abridged and edited version of one that originally appeared on page 5 of Goal IX, Summer 2000 (6:3).