Summary of the Testimony of Gerard Nicolay - Center for Professional Responsibility

Summary of the Testimony of Gerard Nicolay

Before the Multidisciplinary Practice Commission

Gerard Nicolay, managing partner of Coopers & Lybrand Juridique et Fiscal and chair of PricewaterhouseCoopers in Paris, next presented remarks to the Commission. He described a multidisciplinary practice as any business arrangement where different professionals are using their skills to work together. The Big Five, the only disclosed MDPs, usually work with companies and provide mostly consulting and not much litigation. To illustrate today’s more complex problems and more global cost pressures that urge use of a single service provider, an integrated team of specialists, he gave the examples of issuance of stock options and mergers and acquisitions, which involve human resources, tax, social security and valuation issues. He claimed clients want to learn a new, integrated language, as they want to dialogue with other professionals in the course of constructing a deal. His firm does not favor deregulation as all shares of the Paris firm are owned by lawyers although the lawyers on the payroll of accounting firms are not identified as such and are not regulated. His firm shares the same client base as PricewaterhouseCoopers, and presents the same approach to a problem, the same quality review, the same training, and shares costs (and thereby volume cost savings) with the PricewaterhouseCoopers network.

Projecting the view in 5 years of his son as a prospective avocat he questioned whether in France in 5 years there would be any French - or German or Italian - firms doing global business work. Other than White & Case or Baker & McKenzie, there might be few American firms. Notwithstanding the Lotus Notes being shared between lawyers and nonlawyers, he maintained that his firm strictly regulates access to confidential information. He advocated that regulated lawyers, not banks and comparable institutions, should be performing legal services, that MDPs are the answer for a certain type of client, and that lawyers should allow ownership by other professionals while preserving their independence. He prefers the solution set forth in the International Bar Association (IBA) resolution.

Questioned regarding how independence from the networked firm was maintained when such an independent posture was not in the best interest of the networked accounting/consulting firm, Mr. Nicolay explained that the law firm cannot share profits (although they share costs). He explained that the accounting/consulting firm is their biggest client, approximately 5% of gross income. At the end of the year they discuss the possibility of discounting bills to the accounting firm. Any rebate to the accounting firm is structured as a financial relationship with a client. Mr. Nicolay remarked that his firm’s billings are in line with other Paris firms. He said that now that they have educated the European market they have been able to bill high fees to clients who (oftentimes introduced to them by the accounting firm) benefit from their integrated team approach. Although he mentioned coordination a number of times - coordination with the accounting firm in the decision to open a new office as wanting its advice, support and client base, or coordination at the international level of the network through joint decisionmaking by the legal/tax, audit and consulting executives - the extent of joint management was never clarified. It was mentioned that the 40 law firm offices of this network were not all subject to the same partnership agreement and it's likely these law firms would be linked by an association in the future. The work done for its mostly mid-to-high range (half million dollar) business clients consists of 10% employment law and 40% mergers and acquisitions. The law firm name, a point on which Mr. Nicolay says the Paris Bar has changed position, after the merger of Coopers-Lybrand and PriceWaterhouse should include, per Paris Bar instructions, the name of the law partners and reference the firm network. In line with the request of the Batonnier to the firm, the Commission asked for copies of the contract between the law firm and the accounting/consulting firm in France as well as the firm’s contract outside of France with the network.