Oral Testimony Of James Seff Of Pillsbury, Madison And Sutro, August 1999 - Center for Professional Responsibility




AUGUST 8, 1999

The next presenter was James Seff of Pillsbury, Madison and Sutro, vice-president of the Board of Governors of the State Bar of California and co-chair of the Board’s Committee on Regulations and Discipline. The Board of Governors of the California Bar took a careful, but preliminary look at the CMDP recommendations and voted to recommend deferral for further study. Professing the State Bar is not preparing to build a wall against MDPs in California, he said they do not oppose MDPs in principle as California is often in the forefront of change and, thus, is open-minded about new and innovative forms of legal practice that might be beneficial to both the profession and the public. However, they had problems with the recommendations. The Commission’s recommendations would signal sweeping and momentous changes in the profession, its service to the public and its role in the American system of government. While the Commission relies heavily on European models it appears that in all countries except Switzerland the Big Five accounting firms have entered into collaborations with law firms in which the law firms remain independent of the accounting firms. The Commission’s proposal goes well beyond most of the Commission’s models. Thus, the California Bar considers the Commission’s proposal as a largely untested and revolutionary mode of practice in which lawyers may go into partnership with any kind of professional. Noting that the profession has been struggling in recent years with the question of whether the practice of law is a profession or merely another kind of business, the Commission was told to consider carefully whether adoption of its proposal signals the end of that debate in favor of the law as business model. The existing rules concerning sharing fees and entering into partnerships with nonlawyers are designed to protect the lawyer’s unique role as an independent and objective counselor and to shield lawyers from pressures exerted by nonlawyers to betray the lawyer’s duty to his or her client, to the courts and to society. The Bar finds a big problem with the lack of requirement that lawyers control the MDP or even have some independent chain of command within the MDP. Mentioning that preserving lawyer’s independence is not an academic issue Mr. Seff reflected that every lawyer surely has had to make the difficult decision of responding to the client’s wishes with ‘not legal’, ‘not ethical’ or ‘not appropriate’. These kinds of pressures multiply when lawyers work in-house for corporations or other institutions as they risk their entire livelihood in resisting unethical or illegal directives from a nonlawyer superior. Saying such pressures shouldn’t be underestimated he communicated that the State Bar isn’t convinced that the Commission’s proposal provides adequate safeguards regarding lawyer independence issues. As with the medical profession, the MDP proposal stands equally to change and perhaps ultimately eliminate the independence of the legal profession - he asked what that would mean for clients? Will the lawyers in MDPs be pressured to sell products, services, insurance, and investments offered by other members of the MDP; will the financial incentives to do that cloud or impair the lawyers’ objectivity in representing and advising the client? The State Bar is also concerned that lawyers and other professionals in the MDPs will have conflicting duties, especially regarding confidentiality and disclosure (or as characterized by the Batonnier, ‘denouncing the authorities of a problem’). Although the conflicting duties are not known they raise core policy issues that must be dealt with, not as a regulatory afterthought but as part of the proposal itself. Finally, the Commission’s proposal focuses on MDPs that consist of large law and large accounting firms, and the State Bar is not confident that all affects of the proposal have been adequately identified and studied, as the proposed rule change would affect all types of practice. For example, if the current proposal is adopted they do not find unlikely MDPs that consist of tow truck drivers, ambulance drivers, consulting physicians and personal injury lawyers. Before the proposal goes to the House the California urges the Commission study its practical impact on all areas of legal practice for all types of clients. He said that at a reception yesterday afternoon Bill Ide, a former ABA president, told him to tell the Commission that one stop shopping is bad from a corporate general counsel perspective and he believes many corporate counsel share that view. Mr. Seff said the report provides a very good jumping off point for an important discussion of the role of lawyers in the next millennium and the State Bar of California looks forward to playing an active role in that discussion. When the Bar is threatened by action by higher authorities, for example Congress, he urged lawyers to remember that while they can’t afford to fiddle while Rome burns they also cannot afford to try to build Rome on unsound foundations.

In response to questions from Dean Powell, Mr. Seff clarified that his comment that in-house counsel may be exposed to even greater pressures than outside counsel, regarding independence of judgment and avoidance of conflicts, is based on anecdotal evidence. He never intended to suggest that in-house counsel were in some way less ethical than outside counsel. He also said he believes the way the proposal is presently written permits an alliance between a tow truck driver and a lawyer. If the Commission's intent was different, he respectfully suggested that the Commission clarify this issue.