I. Introduction
Multidisciplinary practices, or MDPs, have long been the subject of
acrimonious debate between two opposing campaigns, each citing
passionate reasons for why the organizational structure should be
formally established or definitively barred. [1] Multidisciplinary
practice refers to a professional entity in which lawyers partner with
non-lawyers to provide a mix of legal and non-legal services.
Efficiency and innovation by this new structure is dampened with fears
of conflicts of interest and dilution of privilege. The crucial
question as acerbically couched by one scholar has been “whether client
and public interests are best served by ethics rules that preclude
innovation in joint service delivery enterprises among lawyers and
other professionals.” [2]
II. Proponents of MDPs
Client demand for “one stop shopping” has driven professional
services firms and hindered traditional law firms; clients want
efficiency, convenience, and all their answers under one roof. [3] With
an MDP, clients will no longer have to hire a law firm for
litigation and legal document drafting purposes on one side of town,
with an accounting firm for audits and tax advice on the other. [4]
Clients will save on information and transactional costs, which in turn
may save billable hours by the service providers. [5] Not only is
efficiency a net gain, but MDPs may increase competency and
quality of work; problems in today’s global economy are rarely purely
“legal” or “business” problems, but a sticky amalgamation of both.
[6] MDPs’ combination perspective may address problems that clients
previously did not know existed. [7] Diverse professionals working
together in unity create new and innovative solutions and are more
competitive in offering legal solutions than the traditional firm in
terms of price and quality. [8]
Proponents of MDPs also argue that the public at large is best
served by offering all levels of clients competent, efficient, and
cost-effective comprehensive solutions to business problems. [9] The
positivity of proponents is tempered by an urgency for global
competitiveness, as MDPs have been in Europe for years and offer such
integrated professional service. [10] Legal scholars widely predict a
trend that non-lawyers and MDPs will become competitive against the
traditional lawyer, running the risk of marginalizing practicing
lawyers. [11] Large accounting firms have aggressively invaded the
legal market and profession in the United States even with the ban on
MDPs. [12] The so-called “Big Five” accounting firms’ actions to
provide tax, ERISA, mergers and acquisitions, and other consulting
services previously the sole milieu of the traditional law firm, has
been labeled both “a frontal assault on the legal profession” and a
“guerilla war” by outraged lawyers. [13] The only reason why these
firms are not guilty of any unauthorized practice of law is because
they do not hold themselves out to be lawyers. [14] The current
prohibitions on MDPs in the United States create a large competitive
disadvantage in the global market. [15]
III. Opposition to MDPs
The strongest and most persuasive argument against the MDP is that
the American Bar Association (or ABA) opposes it, voting overwhelmingly
against them in their last meeting addressing the matter. [16] Though
the ABA Commission on Multidisciplinary Practice submitted a report to
the ABA’s House of Delegates recommending modification of the Model
Rules of Professional Conduct to allow attorneys to offer legal
services outside the traditional firms. [17] The main reason for this
is the MDP critics’ staunch belief that an enormous conflict of
interest between lawyers and non-lawyers exists[18], as does the
potential for the breach of confidentiality between lawyers and their
clients. [19]
MDPs may impair the independent judgment of a lawyer who works for
non-lawyers whose standards for professional ethics differ from that of
the ABA. [20] Because MDPs may create confusion about
confidentiality,
inadvertent breaches may harm clients and result of the “slow erosion
of the attorney-client relationship, leading to an overall weakening of
the legal system.” [21] Indeed, at the moment when a client may want
to
preserve a confidence with their attorney, an accountant may be
compelled to disclose it as they owe a duty to the public as well.
[22] Most controversial is the inconsistent roles of an auditor
(independent accountant) and the client advocate the lawyer is supposed
to be; MDP opponents believe that the difference between these two
roles is impossible to reconcile. [23] The lasting and everpresent
contradiction in MDPs is that to advocate, the lawyer must finely
manipulate the law to most favor their clients and earn their fees; as
a collective, attorneys have a strong stake in upholding the
credibility of the law. [24]
IV. Sarbanes-Oxley’s Ambiguity
In the wake of Enron and other such corporate scandals, the
Sarbanes-Oxley Act of 2002 (or “SOX) imposed on disclosures and
financial data reporting. [25] SOX first acknowledged the necessity of
multidisciplinary enterprise by mandating the creation of the Public
Company Accounting Oversight Board that contains not only CPAs but
non-CPAs, with presumably legal and business expertise. [26] This
pro-MDP provision is tempered by some anti-MDP provisions as well,
including one that prohibits accountants (auditors in particular) from
offering certain consultant services to clients for which the
accountants are auditing. [27] This precludes any auditing accounting
firm from also rendering any legal or other expert services to the same
client. By doing so, SOX specifically addresses conflicts that arise
when one professional entity performs work for a client but also owes
fiduciary duties to the investing public and company shareholders. [28]
SOX intimidated KPMG into disbanding their global legal entity, KLegal,
which employed mover than 3,000 lawyers in 60 countries. [29] However,
PriceWaterhouseCoopers, Deloitte & Touche, and Ernst & Young
have no intentions of doing the same, despite added pressure from SOX
and the SEC. [30]
V. Multidisciplinary Practice…In Practice
MDP-like arrangements already exist in the nature of in-house
counsel and counsel for some trade and nonprofit entities. In this
schema, lawyers report directly to nonlawyers, and in cases where the
client is someone other than the employer, the attorney owes a duty of
loyalty to them both. [31] Many observers state pragmatically that for
all intents and purposes, the MDP revolution has already arrived in
relation to corporate practice. [32] Indeed, by the numbers, Arthur
Andersen was the biggest employer of lawyers in the United States in
2000. [33] PriceWaterhouseCoopers is in effect the third largest law
firm globally, employing more than 1600 non-tax lawyers outside the
United States. The Big Five already have a head start in the market,
and have made good on their public statement that they intend to
compete directly with major international law firms. [34]
Many onlookers and commentators have accused the ABA of “burying
their heads in the sand” and ignoring the very real MDP issue. [35]
Some state bar associations, such as the District of Columbia, have
taken matters into their own hands and amended their Model Rules to
allow the integrated teamwork and fee sharing of lawyers and non-lawyer
professionals. [36] The most oft-cited analogous domestic firm to the
typical European MDP firm is that of McKee Nelson LLP, in Washington,
D.C. [37] Under some controversy [38], it was founded in 1999 by two
tax lawyers, with start-up capital by Ernst & Young, with the
purpose of offering legal advice on tax litigation, transactional
structuring, and capital markets. [39] Legal scholars were skeptical as
to whether this firm would survive, much less evolve past pure tax
practice. [40] However, this author, who worked there for over a year
prior to entering law school, is happy to report that they are
flourishing well across the financial services sector as well as their
other full-service areas. [41]
The ABA can put off discussing the issue of MDPs for only so long,
and their position is influential but only advisory to the states. [42]
State bar associations are taking matters into their own hands, with
recommendation to alter ethics rules to allow “controlled” disciplinary
practices. [43] Furthermore, there is little evidence that the
expanding trend to pair lawyers and other professionals will be
effectively prevented by enforcement actions for unauthorized practice
of law. [44] Indeed, the ABA cannot ignore that de facto MDPs are
already in place, and by leaving the issue to be individually debated
among states, they have jeopardized their chance to regulate them. [45]
If U.S. legislators do not embrace the MDP revolution, our legal
profession may “be left withering in its wake.” [46]
______________________
Endnotes:
[1] Rees M. Hawkins, Comment: Not “If”, but “When” and “How”: A
Look at Existing De Facto Multidisciplinary Practices and What They Can
Teach Us About the Ongoing Debate, 83 N.C. L. Rev. 481, 481 (2005), stating that the issue has been labeled an “Armageddon” by some and a “salvation” by others.
[2] Ann L. MacNaughton & Gary A. Munneke, Practicing Law Across Geographic and Professional Borders: What does the Future Hold?, 47 Loy. L. Rev. 665, 690 (2001).
[3] Randall S. Thomas, Stewart J. Schwab, & Robert G. Hansen, Megafirms, 80 N.C. L. Rev. 115, 163 (2001).
[4] Kathryn Lolita Yarbrough, Commentary: Multidisciplinary Practices: Are they Already Among Us?, 53 Ala. L. Rev. 639, 646 (2001).
[5] Id.
[6] MacNaughton & Munneke, supra note 2, at 695-96.
[7] Yarbrough, supra note 4.
[8] MacNaughton & Munneke, supra note 2, at 700-04.
[9] Yarbrough, supra note 4.
[10] Thomas, Schwab & Hansen, supra note 3, at 173-75.
[11] Working
Notes: Deliberations of the Committee on Research About the Future of
the Legal Profession on the Current Status of the Legal Profession, 16 Maine Bar J. 236, 238 (2001). See also Yarbrough, supra
note 4, at 645, stating that a survey by the International Bar
Association deemed accountants as the main threat to law firms in
competition for legal services.
[12] Hawkins, supra note 1.
[13] Id.
[14] Yarbrough, supra note 4, at 653-55.
[15] Thomas, Schwab & Hansen, supra note 3, at 173-75.
[16] Marc N. Biamonte, Note: Multidisciplinary Practice: Must a Change to Model Rule 5.4 Apply to All Law Firms Uniformly?. 42 B.C.L. Rev. 1161, 1163-64 (2001).
[17] Stuart S. Prince, Comment: The Bar Strikes Back: The ABA’s Misguided Quash of the MDP Rebellion, 50 Am. U. L. Rev. 245, 246 (2000).
[18] Yarbrough, supra note 4, at 653-55.
[19] Michael W. Loudenslager, Cover Me: The Effects of Attorney-Accountant Multidisciplinary Practice on the Protections of the Attorney-Client Privilege, 53 Baylor L. Rev. 33, 56 (2001).
[20] Yarbrough, supra note 4, at 653.
[21] Biamonte, supra note 16.
[22] Yarbrough, supra note 4, at 655.
[23] Id.
[24] Yves Dezalay & Bryant G. Garth, From
the Trenches and Towers: MDPs after Enron/Anderson [sic]: The
Confrontation Between the Big Five and Big Law: Turf Battles and
Ethical Debates as Contests for Professional Responsibility, 29 Law & Soc. Inquiry 615, 618 (2004).
[25] Susan Saab Fortney,
National Symposium on the Role of a Corporate Lawyer: Chicken Little
Lives: The Anticipated and Actual Effect of Sarbanes-Oxley on Corporate
Lawyers’ Conduct, 33 Cap. U.L. Rev. 61-65 (2004).
[26] Janice A. Alwin & Jason P. Eckerly,
Raising the Tax Bar: Redefining the Rules of Accountants and Lawyers
for a Practical Solution to the Multidiciplinary Practice Debate, 1 DePaul Bus. & Comm. L.J. 257, 267 (2003).
[27] Id.
[28] Id.
[29] Hawkins, supra note 1, at 496.
[30] Id.
[31] Alwin, supra note 26, at 264.
[32] John H. Matheson, Governance Issues In the Multidisciplinary Corporate Practice Firm, 69 U. Cinn. L. Rev. 1107, 1111 (2001).
[33] Hawkins, supra note 1, at 507.
[34] Thomas, Schwab & Hansen, supra note 3, at 175.
[35] Biamonte, supra note 16, at 1163-64.
[36] Yarbrough, supra note 4 at 653-55.
[37] Bryant G. Garth & Carole Silver, The MDP Challenge in the Context of Globalization, 52 Case W. Res. 903, 913 (2002). See also Hawkins, supra note 1, at 508; Loudenslager, supra note 19 at 45; Yarbrough, supra note 4, at 660; Thomas, supra note 3 at 175-76 (2001); and Prince, supra note 17. at 265.
[38] L. Harold Levinson, McKee, Nelson to Remove E&Y From Name, The Attorney-CPA, 2001, available at http://findarticles.com/p/articles/mi_qa3703/is_200101?pnum=3&opg=n8945204,
noting that “the precise nature of the relationship has not been
disclosed. Without full disclosure, it is difficult to assess the
propriety of the arrangement, either as it was in 1999, or as it is
projected to continue in the future, and whether the applicable
-standards are those of D.C., New York, or other jurisdictions.”
[39] Garth, supra note 37, at 913.
[40] Id. See also Prince, supra note 17, at 267.
[41] Nathan Carlile, McKee Nelson: The Richest Guys in Town, Legal Times, Aug. 13, 2007, available at http://www.law.com/jsp/article.jsp?id=1186736520377,
calling the richest firm in D.C. “an unprecedented alliance between a
small law firm and a Big Five accounting firm, a deal industry watchers
tabbed as a model for the 21st-century legal practice. But that all
went up in flames years ago…Yet the phoenix that arose from those ashes
may well be more spectacular than the original model.”
[42] Loudenslager, supra note 19, at 54.
[43] Hawkins, supra note 1, at 497.
[44] Loudenslager, supra note 19, at 54.
[45] Hawkins, supra note 1, at 497.
[46] Id.