November 1999

External Trends Affecting the Practice of Law in Washington State:
Multidisciplinary Practice

A multidisciplinary practice exists where a lawyer is associated with one or more professionals from a different discipline (e.g., accounting, financial planning, social work, gerontology, etc.). A multidisciplinary partnership is a partnership owned by professionals in different disciplines (e.g., a lawyer and an accountant, a lawyer and a social worker, etc.).1 In today's business climate of mergers and consolidations, combined with technological advancements, the demands placed upon business and the legal profession have created the issue of potential partnerships with nonlawyers in the United States. The question of whether the Rules of Professional Conduct (RPCs) should be amended to permit attorneys to participate in multidiscipline groups is the subject of much debate throughout the legal profession, and the American Bar Association will likely take a formal position on this matter within the next 12 months.2

The ABA Commission on Multidisciplinary Issues has invited input from all interested organizations and individuals on the following questions. How would clients be harmed or benefited by amending the ABA Model Rules of Professional Conduct to permit a lawyer to enter into other arrangements that permit fee-sharing? Can any specific instances of harm to a client by such a change be identified in either the United States or a foreign jurisdiction? If the benefit to clients outweighs the harm, what restrictions, if any, should the Commission recommend? Should the restrictions follow or differ from those adopted in Rule 5.4 of the Washington, D.C., Rules of Professional Conduct? How would a lawyer's independent professional judgment be impaired by changing the Model Rules to permit a lawyer to enter into a partnership with a nonlawyer or enter into other arrangements that permit fee-sharing with a nonlawyer? How are the professional standards that govern the conduct of accountants and accounting firms different from those that govern the conduct of lawyers or firms? How do any differences in professional standards impact the protections offered to clients and the public? What if the Model Rules were amended to permit a lawyer to deliver legal services to the clients of a non-law-firm entity at which the lawyer is a partner (e.g., accounting firm, gerontological consulting firm, engineering firm, etc.)? Is an entirely new regulatory framework needed? If so, how should it be structured?3

Foreign Consolidation of Accounting Firms and Law

In Washington state, RPC 5.4 prohibits partnerships between lawyers/law firms and accountants/nonlawyers. In many foreign countries, accounting firms are permitted to offer legal services to the firm's clients. There are a number of large international accounting firms (e.g., Price Waterhouse Coopers, Ernst & Young, Arthur Andersen) openly expressing their desire to become legal service providers around the world.4 Their goal is to provide legal services along with the traditional accounting services accounting firms currently provide.

There have been two international bar associations which have attempted to address multidisciplinary issues. The International Bar Association (IBA) passed a resolution in September 1998 that neither approves nor disapproves the creation of multidisciplinary practices. The Council of the Bars and Law Societies of the European Union (CCBE) adopted a position opposed to multidisciplinary practice between lawyers and nonlawyers.5

It appears that the issue of multidisciplinary practice will continue to be a point of interest in the future, as these foreign countries work toward developing and implementing an agreement.

The proponents of multidisciplinary partnerships focus on improving client service and providing a choice for legal consumers. They argue that improved client service, access to a wider range of resources and technology, and inclusion of diversified individuals with particular expertise work well together. Theoretically, a partnership would provide more efficiency and a cost savings to the client.6

Professional Independence

The issue of professional independence is one of the greatest concerns with groups opposing multidisciplinary practice. Under Washington's RPC 5.4 (b), a lawyer shall not have a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law. The New York Sate Bar Committee on Multidisciplinary Practice discussed in its report how "the role of the legal profession in protecting our essential freedoms from the government's excesses is . . . to remain independent from their clientele." Further, the Committee discussed the importance of lawyers having an obligation, deriving from their central role in society, to uphold the integrity of our legal system even if doing so is contrary to the interests of their client. The Committee expressed concerns that the creation of multidisciplinary practices runs the risk of losing the societal benefits of an independent bar. Likewise, there is also an issue concerning the professional independence of accountants.7

Client Confidentiality

An attorney has an ethical duty not to reveal a confidence of a client (RPC 1.6). Further, attorney work product is protected against disclosure. There are issues of how the Code of Professional Conduct of the American Institute of Certified Public Accountants (AICPA) would operate in conjunction with the Professional Rules of Conduct for Lawyers in a multidisciplinary partnership.8

The legal profession has established ethical guidelines to guard against and minimize the effects of conflicts of interest. There is also a question of how the American Institute of Certified Accountants resolves conflicts of interest with accountants. Under Washington state RPC 1.7, an "attorney shall not represent a client if the representation of that client will be directly adverse to another." Do the ethical rules of the AICPA for accountants treat conflicts of interest the same, or differently, than attorneys and law firms?

The New York State Bar Association Commission's report on multidisciplinary practice indicated that an attorney and law firm may be disqualified from representing a client, while under the AICPA rules an accountant may not be required to be disqualified. The Commission's report indicated that accountants practicing in a multidisciplinary practice with lawyers may also adhere to standards that are stricter than those that apply to accountants.9

How would a multidisciplinary partnership split fees when RPC 5.4 (a)(1)(2)(3) prohibits such type of action? If multidisciplinary partnerships are permitted, it would seem that Washington RPC 5.4 would need to be repealed or modified in order for a multidisciplinary practice to be permitted in Washington.

1 See American Bar Association Commission on Multidisciplinary Practice Background Paper at page 15 (February 1999).

2 Id. at page 2.

3 Id. at pages 3-4.

4 The Miami Herald, Line between Accounting, Law Professions May Soon Blur (March 14, 1999).

5 American Bar Association Commission on Multidisciplinary Practice Background Paper at p. 8.

6 New York State Bar Association, report of Special Committee on Multi-Disciplinary Practice and the Legal Profession at page 9 (January 1999).

7 Id. at 11-15.

8 Id. at 15.

9 Id. at 20-23.

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