June 2000

Multidisciplinary Practice: What is It and Who Cares?

by Jan Eric Peterson
WSBA President-elect

According to the American Bar Association, multi-disciplinary practice is the major issue confronting the organized bar at the advent of the new millennium. "MDPs," as they have come to be known, are professional associations, partnerships, alliances or other business organizations owned jointly by lawyers and nonlawyers whose functions include the provision of legal services for which fees are shared among the members. For nonlawyer members of such organizations, it is potentially the illegal unauthorized practice of law. For lawyer members, it is an ethical violation of the Rules of Professional Conduct. Some examples include:

• a partnership of lawyers, accountants, financial planners and tax advisors providing multidisciplinary services to a client that may include auditing, estate planning, tax advice; and

• environmental lawyers joining forces with engineers to provide comprehensive environmental consulting services.

Some of these already exist. King Spalding Ernst & Young LLP is the merger of a law firm and an accounting firm. PricewaterhouseCoopers LLP, a global accounting firm, employs lawyers who do essentially the same thing they did at law firms.

What’s wrong with this? The Washington State Rules of Professional Conduct 5.4 regarding the professional independence of a lawyer provide that a lawyer or law firm shall not share legal fees with a nonlawyer (RPC 5.4(a)), nor shall a lawyer form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law (RPC 5.4(b)). RPC 5.4(c) prohibits a lawyer from permitting a person who recommends, employs or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services. RPC 5.4(d)(2) and (3) prohibit lawyers from entering into an arrangement that involves, in part, the practice of law where a nonlawyer is a corporate director or officer of the organization, or has the right to direct or control the professional judgment of the lawyer. RPC 5.5, on the unauthorized practice of law, prohibits a lawyer from practicing in a jurisdiction where the lawyer is not licensed (thereby violating the regulation of the legal profession in that jurisdiction), or assisting a person who is not a member of the Bar in the performance of activity that constitutes the unauthorized practice of law. Further, such MDP arrangements arguably violate RPC 1.5 on the splitting of fees; potentially RPC 1.6 on confidentiality, if client information is shared with nonlawyers in the same firm who are not protected by the attorney-client privilege; and RPC 1.7 and 1.8, regarding conflicts of interest. A classic example may be that of an accountant in an auditing capacity having a duty to disclose client information, while a lawyer has an absolute duty not to do so. Note that multidisciplinary practices are already a reality and the lawyers engaged in them are subject to discipline under the current rules, with the entities involved exposed to prosecution for unauthorized practice of law.

The proposal before the ABA is to change the Model ABA Rules of Professional Conduct to allow multi-disciplinary practices in some form. The ABA commission on this issue brought the proposal before the House of Delegates last summer, where it was rejected. The commission amended the proposal to limit multidisciplinary practices to firms controlled by lawyers, and provide other safeguards to preserve the core values of the legal profession — independence, confidentiality, the avoidance of conflicts of interest, and pro bono public service.

Who cares, and what’s driving this issue? The advocates are primarily the "big five" accounting and consulting firms that employ thousands of lawyers and do business on a global basis. They are potentially subject to these rules only in the United States. Another advocate, perhaps more important, are the law firms that are challenged by competition and wish either a loosening of the rules to allow them to form competitive multi-disciplinary practices, or a stringent enforcement of the law to stamp out the MDP competition. The big five accounting firms want new markets, including attorney services. The big law firms are threatened by this global competition. Supposedly, consumers want one-stop shopping for bundled services provided by a multiplicity of disciplines, but this is an undocumented advocacy.

Given that 65 percent of the nation’s lawyers practice solo or in firms of fewer than five lawyers, do we really care about this competitive power struggle for international business between the mega accounting, consulting and law firms? Or is this just the tip of the iceberg in a global economy, in an increasingly complex and multidisciplinary professional world in the Internet-access information age?

Can you envision the real estate department of your local bank branch offering an attorney, loan officer and real estate agent for one-stop real estate transactions? Can you imagine the family problems center that offers one-stop, full-service, family dispute resolution through counselors, facilitators, mediators, lawyers, child psychologists and domestic tax advisors? How about the injury recovery center providing lawyers, adjusters, counselors, rehabilitation specialists, vocational counseling, financial planning, and structured settlement services all at the same address as the ambulance company next to the hospital? Could we have the family death-planning practice that employs certified estate planner paralegals, accounting experts on death, gift and inheritance taxes, a probate lawyer, life insurance purveyors, undertakers, funeral directors, cemetery plots and headstone engravers at your local mall? Far-fetched? How about any or all of this available from anywhere on the Internet? This is completely imaginable for a service sector business in the post-industrial, information-based, global economy.

The multiplicity of related issues is staggering: multijurisdictional practice and reciprocity, the unauthorized practice of law, the definition of the practice of law, the provision of affordable access to justice, and the collision of state jurisdictions and rules with the potential preemption of federal treaties like NAFTA, GATT and the WTO. The issue has the potential of affecting each and every one of us in the profession.

Is this a good thing or a bad thing? Allowing MDPs can be seen as a good thing, allowing lawyers to compete by joining up with other disciplines to provide full service to clients in a global economy and one-stop shopping to consumers that keeps up with technology. It would allow lawyers to join forces and compete with nonlawyers who provide legal services in violation of the unauthorized practice of law rules that we seem unwilling or unable to enforce. It may provide opportunities for access to justice by providing more affordable, simpler, accessible legal services through vast utilization of non-lawyers and technology in the delivery of those services. On the other hand, lawyers are a unique profession — officers of the court, guaranteed in the Constitution as an arm of a separate branch of government. The independence of lawyers and the adherence to those core ethical values of independence, confidentiality and conflict of interest must not be compromised or diluted in a constitutional democracy. Lawyers have a fiduciary duty to clients and the public under the rule of law that is different than any other profession with which they might join forces. For lawyers, it is not all about the money. The core ethical values are essential. Can they be retained without compromise in a multi-disciplinary practice?

Lawyers are fiduciaries of the law first, charged to preserve the rule of law and the public interest. Goal XI of the ABA Mission Statement is "to preserve the independence of the legal profession and the judiciary as fundamental to a free society." It is the essence of the separation of powers doctrine. In theory, no democracy can survive unless someone stands between the individual and the abuse of authority, whether it be corporate or governmental. Lawyers and judges have stepped forward in times of crisis to preserve individual rights, equal protection and the rule of law. Can that independence and client loyalty survive when blended with a business unit where non-lawyers or even shareholders hold the purse strings? Why not? Can we segregate transactional legal services from court representation and preserve the latter solely for attorneys? Do we have the resources and the will to prosecute unauthorized practice of law or grant a variety of limited practice licenses and regulate them? Are there less restrictive ways of preserving the core values that would allow us to better serve the public by eliminating undue limitations on the settings in which lawyers may practice? Will such devices preserve the professional integrity and independence that give real value to legal advice? Can we still afford the patchwork of state-by-state regulation where lawyers and nonlawyers provide legal services in multiple jurisdictions all over the world, all at the same time, with the aid of the new information technology that blurs physical boundaries? Should the Bar have rules it is not ready, willing and able to enforce and is not, in reality, actually enforcing?

Times have changed, and so must the delivery of legal services. The question is, what is truly in the public interest, and what will we do about it? The debate on national and international levels has already begun. What will we in Washington have to say about it? And what do you want your Bar Association to do, if anything? The WSBA is forming a discussion group and will have a point-counterpoint workshop at Celebration 2000 in September. To participate in this group, please contact Jan Michels at oed@wsba.org, or the Office of the Executive Director, 2101 Fourth Ave., Fourth Fl., Seattle, WA 98121-2330.

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