ABA Commission urges rules change to permit multidisciplinary practices

June 8, 1999

In a sharp break with existing U.S. law, a special American Bar Association commission today unanimously recommended that lawyers be allowed to partner with professionals from other disciplines.

"These changes would allow clients more options in where they obtain legal services, and lawyers more choices in how they serve clients, but maintain the core values of the legal profession and the protections those values guarantee the public and clients," said Sherwin P. Simmons of Miami, chair of the ABA Commission on Multidisciplinary Practice.

The commission urged changing the ABA Model Rules of Professional Conduct to allow fee-sharing between lawyers and other owners of multidisciplinary practices, commonly known as MDPs, and to apply legal ethics rules to the MDPs and subject them to court regulation. Legal ethics rules would apply to lawyers wherever they worked.

Multidisciplinary practice is common in Europe, where international accounting firms routinely provide legal services, including litigation. Court-imposed lawyer ethics rules have discouraged fee-sharing and mixed professional partnerships in the United States since 1908, and expressly barred them since 1969, although the District of Columbia allows non-lawyer partners in law firms that are devoted solely to practicing law.

The commission cited independence of professional judgment, protection of confidential client information and avoidance of conflicting royalties as core values that exist to protect the public and that are essential to preserving client-lawyer relationships.

In addition to explicitly reinforcing lawyers' obligations in those three areas, the recommendations noted that ethics rules governing lawyers would be imputed to non-lawyer members of the MDPs, and would require each MDP to annually certify to the highest court in every jurisdiction where it functions that it complies with specific obligations placed on lawyers.

The commission recommended limiting ownership interest in the partnership to working members of the MDP.

Specifically, the commission said:

• The legal profession should maintain professional conduct rules that protect its core values, but do not unnecessarily inhibit development of new structures to deliver legal services that are more effective and offer better public access to the legal system.
  
  
• MDPs would be defined as partnerships, professional corporations or other associations or entities of lawyers and non-lawyers that include among their purposes delivery of legal services to one or more clients other than the entities themselves. Lawyers should be permitted to share fees with non-lawyers only in the context of MDPs.
  
  
• Allowing lawyers to deliver legal services from MDPs would not change the prohibition against non-lawyers delivering legal services.
  
  
• A lawyer in an MDP should remain bound by rules of professional conduct, particularly those relating to confidentiality and loyalty, and could not defend charges of misconduct by citing orders from a non-lawyer supervisor.
  
  
• All professional conduct rules applicable to a law firm, expressly including prohibitions on conflicts of interest among clients, should also apply to an MDP.
  
  
• All MDP clients should be treated as lawyers' clients in determining if there are conflicting interests among clients and in imputing knowledge about any client to other members of the firm.
  
  
• When a lawyer and a non-lawyer in an MDP are both serving the same client on unrelated matters, the non-lawyer may have legal obligations to
  disclose information that the lawyer would be required to treat as confidential. In that circumstance, the lawyer must make reasonable efforts to ensure the client understands the differing obligations, and that courts would not protect confidences shared with the non-lawyer. In its explanatory report, the commission cites as an example a mental health care worker in the MDP acquiring information regarding suspected child abuse, and being required to report it to law enforcement authorities.
  
  
• When a lawyer and a non-lawyer in an MDP are both serving a client on related matters, the lawyer should make reasonable efforts to ensure the non-lawyer conforms to legal professional ethics, as in protecting confidential information.
  
  
• An MDP could not avoid regulation under lawyer standards by describing legal services rendered by a lawyer in the MDP as something other than legal service, as management consulting, for example. To do so would be a material misrepresentation of fact. The report defines legal services as services that would be considered practicing law if the lawyer was in a law firm.
  
  
• As a condition of allowing fee-sharing and partnerships between lawyers and non-lawyers, MDPs would be required to certify to the highest court of each jurisdiction in which the MDP performs services that:
  • The MDP will not interfere with lawyers' exercise of professional judgment;
    
    
  • The MDP will enforce procedures to protect the lawyers' exercise of
    professional judgment;
    
    
  • The members of the MDP will abide by legal ethics rules when delivering services to a client, any portion of which would be considered practicing law if done by a lawyer in any other setting;
    
    
  • The MDP will respect the unique role of lawyers in society as officers of the legal system and as having special responsibilities for
    the administration of justice, including rendering pro bono legal services;
    
  • The MDP will annually review its procedures, amend them as needed, and provide each lawyer in the MDP with a copy of the certificate;
    
    
  • The MDP will permit the highest court in each jurisdiction in which
    it serves clients to conduct an administrative audit at will;
    
    
  • MDPs would bear the cost of regulation through an annual certification fee.

The commission will receive comment on the proposals in a public hearing to be held 2 to 5 p.m. Aug. 8 in the Hyatt Regency Hotel in Atlanta, and present the recommendations to the ABA House of Delegates, the association's policy-making body, when it convenes Aug. 9 and 10 during the ABA's Annual Meeting there. However, house adoption at that meeting would not change the rules immediately.

Rather, it would direct the ABA Standing Committee on Ethics and Professional Responsibility to draft formal amendments for ratification by the House at a subsequent meeting. Any changes would then be considered by ethics authorities that regulate lawyer conduct in individual states. The commission offers sample amendments in an appendix.

In the report accompanying its recommendations, the commission noted
other developments that relate to the way law is practiced around the world, and how it would be practiced in MDPs, and suggested more thought should be addressed to them. For example, the commission said it had considered ramifications of its proposals in the larger context of practicing law across state borders, and stated that significant problems already exist independently of MDPs.

It also pointed to international treaties aimed at opening up commerce among nations, such as the North American Free Trade Agreement and the General Agreement on Trade in Services, and to the work of the World Trade Organization. Although these factors may impact legal service by MDPs, said the commission, it would not be appropriate to change its recommendations in anticipation of the impact.

The commission's report and recommendations, sample language for amending the model rules, reporter's notes and more information about the commission, its witnesses and the status of multidisciplinary practice in Europe are available at the commission's web site.

The American Bar Association is the largest voluntary professional organization in the world. With more than 400,000 members, the ABA provides law school accreditation, continuing legal education, information about the law, programs to assist lawyers and judges in their work, and initiatives to improve the legal system for the public.