The case against MDPs
Lawyers are being asked to sell the soul of our
profession to the Big Five accounting firms – the real driving
force behind the MDP issue, not the public. Watering down the ethical
rules governing our profession will lead to our demise.
by Earl H. Munson
The State Bar Executive Committee proposes and endorses a multi-part
resolution, the first of which reads:
"BE IT RESOLVED, that the Board of Governors at the State Bar of
Wisconsin, on behalf of its members, adopt the following policies for
improvement of the legal services:
"1. Multidisciplinary practice. Supports
multidisciplinary practice by attorneys and other professionals with the
ability of sharing fees for such services, management and supervision
attorneys, other professional or lay managers, by entities, which may be
owned by attorneys, other professionals, investors or any combination of
the same."
Read it again. It is somewhat clumsy, but the intent is clear:
Lawyers should be allowed to provide legal services as employees of
entities owned and controlled by banks, insurance companies, securities
brokers, real estate brokers, accountants, doctors, and so on, including
"investors" who will define the policies and practices of firms offering
legal services. Investors will set the agenda of MDPs to generate the
maximum return on the investment dollar. In short, the resolution
purports to put a "for sale" sign on the soul of a proud and noble
profession.
Very little of this article is original thought. It borrows bits and
pieces from the "pro" and "con" reports of the Florida and Illinois bar
associations as well as a report submitted to the New York Bar
Association.1 There are many other reports and
articles, most of which are scholarly and lengthy. This short article
only scratches the surface of a profound issue. I can only hope to alert
lawyers that your State Bar is tinkering with the very guts of our
profession. You owe it to yourself and your profession to study the
issue and make yourself heard.
How the Bar arrived at this state of affairs is as troubling as the
resolution itself.
The Big Five are Driving the MDP Issue
|
 Earl H.
Munson, U.W. 1959, is a partner in the Madison law firm of
Boardman, Suhr, Curry & Field LLP. He tries cases involving business
and commercial torts and disputes. |
|
According to the Florida Con Report,2 the driving
force behind the MDP issue is best conveyed by an August 1999 article in
CPA Today, the title page of which conveyed the spirit of the issue:
"The Future of the CPA Profession in the United States: Fee, Fi, Foe,
Fum! Look Out Lawyers, Here We Come!"
Approximately 10 years ago the large national accounting firms
decided to offer legal services to increase then-stagnant earnings and
profits. As a result, the Big Five accounting firms now employ more than
5,000 lawyers worldwide. No law firm in the U.S. or anywhere else can
match the overwhelming size and capital of the Big Five accounting
firms, but their extraordinary growth in the provision of legal services
was achieved largely outside of the United States. In this country,
lawyers are an arm of a branch of government. Here the accountants'
attempt to make inroads into the legal profession is hampered by the
lawyers' role as officers of the court and the resulting ethical rules
governing our profession. For that reason, the large accounting firms
made a conscious decision to change the ethics of the American legal
profession: "To execute their [the accountants'] plan, they needed to
bring lawyers into the fold, convert them to their cause, and make these
the advocates of change."3
The accounting firms anticipated that the thousands of lawyers they
hired to provide "consulting advice" ultimately would demand the right
to status as lawyers. They were right. "As predicted, at the hearings
before the Commission on Multidisciplinary Practice, lawyers working for
accounting firms testified overwhelmingly in support of MDPs."4
Thus, those lawyers who now urge that MDPs are necessary in order to
compete with the accounting firms ignore the fact that those same
accounting firms seek that very result. Once MDPs are established and
our ethics rules are watered down, the accounting firms have the power
and the money to buy and sell any law firm they choose. The fox will be
in the henhouse.
"Will the end result be the creation of a ... regulatory system
[similar to accountants"]? I believe it will. Why? Because the same
forces that have driven many professions and businesses to 'adapt or
die' are pressing the legal profession to modify and accommodate MDPs
... . [T]he incentives are huge and the resources exist. First and
foremost, the incentive is a piece of the roughly $100 billion-a-year
market for legal advice which the law firms have monopolized for
centuries."5
At the ABA multidisciplinary hearings, the accounting firms modified
their approach. They argued that it is not the accounting firms that are
driving MDPs. Rather, the public demands "one-stop shopping," a
consolidation of the legal services with other services to create
efficiency and savings. The accountants - and the lawyers asserting
their cause - argue that unless the attorneys change, we will not be
prepared to compete, and the legal profession will be irrelevant. They
urge that the tide of change is so far advanced that the momentum cannot
be stopped. Lawyers should just give up. "Let there be no doubt about
it. The MDP issue did not arise out of a groundswell of public demand.
Even the ABA Commission Report on MDPs admits this. The MDP issue was a
skillfully maneuvered operation."6
The experience in Wisconsin is not an exception. For the past year we
have been subjected to a steady drumbeat of articles, conferences, and
speeches using phrases such as "the revolution has started," "the hordes
are at the gate," even the proposed resolution "will not be sufficient
to save the profession," "the clock is ticking," we have to "keep the
legal profession from going the way of the dinosaurs," "we must change
now," if we do not, "within 10 years, 60 percent of us will be out of
business." As stated by the Florida Con Report, "[t]he theme [read
Wisconsin Theme] is almost exactly as the accountants predicted - it's
already happening, we can't stop it, we might as well allow it so that
we can control it."7
Fundamental Principles Stand in the Way of MDPs
The argument for MDPs is based on economics, not principles, but
there are fundamental principles standing in the way. The rules of
professional conduct for attorneys which express the core values of our
profession would have to be modified - some of us might say nullified -
to accommodate MDPs. Limited space permits only a mere summarization of
some of the principles involved.
Professional
Independence. SCR 20:5.4, which prohibits the sharing of legal
fees, was designed to "protect the lawyer's professional independence of
judgment."8
"Whatever may be said about the practice of law metamorphosing from a
learned profession into a money-getting trade, the fact is that lawyers
continue to play a critical role in the preservation of our free society
... . The vindication of individual rights, especially against the
state, requires that lawyers be able to assert and pursue client
interests free of external controls ... . The independent bench and bar
historically and today are the primary institutions for preserving
individual liberty and civility against government oppression, and it is
the mission of the legal profession 'to participate in the constant
improvement of society's legal system and to make that system readily
accessible to society.'
"At least as important as the role of the legal profession in
protecting our essential freedoms from government's excesses is the need
of lawyers to remain independent from their clientele ... . Lawyers have
an obligation, deriving from their central role in our society, to
uphold the integrity of our legal system even if doing so may be
contrary to the interests of their clients.
"Thus, it is argued, society should weigh the risks of losing its
independent legal profession against the perceived benefits of
'one-stop-shopping' that multidisciplinary practice groups arguably may
provide."9
This New York Report suggests that the perceived efficiencies of
one-stop-shopping "is ultimately too simplistic to be determinative."10
Client Confidentiality and the
Attorney-client Rule of Evidence. These are two separate but
related concepts. Ethically, a lawyer must maintain the confidentiality
of her client's communication. In addition, the client may assert an
evidentiary privilege in a court of law. "MDP proponents admit that
there will be an impact on client confidentiality. Combined services, by
definition, will implicate combined discussion, sharing of documents,
etc."11 Further, the complications caused by the
mixing of business advice with legal advice will inevitably erode, if
not eliminate, the attorney-client privilege.
Loyalty to Client - Conflicts
of Interest. "Presumably, the multidisciplinary practice will
attract clients who seek the advice and guidance from multiple
professionals, acting alone or in concert. This practice raises
significant questions of whether a lawyer has a conflict in representing
the interest of a prospective client where a nonlawyer partner has
provided advice that could be deemed in conflict with the interest of
the prospective client."12
Imputed
Disqualification. "Is it realistic in that context [MDPs] to
limit imputation of conflicts to putative working teams? Will such
measures square with the claim of seamless service based on the
mobilization of global resources linked by intranets and extranets alive
with the pulse of instantaneous, modern communications?"13
There are other issues: It is generally agreed that the courts will
not be capable of regulating the MDP entity. Therefore, regulations must
concentrate on the lawyer - not the firm. Legislatures may step in to
fill the gap. As a result, whatever vestiges of self-regulation remain
will be further eroded. An integrated bar will be difficult to
support.
This article is not against change; all lawyers should strive to
think outside of the box; but please do not sell the soul of our
profession.
Endnotes
1 "Facing
the Tide of Change," Fla. Bar Con - MDP Subcommittee (12/99); "Facing
the Inevitability, Rapidity and Dynamics of Change," Fla. Bar Pro -
MDP Subcommittee (1/7/00); "Report of Special
Committee on Multi-Disciplinary Practice and The Legal Profession,"
N.Y. State Bar Ass'n (1/8/99); "Con Report to Ill. State
Bar Ass'n Task Force on Multidisciplinary Practice" (5/10/00); "Report Favoring Adoption
of ABA Recommendation on MDP," Ill. State Bar Ass'n (5/17/00).
2 Fla. Con, 12-13.
3 Fla. Con., 14.
4 Fla. Con, 15.
5 Fla. Con, 15, quoting "Fe, Fi, Fo, Fum," at
33.
6 Fla. Con, 17.
7 Fla. Con, 17-18.
8 See "Comment" to SCR 20:5.4.
9 N.Y. Report, 12-13. [Emphasis added.]
10 N.Y. Report, 4.
11 Fla. Con, 24.
12 N.Y. Report, 24.
13 Ill. Con, 4.
What
is a multidisciplinary practice? 
Wisconsin
Lawyer
