CHAPTER 3 MULTIDISCIPLINARY PRACTICE: MISSION IMPOSSIBLE, BRAVE NEW WORLD, OR SOMETHING MORE ELEGANT?
| Jurisdiction | United States |
(2000)
MULTIDISCIPLINARY PRACTICE: MISSION IMPOSSIBLE, BRAVE NEW WORLD, OR SOMETHING MORE ELEGANT?
Attorney at Law
Littleton, Colorado 80123
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9200 WEST CROSS DRIVE, SUITE 321
December 8, 2000
TABLE OF CONTENTS
I. What is Multidisciplinary Practice?
II. The Rules of Professional Conduct As We Know Them
A. Rule 5.4, Colorado Rules of Professional Conduct
B. Rule 265, Colorado Rules of Civil Procedure
III. What's the Controversy All About: Pros and Cons
A. Principal Arguments in Favor of Permitting MDPs
B. Principal Arguments Against MDPs
IV. The "Core Values" of the Legal Profession
V. The American Bar Association: Queen of Denial?
VI. What's Happening in Colorado and Other States?
A. The CBA/DBA Joint MDP Task Force Recommendations
B. Progress in Other States
C. Where Do We Go from Here?
APPENDIX 1: Colorado and Denver in the House: MDP Declared Heresy by the ABA House of Delegates
APPENDIX 2: Status in Other Pro-MDP States
APPENDIX 3: Resources on Multidisciplinary Practice
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I. WHAT IS MULTIDISCIPLINARY PRACTICE?
The American Bar Association's Commission on Multidisciplinary Practice formulated a broad definition of MDP which the Colorado Bar Association/Denver Bar Association Joint Task Force has adopted for purposes of its study and discussion. That definition is:
A multidisciplinary practice is defined as a partnership, professional corporation, or other association or entity that includes lawyers and nonlawyers and has as one, but not all, of its purposes the delivery of legal services to a client(s) other than the MDP itself or that holds itself out to the public as providing nonlegal, as well as legal, services. It includes an arrangement by which a law firm joins with one or more other professional firms to provide services, including legal services, and there is a direct or indirect sharing of profits as part of the arrangement.
The ABA definition contemplates an organization (or an affiliation among firms) including members of more than one different profession, any of whom may provide professional services to clients within their own professional qualifications, or who may work together to provide related professional services to clients.
As an alternative, some commentators have suggested that a multidisciplinary practice should be limited in its purpose to the delivery of legal services. In this formulation, a law firm might include as partners or shareholders professionals other than lawyers, such as engineers, trial consultants, physicians, or accountants. Those professionals would be limited to performing work connected with the delivery of legal services to clients of the firm.
II. THE RULES OF PROFESSIONAL CONDUCT AS WE KNOW THEM
The Colorado Rules of Professional Conduct and the Colorado Rules of Civil Procedure as currently enacted prohibit lawyers from practicing in such multidisciplinary organizations or affiliations, at least where legal fees are shared with a nonlawyer, or where a nonlawyer holds an ownership interest in the organization.
A. Rule 5.4, Colorado Rules of Professional Conduct
(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(1) an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or more specified persons;
(2) a lawyer who undertakes to complete unfinished business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer;
(3) a lawyer who purchases the practice of a lawyer pursuant to Rule 1.17 may, in the case of a deceased lawyer or one for which a legal guardian or
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representative has been appointed, pay such estate or representative the purchase price; and
(4) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.
(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.
(c) A lawyer shall not permit 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.
(d) A lawyer shall not practice with or in the form of a professional corporation or association, or limited liability company, authorized to practice law for a profit, except in accordance with C.R.C.P. 265 and any successor rule or action adopted by the Colorado Supreme Court.
B. Rule 265, Colorado Rules of Civil Procedure
Rule 265 Professional Service Companies
I. A. Attorneys who are licensed to practice law in Colorado may do so in the form of professional corporations, limited liability companies, limited liability partnerships, registered limited liability partnerships, or joint stock companies, herein collectively referred to as "professional companies," permitted by the laws of Colorado to conduct the practice of law, provided that such professional companies are established and operated in accordance with the provisions of this Rule and the Colorado Rules of Professional Conduct....
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2. The professional company shall be established solely for the purpose of conducting the practice of law, and the practice of law in Colorado shall be conducted only by persons qualified and licensed to practice law in the State of Colorado.
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II. A. Except as provided in paragraph II.B and II.C, all officers, directors, shareholders, partners, members, or managers of the professional company shall be individuals who are duly licensed by either the Supreme Court of the State of Colorado or some other state or jurisdiction to practice law either in the State of Colorado or in such other state or jurisdiction and who at all times own shares or other equity interests in the professional company in their
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own right. In addition, all other employees or representatives of the professional company who practice law shall be duly licensed by either the Supreme Court of the State of Colorado or some other state or jurisdiction to practice law in the State of Colorado or in such other state or jurisdiction
III. WHAT'S THE CONTROVERSY ALL ABOUT: PROS AND CONS
A. Principal Arguments in Favor of Permitting MDPs
Those who favor amending the Rules of Professional Conduct to allow MDPs make several arguments which may be summarized as follows:
• Technology, instant communications, and the globalization of commerce demand new ways to address and solve business problems. Clients increasingly need coordinated advice from teams of professionals from various disciplines. Clients should have the option to obtain all these services under one roof — "one stop shopping for a seamless web of professional services." Clients should not be precluded from obtaining services in this way by rules drafted by lawyers at a different time under different circumstances. The marketplace should decide whether this is a good idea.
• MDPs exist already in accounting firms and other settings. They will continue to flourish regardless of what lawyers want. Lawyers must get with it or get buried by it. If we want to help shape the direction this movement takes, we must move in this direction now before it is too late. Accounting firms are acquiring law firms in foreign countries at a breathtaking pace. Even in the United States, accounting firms are hiring lawyers away from law firms and are recruiting the best and brightest law students from the best law schools. They already are practicing law in those settings, even though they say they are not. Enforcement of unauthorized practice of law rules and statutes has been sporadic and ineffective. Law firms are forming strategic alliances with accounting firms and other professions under the rules as they exist today. Ernst & Young is financing a law firm in Washington, D.C., with "Ernst & Young" included in the firm name.
• The ABA Commission's June 1999 recommendations are reasonable steps to bring back under our Rules of Professional Conduct those lawyers who now operate outside the rules in these other settings (e.g., tax lawyers employed by accounting firms who say they are practicing "tax accounting" or "tax consulting," not tax law.)
• The ABA Commission's proposals were supported by testimony from such diverse groups as the American Association of Retired Persons (AARP), the solo and small firm section of the ABA and the American Corporate Counsel Association (ACCA). In other words, it is not just the accounting firms who are driving these changes. They may be the most vocal and visible tip of the iceberg, but many consumer groups, in-house corporate lawyers, small law firms and solo practice lawyers also believe it to be in the public interest.
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• The core values of the legal profession — independence of professional judgment, confidentiality, loyalty and competence — are protected by guidelines, restrictions and limitations contained in the ABA Commission's proposal. Moreover, there already are examples of lawyers working under the "control" of nonlawyers — e.g., in-house counsel — who have proven that the core values can be maintained in these settings.
• Finally, lawyers are not well regarded by large segments of the public — many of whom think greed and self-interest are the primary motivations of most lawyers. The rules against fee-sharing and against partnerships with nonlawyers may be viewed by many as an example of lawyers trying to protect their own self-interest. If we insist on maintaining those rules in the face of a strong interest in...
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