Facing the tide of change.

• Author: Brewer, Carol McLean
• Position: Multidisciplinary practice of law - Florida

Consistent with the mandate of the president of The Florida Bar, the Con-MDP Subcommittee of The Florida Bar Special Committee on Multidisciplinary Practice prepared this report. This position paper sets forth the primary issues, as we see them, which are presented by the MDP debate. Clearly, the implications are far reaching. The existing Rules of Professional Conduct are implicated in many more ways than those suggested here. However, it was our goal to address the threshold or primary implications for the Bar and the public. We believe we have done so here. In doing so, we have concluded that the proponents of change have not met their heavy burden of showing that the substantial impact on the core values of the legal profession which are designed to and do protect the public justifies any change to long-standing Supreme Court precedent.

Accordingly, the con subcommittee respectfully recommends that The Florida Bar take the following position on multidisciplinary practice in Florida.

1) It is in the public interest to preserve the lawyer's duty of undivided loyalty to the client.

2) The Florida Bar finds no credible evidence or persuasive argument that it would be in the public interest to amend the Rules Regulating The Florida Bar or the Code of Professional Responsibility to allow the sharing or splitting of fees for legal services with nonlawyers.

3) It is in the public interest for the Supreme Court of Florida to regulate the practice of law by regulating the admission of persons to the practice of law and the discipline of persons admitted.

4) The Florida Bar shall vigorously enforce the Rules Regulating The Florida Bar and will devote such assets as may be necessary to diligently prosecute all violations thereof.

Let me [start] with the moving words of John W. Davis, one of America's greatest advocates before the Supreme Court: "Every would-be despot has found it necessary to silence the tongues of his countries' lawyers. For this, brethren of the Bar, is our supreme function--to be sleepless sentinels on the ramparts of human liberty and there to sound the alarm whenever an enemy appears. What duty could be more transcendent and sublime? What cause more holy?"

Comments by the Honorable William M. Hoeveler, Senior District Judge, United States District Court, Southern District of Florida.

We are facing an issue which may forever transform the practice of law. The legal profession as we know it may never be the same. Our duty as sleepless sentinels cannot drown in the tide of change. Our duty requires us to face the tide of change. Dramatic? Perhaps. Too? You decide.

Consider this: A personal injury lawyer is permanently disbarred for conduct involving dishonesty and moral turpitude. The law was his life. He misses it. He can't stand not being a part of it. While he knows he cannot practice law, he decides that he has other skills that may indirectly facilitate a licensed lawyer but wouldn't cross the line of actually practicing law. So he decides to form a corporation and offer "document management services." He also hires licensed lawyers to work for the corporation and the corporation advertises "document management services" and "legal services." He manages the operation, makes the hiring and firing decisions, decides the compensation of the lawyers in the group, meets regularly with clients on "non-law-related matters," and gets a percentage of all legal fees generated by his document management business. Possible? If MDPs are allowed in the State of Florida, combinations such at this are not only possible but far from the extreme of absurd combinations which may soon grace our noble profession.(2)

What are MDPs and Why is the Term Novel to Most Lawyers and Lay Persons in Florida?

Until the summer of 1999, very few Florida attorneys and even fewer members of the public at large had even heard the term "MDP."(3) As we write this article, virtually every bar association in the country is busy learning everything they can about this animal. Before we explain why, first let us tell you what they are. Multidisciplinary practices, or MDPs as they have become known, are professional associations, partnerships or other business organizations owned jointly by lawyers and nonlawyers. At least one of its functions is the provision of legal services. Fees are shared amongst the members, including fees earned for the provision of legal services.(4)

These entities, as defined above, have had little presence in the vocabulary of most lawyers across the country because canons and rules regulating the practice of law in every jurisdiction of this country, save one,(5) have heretofore prohibited lawyers from sharing fees or forming partnerships with nonlawyers. For the current iteration of these rules, see ABA Model Rule of Professional Conduct 5.4 and Rule 4-5.4 of the Rules Regulating The Florida Bar.

This restriction and others intertwined with it are centered on the notion that lawyers, unlike any other business person, are an arm of the judicial branch of government and integral to the development and maintenance of the law. Comment to Rule 4-1.6 of the Rules Regulating The Florida Bar; Florida Bar v. Murrell, 74 So. 2d 221 (Fla. 1954). Entry into the profession is restricted to those who take an oath to uphold the constitutions which create the judicial branch of which we are a crucial part. Rule 2-2.1 of the Rules Regulating The Florida Bar; Oath of Admission to The Florida Bar. Public confidence in our justice system is considered so crucial to the function of the law, that entry into the profession can be denied to or taken away from those who damage the public's faith in our system and its ability to function free of influences counter to its purpose. The Florida Bar, Petition of Rubin for Reinstatement, 323 So. 2d 257 (Fla. 1975).

In Florida, as in most jurisdictions in this country, the state's highest court regulates the practice of law. Fla. Const. Art. V, [sections] 15. Acting in a quasi-legislative capacity, these courts have a legitimate state interest in implementing regulations which "are designed to safeguard the public, maintain the integrity of the legal profession, and protect the administration of justice from reproach." The fee splitting prohibitions are rationally related to this important state interest because they promote the independence of lawyers by attempting to "minimize the number of situations in which lawyers will be motivated by economic incentives rather than by their client's best interests" and "prevent ... nonlawyers from controlling how lawyers practice law." Lawline v. American Bar Association, 956 F.2d 1378 (7th Cir. 1992), cert. denied, 510 U.S. 992 (1993) (declining to declare ABA Model Rule 5.4 unconstitutional).

Origin of the Fee Splitting/ Partnership Prohibitions

In 1854, concerned that the Bar had no formal written code of ethics, Judge George Sharswood published a series of articles titled Professional Ethics. See Annotated Model Rules of Professional Conduct, Preface (Third Edition). It was not until 1908 that the ABA transformed the principles contained in these articles into the first formal Canons of Professional Ethics. Id. The canons were aspirational and intended to guide states in the adoption of their own codes. In 1922, the ABA expanded its role in the ethics movement when it began issuing opinions "concerning professional conduct, and particularly concerning the application of the tenets of ethics thereto." Id. While the original canons did not have a fee splitting prohibition, the ABA issued at least one formal opinion in 1925 which found it unethical for an attorney to accept employment with an automobile club to serve the club members. That opinion stated in relevant part:

Society has seen fit, for its own benefit and protection, to limit the practice of law to those individuals whom it found duly qualified in education and character. The permissive right conferred on the lawyer is an individual and limited privilege subject to withdrawal if he fails to maintain proper standards of moral and professional conduct. Neither this privilege, nor any responsibility or duty connected therewith, can be delegated to or be shared with a layman. As the lawyer cannot share his professional responsibility with a layman or lay agency, he cannot properly share his professional emoluments with them. This of itself is sufficient to render it improper for a lawyer to allow his services to be sold or dealt in by any layman or lay agency.

See ABA Formal Opinion 8 (emphasis added).

The ABA concluded that exploitation of professional legal services "is derogatory to the dignity and self-standards of professional character and conduct and thus lessens the usefulness of the profession to the public...." Id.

A few years later, the ABA formally adopted Canons 33, 34, and 35 prohibiting fee splitting with nonlawyers. The canons evolved over the years and took on various forms and jurisdictions across the country generally followed the models created by the ABA, with amendments as they saw appropriate. The rules substantially took on their current form in 1983 when the ABA transformed the canon/code format into a restatement format containing formal Rules of Professional Conduct.

In its current form, Florida's version of Model Rule 5.4 is titled to reflect the essential purpose of its existence: to promote the professional independence of a lawyer. The body of the rule provides, in pertinent part:

(a) Sharing Fees with Nonlawyers: A lawyer or law firm shall not share legal fees with a nonlawyer.(6)

(c) Partnership with Nonlawyer: A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law.

(d) Exercise of Independent Professional Judgment: 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...