Multidisciplinary practice: is it the wave of the future, or only a ripple?

Author:Evans, John C.
 
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ACROSS Western Europe, North America and to Australia, a prime issue of the moment for lawyers and their professional associations is whether to relax long-standing rules prohibiting lawyers from forming partnership practices with non-lawyers, a stance often stated in terms of "fee sharing."

The latest manifestation of the debate occurred in the summer of 1999 when a commission formed by the American Bar Association to study the issue made recommendations to the ABA House of Delegates that the ABA Model Rules of Professional Conduct be amended to permit multidisciplinary practice with safeguards to protect the core values of the legal profession. In July 1999, a forum on multidisciplinary practice was presented at the International Association of Defense Counsel annual meeting, with speakers from the England, the United States, Canada and Australia.

Commission proposes change

The ABA Commission on Multidisciplinary Practice recommended changes in the ABA's "model" rules. But even if these changes were adopted, they would not open the doors to multidisciplinary partnerships in the United States, except as similar rules amendments were to be adopted by the multiple state jurisdiction there. While most U.S. states follow the ABA "model," often with variations, they are not obliged to do so. Similar complexities exist in federal nations such as Canada and Australia, where regulation of the legal profession is by state or province.

After several hours of debate over both substance and procedure, the ABA House of Delegates rejected the recommendations that lawyers should be permitted to practice in a multidisciplinary setting, known as MDP, and deferred any action on the issue indefinitely for "additional study."

The commission was created in August 1998 "to determine what changes, if any, should be made to the ABA Model Rules of Professional Conduct with respect to the delivery of legal services by professional services firms." Pursuing this assignment, the commission, chaired by Sherwin P. Simmons of Florida, heard 60 hours of testimony from 56 witnesses from around the world and received many written and oral communications.

Permit but control MDPs

The commission submitted a unanimous report with 15 recommendations, the major ones being: "A lawyer should be permitted to share legal fees with a non-lawyer, subject to certain safeguards that prevent erosion of the core values of the legal profession.... The legal profession should adopt and maintain rules of professional conduct that protect its core values, independence of professional judgment, protection of confidential client information, and loyalty to the client through avoidance of conflicts of interest, but should not permit existing rules to unnecessarily inhibit the development of new structures for the more effective delivery of services and better public access to the legal system."

The accomplishment of this objective would require altering the ABA Model Rules of Professional Conduct, most notably Rule 5.4(b), which provides: "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." The commission defined a multidisciplinary practice as a "partnership, professional corporation, or other association or entity that includes lawyers and non-lawyers and has one, but not all, of its purposes the delivery of legal services to a client(s) other than the MDP itself and holds itself out to the public as providing non-legal, 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."

Opposition is strong

It was clear from the House of Delegates debate that had the commission's proposal been subjected to an up-or-down vote, it would have lost. Prior to the House meeting, the chair of the commission had announced his intention of asking for a deferral in view of the comments received by the commission and the need for more study by state and local bar associations and other groups.

The house was not content, however, with this disposition; it proved to be too mild. Instead, the house adopted this resolution from the Florida Bar:

RESOLVED, that the American Bar Association make no change, addition or amendment to the Model Rules of Professional Conduct which permits a lawyer to offer legal services through a multidisciplinary practice unless and until additional study demonstrates that such changes will further the public interest without sacrificing or compromising lawyer independence and the legal profession's tradition of loyalty to clients. The original wording of the Florida resolution had used the words "extensive and well-reasoned analysis" in place of the substituted words "additional study." In that form, the resolution had been supported by state bars in Alabama, Georgia, Kansas, Kentucky, Maryland, New Hampshire, New York, Oregon and South Carolina, as well local bars in Broward County (Florida), Monroe County (New York) and San Diego County (California).

Issue up in the air

Presumably under this disposition, the ABA commission is still in existence and could continue to hold hearings and could return to the House of Delegates with the same or a different proposal. Of course, any bar association or entity of the ABA also is free to do so. The issue appears to be very much unsettled.

In fact, the Florida Bar delegate explained that the resolution did not bar further consideration of MDPs, and several bar association delegates who had stated their opposition to the commission's position also said that they had formed committees or task forces to study the MDP issue.

Recommendation of ABA Commission on Multidisciplinary Practice

RESOLVED, that the American Bar Association amend the ABA Model Rules of Professional Conduct consistent with the following principles:

  1. The legal profession should adopt and maintain rules of professional conduct that protect its core values, independence of professional judgment, protection of confidential client information, and loyalty to the client through avoidance of conflicts of interest, but should not permit existing rules to unnecessarily inhibit the development of new structures for the more effective delivery of services and better public access to the legal system.

  2. A lawyer should be permitted to share legal fees with a non-lawyer, subject to certain safeguards that prevent erosion of the core values of the legal profession.

  3. A lawyer should be permitted to deliver legal services through a multidisciplinary practice (MDP), defined as a partnership, professional corporation, or other association or entity that includes lawyers and non-lawyers 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 non-legal, 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.

  4. Non-lawyers in an MDP, or otherwise, should not be permitted to deliver legal services.

  5. A lawyer in an MDP who delivers legal services to the MDP's clients should be bound by the rules of professional conduct.

  6. A lawyer acting in accordance with a non-lawyer supervisor's resolution of a question of professional duty should not thereby be excused from failing to observe the rules of professional conduct.

  7. All rules of professional conduct that apply to a law firm should also apply to an MDP.

  8. In connection with the delivery of legal services, all clients of an MDP should be treated as the lawyer's clients for purposes of conflicts of interest and imputation in the same manner as if the MDP were a law firm and all employees, partners, shareholders or the like were lawyers.

  9. To the extent that the delivery of non-legal services to a client is compatible with the delivery of legal services to the same client and with the rules of professional conduct, a lawyer should be required to make reasonable efforts to ensure that the client sufficiently understands that the lawyer and non-lawyer may have different obligations with respect to disclosure of client information and that the courts may treat the client's communications to the lawyer and non-lawyer differently.

  10. A lawyer in an MDP who delivers legal services to a client of the MDP and who works with, or is assisted by, a non-lawyer who is delivering non-legal services in connection with the delivery of legal services to the client should be required to make reasonable efforts to ensure that the MDP has in effect measures to ensure that the non-lawyer's conduct is compatible with the professional obligations of the lawyer.

  11. A lawyer in an MDP should not represent to the public generally or to a specific client that services the lawyer provides are not legal services if those same services would constitute the practice of law if provided by a lawyer in a law firm. Such a representation would presumptively constitute a material misrepresentation of fact.

  12. A lawyer should not share legal fees with a non-lawyer or form a partnership or other entity with a non-lawyer if any of the activities of the partnership or other entity consist of the practice of law except that a lawyer in an MDP controlled by lawyers should be permitted to do so and a lawyer in an MDP not controlled by lawyers should be permitted to do so subject to safeguards similar to those identified in paragraph 14.

  13. Allowing fee-sharing and ownership interest in an MDP does not change the rules of professional conduct prohibiting fee-sharing and partnership in any other respect, including the current provisions limiting the holding of equity investments in...

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