The Journal of The DuPage County Bar Association

Back Issues > Vol. 12 (1999-00)

Multidisciplinary Practice: The Debate Goes On
By Mark J. McAndrew, J.D. and Tamara L. Vergara, J.D.

Some believe the evolution of multidisciplinary practice, the joint practice and fee sharing of lawyers and non-lawyers in the delivery of legal and non-legal services, is inevitable. They claim that consumer demand for "one-stop shopping" is compelling. Others claim that multidisciplinary practices are potentially destructive and harmful to the interests of some consumers who might become snared in its web. While the effect and advisability of multidisciplinary practice is debated, all agree that it cannot be ignored.

Issues Raised in the Debate

The introduction of multidisciplinary practice has fueled much debate among lawyers, bar associations and other professionals in the United States. Although the ABA has not yet amended the Model Rules of Professional Conduct to accommodate multidisciplinary practice, many, including current ABA president William G. Paul, predict the ABA House of Delegates will vote on the multidisciplinary practice issue as early as July of this year and, if not then, certainly within the next twelve months.

In August of 1999, the ABA Commission on multidisciplinary practice recommended to the House of Delegates that the Model Rules be amended to allow multidisciplinary practice, and suggested ways to preserve current ethical standards. In response to requests from various state and local bar associations, the House of Delegates opted to defer its vote on whether to amend the Model Rules until the completion of further study of the impact of multidisciplinary practice on the public. Some commentators have used this opportunity to take positions and politicize the process, while others have sought to explore ways to define multidisciplinary practices in a manner that will truly benefit the public and not just the bottom line.

Since last August, many commentators have expressed concerns regarding the pitfalls of multidisciplinary practice. Most of these concerns center around the protections and confidentiality currently enjoyed by consumers, whether or not they are consciously aware of them. Multidisciplinary practices, it has been argued, could perpetuate confusion with regard to the differences between legal and non-legal services. A client contracting with one entity for legal services might have trouble determining who within the practice group actually are lawyers capable of rendering legal services, and who will be subject to privilege and ethical obligations.

The segregation of fees is another area of concern, since lawyers must adhere to strict guidelines with regard to maintenance of client trust funds that do not exist for other professions. Lawyers must also comply with stringent rules of professional conduct. While non-legal professionals have their own rules of professional conduct and are revising those rules as the debate over multidisciplinary practice heats up, none are as stringent as those of the legal profession in protecting a client’s interests. Lawyers and their clients ask how non-lawyers will be regulated in a multi-disciplinary practice setting, and how the core values of the legal profession, which the public has come to depend on, will be upheld. Some speculate that multi-disciplinary practice would allow a gross deterioration of the legal profession, wherein personal injury attorneys, for example, would be tempted to team up with tow truck drivers, "ambulance chasers" and unscrupulous emergency room physicians.

Survival of some firms may be another concern as anti-trust issues evolve. As large accounting firms gobble up traditional law firms, how will smaller law firms compete with multidisciplinary practices that charge hefty fees for accounting work, while severely discounting legal services? In response to these concerns, some suggest the highest court in the multidisciplinary practice’s jurisdiction should assume the task of regulating such practices. Others argue it would be imprudent to place this responsibility on an already overburdened judicial system.

In some multidisciplinary practice situations, the lawyers, who must uphold the attorney-client privilege, may find themselves in direct conflict with non-lawyers whose duty it is to disclose the very same information. For example, the roles of lawyers and accountants under federal securities laws are incompatible, as are those of lawyers and mental health care workers in instances of suspected child abuse.

Of no less importance is the issue of conflicts of interest. When an entity increases the number of services it offers its clients, the number of potential conflicts associated with those services also increases. Many commentators note that conflict management plays an important role in the administration of multidisciplinary practice services. In the event a multidisciplinary practice provides interstate services, conflict issues will be even further complicated.

In addition to conflict issues, it has been argued that the exercise of professional judgment might suffer in a multidisciplinary practice setting, especially if non-lawyers focused on the multidisciplinary practice’s profitability supervise the work of lawyers. If many interrelated but distinct professional services are offered by one entity with one bottom line, one professional liability carrier and one bonus pool, multidisciplinary practice professionals might be less inclined to criticize or question each other’s actions. This might compromise the quality of services and the concerns for the client’s welfare.

Multidisciplinary Practice Here and Abroad

Multidisciplinary practices are thriving in other countries, such as Germany and France where the legal systems have evolved quite differently than in the United States and the rules of conduct vary significantly. Australia, which has struggled like the United States to find the perfect multidisciplinary practice model, has allowed multidisciplinary practice. To date, only New South Wales has provided for the legalization of multidisciplinary practice. The legislative regime in New South Wales allows multidisciplinary practices to exist under the following conditions:

(a) lawyer members maintain control through the exercise of majority voting rights and receive at least 51% of firm income;

(b) non-lawyer members are bound to the same professional rules as lawyers, and

(c) non-lawyer members are personally liable for non-lawyer breaches of legislative and regulatory requirements.

Presently, only New South Wales has adopted such ethical rules for multidisciplinary practices. All other Australian states and territories prohibit multidisciplinary practice, although Australian legal commentators have recognized that the multidisciplinary practice debate seems to be gaining momentum.

Closer to home, the District of Columbia’s Rules of Professional Conduct permit partnership and fee sharing between lawyers and non-lawyers, as long as such partnerships provide only legal services. These rules require that all members, lawyers and non-lawyers, with managerial authority bind themselves to the rules of professional conduct. Lawyers with a financial interest or managerial authority take responsibility for their non-lawyer colleagues and these conditions be set forth in writing. Ernst and Young recently joined forces with a local law firm in the District of Columbia to establish the first true multidisciplinary practice in the United States.

What is a true multidisciplinary practice? Haven’t accounting and insurance firms throughout the United States been engaged in multidisciplinary practice for quite some time now? Both industries employ attorneys, have been recruiting law school graduates in droves and, despite disclaimers, have been providing services that are legal in nature for several years. Moreover, informal multidisciplinary practices (referral networks without fee sharing) have existed in the United States for decades. If this is the case, the question is: Why the sudden interest and who will benefit from changes in the law? The risk and benefit analysis of multidisciplinary practice has just begun and must be allowed to run its course. Advocates and opponents must be scrutinized for their self-interests so that, in the long run, the consumers are best served.

If multidisciplinary practice becomes reality, how do we, as lawyers, deal with it? The ABA Commission suggests that amendments to the Model Rules of Professional Conduct should provide that non-lawyers in multi-disciplinary practice may not deliver legal services, lawyers in a multidisciplinary practice are bound by the rules of professional conduct, the rules of professional conduct apply identically to law firms and multidisciplinary practices, all clients of multidisciplinary practices are treated as the lawyer’s clients for conflict of interest purposes, and client funds for legal services are segregated from other funds. The ABA Commission also has offered proposed models for multidisciplinary practices.

In its quest to persuade the House of Delegates to revise the Rules of Professional Conduct, the ABA Commission developed five possible multidisciplinary practice models. Of these models, the Ancillary Business Model warrants special consideration. This model requires the law firm to operate an ancillary business that provides all non-legal professional services associated with the multidisciplinary practice. All lawyer partners are subject to the rules of professional conduct with regard to the non-legal services of the ancillary business. The members are required to disclose to their clients the fact that the ancillary business does not provide legal services. Lawyer and non-lawyer partners of the ancillary business share fees and make joint decisions, although the lawyers operate as consultants who do not provide legal services to clients of the ancillary business. Clients, under this model, decide whether they want to be clients of both the ancillary business and the law firm.

Taking the Ancillary Business Model a step further, members of a multi-disciplinary practice entity could create a holding company with separate subsidiary corporations for various disciplines, which would be wholly-owned subsidiaries of the holding company. Each of the subsidiaries could purchase services from one another. This enhanced version of the Ancillary Business Model would resolve many of the primary concerns associated with multidisciplinary practice. The clients would be informed of the roles of the separate entities (that the non-legal entities do not offer legal services). This model would reduce client confusion with regard to the delineation of legal and non-legal services. By establishing a separate entity that offers legal services exclusively, fees and client funds could be segregated easily.

Moreover, if lawyers were required to supervise, and serve as gatekeepers, of each entity, as in the Australian model, the rules of professional conduct would be enforceable and the lawyer partners could educate their non-lawyer partners with regard to these rules and their appropriate application to each entity. Because the sharing of client information would be limited and the coordination of services would be highly supervised by the controlling lawyer partners, privilege issues would be almost nonexistent.

Likewise, conflict issues would be manageable, and the delivery of interstate services could be administered more easily. Additionally, the lawyer members would be responsible for the conduct of their non-lawyer colleagues, eliminating the need for intervention by the highest court in each multidisciplinary practice jurisdiction beyond current involvement. Above all, and assuming that multidisciplinary practices are desirable or at least inevitable, this enhanced model would provide optimum protection for the client. However, the model does not address some basic shortcomings of multidisciplinary practices.

Conclusion

Finding an efficient multi-disciplinary practice solution will require substantial effort on the part of all legal and non-legal partners involved. The ABA is to be complimented for engaging in the debate rather than ignoring it. There are basic values that all in the legal community have adhered to and which benefit the consumer. Regardless of how thunderous and wilting the rhetoric becomes, particularly from the large accounting and insurance establishments which see this as a direct benefit to their bottom lines, these core values must not be compromised. The small and medium-sized clients depend on us.

If modified, the Ancillary Business Model certainly could provide a good starting point for discussion of the attractiveness of multidisciplinary practice. Each of us must monitor and participate in the debate since it will fundamentally impact each of us. We must be active participants in the debate to fulfill our obligation to protect and serve the public.

(The authors gratefully acknowledge the assistance and legal scholarship of Heather L. Genck in preparing this article.)

Mark J. McAndrew is a partner with Momkus Ozog & McCluskey LLC in Downers Grove, where he practices management-side employment law, corporate risk management and litigation. He received his Bachelor of Science degree from the University of Illinois in 1974 and his Juris Doctor degree from The John Marshall Law School in 1980.

Tamara L. Vergara is an associate with Momkus Ozog & McCluskey LLC in Downers Grove, where she practices management-side employment law. She received her Bachelor of Arts degree, with highest distinction, from Purdue University in 1993 and her Juris Doctor degree from Loyola University Chicago in 1998.


 
 
DCBA Brief