I. Introduction

Multidisciplinary practices, or MDPs, have long been the subject of acrimonious debate between two opposing campaigns, each citing passionate reasons for why the organizational structure should be formally established or definitively barred. [1]  Multidisciplinary practice refers to a professional entity in which lawyers partner with non-lawyers to provide a mix of legal and non-legal services.  Efficiency and innovation by this new structure is dampened with fears of conflicts of interest and dilution of privilege.   The crucial question as acerbically couched by one scholar has been “whether client and public interests are best served by ethics rules that preclude innovation in joint service delivery enterprises among lawyers and other professionals.” [2]

II. Proponents of MDPs

Client demand for “one stop shopping” has driven professional services firms and hindered traditional law firms; clients want efficiency, convenience, and all their answers under one roof. [3] With an MDP, clients will no longer have to hire a law firm for litigation and legal document drafting purposes on one side of town, with an accounting firm for audits and tax advice on the other. [4] Clients will save on information and transactional costs, which in turn may save billable hours by the service providers. [5]  Not only is efficiency a net gain, but MDPs may increase competency and quality of work; problems in today’s global economy are rarely purely “legal” or “business” problems, but a sticky amalgamation of both.  [6]  MDPs’ combination perspective may address problems that clients previously did not know existed. [7]   Diverse professionals working together in unity create new and innovative solutions and are more competitive in offering legal solutions than the traditional firm in terms of price and quality. [8]

Proponents of MDPs also argue that the public at large is best served by offering all levels of clients competent, efficient, and cost-effective comprehensive solutions to business problems.  [9]  The positivity of proponents is tempered by an urgency for global competitiveness, as MDPs have been in Europe for years and offer such integrated professional service.  [10]  Legal scholars widely predict a trend that non-lawyers and MDPs will become competitive against the traditional lawyer, running the risk of marginalizing practicing lawyers. [11]  Large accounting firms have aggressively invaded the legal market and profession in the United States even with the ban on MDPs. [12]  The so-called “Big Five” accounting firms’ actions to provide tax, ERISA, mergers and acquisitions, and other consulting services previously the sole milieu of the traditional law firm, has been labeled both “a frontal assault on the legal profession” and a “guerilla war” by outraged lawyers. [13]  The only reason why these firms are not guilty of any unauthorized practice of law is because they do not hold themselves out to be lawyers. [14] The current prohibitions on MDPs in the United States create a large competitive disadvantage in the global market. [15]

III. Opposition to MDPs

The strongest and most persuasive argument against the MDP is that the American Bar Association (or ABA) opposes it, voting overwhelmingly against them in their last meeting addressing the matter.  [16]  Though the ABA Commission on Multidisciplinary Practice submitted a report to the ABA’s House of Delegates recommending modification of the Model Rules of Professional Conduct to allow attorneys to offer legal services outside the traditional firms. [17]  The main reason for this is the MDP critics’ staunch belief that an enormous conflict of interest between lawyers and non-lawyers exists[18], as does the potential for the breach of confidentiality between lawyers and their clients. [19] 

MDPs may impair the independent judgment of a lawyer who works for non-lawyers whose standards for professional ethics differ from that of the ABA. [20]   Because MDPs may create confusion about confidentiality, inadvertent breaches may harm clients and result of the “slow erosion of the attorney-client relationship, leading to an overall weakening of the legal system.” [21]  Indeed, at the moment when a client may want to preserve a confidence with their attorney, an accountant may be compelled to disclose it as they owe a duty to the public as well. [22]   Most controversial is the inconsistent roles of an auditor (independent accountant) and the client advocate the lawyer is supposed to be; MDP opponents believe that the difference between these two roles is impossible to reconcile. [23]  The lasting and everpresent contradiction in MDPs is that to advocate, the lawyer must finely manipulate the law to most favor their clients and earn their fees; as a collective, attorneys have a strong stake in upholding the credibility of the law. [24] 

IV. Sarbanes-Oxley’s Ambiguity

In the wake of Enron and other such corporate scandals, the Sarbanes-Oxley Act of 2002 (or “SOX) imposed on disclosures and financial data reporting. [25]  SOX first acknowledged the necessity of multidisciplinary enterprise by mandating the creation of the Public Company Accounting Oversight Board that contains not only CPAs but non-CPAs, with presumably legal and business expertise. [26]  This pro-MDP provision is tempered by some anti-MDP provisions as well, including one that prohibits accountants (auditors in particular) from offering certain consultant services to clients for which the accountants are auditing. [27]  This precludes any auditing accounting firm from also rendering any legal or other expert services to the same client.  By doing so, SOX specifically addresses conflicts that arise when one professional entity performs work for a client but also owes fiduciary duties to the investing public and company shareholders. [28]

SOX intimidated KPMG into disbanding their global legal entity, KLegal, which employed mover than 3,000 lawyers in 60 countries. [29]  However, PriceWaterhouseCoopers, Deloitte & Touche, and Ernst & Young have no intentions of doing the same, despite added pressure from SOX and the SEC. [30]

V. Multidisciplinary Practice…In Practice

MDP-like arrangements already exist in the nature of in-house counsel and counsel for some trade and nonprofit entities.  In this schema, lawyers report directly to nonlawyers, and in cases where the client is someone other than the employer, the attorney owes a duty of loyalty to them both. [31]  Many observers state pragmatically that for all intents and purposes, the MDP revolution has already arrived in relation to corporate practice. [32]  Indeed, by the numbers, Arthur Andersen was the biggest employer of lawyers in the United States in 2000. [33]  PriceWaterhouseCoopers is in effect the third largest law firm globally, employing more than 1600 non-tax lawyers outside the United States. The Big Five already have a head start in the market, and have made good on their public statement that they intend to compete directly with major international law firms. [34]

Many onlookers and commentators have accused the ABA of “burying their heads in the sand” and ignoring the very real MDP issue. [35] Some state bar associations, such as the District of Columbia, have taken matters into their own hands and amended their Model Rules to allow the integrated teamwork and fee sharing of lawyers and non-lawyer professionals. [36]  The most oft-cited analogous domestic firm to the typical European MDP firm is that of McKee Nelson LLP, in Washington, D.C.  [37]  Under some controversy [38], it was founded in 1999 by two tax lawyers, with start-up capital by Ernst & Young, with the purpose of offering legal advice on tax litigation, transactional structuring, and capital markets. [39]  Legal scholars were skeptical as to whether this firm would survive, much less evolve past pure tax practice. [40] However, this author, who worked there for over a year prior to entering law school, is happy to report that they are flourishing well across the financial services sector as well as their other full-service areas. [41] 

The ABA can put off discussing the issue of MDPs for only so long, and their position is influential but only advisory to the states. [42] State bar associations are taking matters into their own hands, with recommendation to alter ethics rules to allow “controlled” disciplinary practices. [43]  Furthermore, there is little evidence that the expanding trend to pair lawyers and other professionals will be effectively prevented by enforcement actions for unauthorized practice of law. [44]  Indeed, the ABA cannot ignore that de facto MDPs are already in place, and by leaving the issue to be individually debated among states, they have jeopardized their chance to regulate them. [45] If U.S. legislators do not embrace the MDP revolution, our legal profession may “be left withering in its wake.” [46]

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Endnotes:

[1] Rees M. Hawkins, Comment: Not “If”, but “When” and “How”: A Look at Existing De Facto Multidisciplinary Practices and What They Can Teach Us About the Ongoing Debate, 83 N.C. L. Rev. 481, 481 (2005), stating that the issue has been labeled an “Armageddon” by some and a “salvation” by others. 

[2] Ann L. MacNaughton & Gary A. Munneke, Practicing Law Across Geographic and Professional Borders: What does the Future Hold?, 47 Loy. L. Rev. 665, 690 (2001).

[3] Randall S. Thomas, Stewart J. Schwab, & Robert G. Hansen, Megafirms, 80 N.C. L. Rev. 115, 163 (2001).

[4] Kathryn Lolita Yarbrough, Commentary: Multidisciplinary Practices: Are they Already Among Us?, 53 Ala. L. Rev. 639, 646 (2001).

[5] Id.

[6] MacNaughton & Munneke, supra note 2, at 695-96.

[7] Yarbrough, supra note 4.

[8] MacNaughton & Munneke, supra note 2, at 700-04.

[9] Yarbrough, supra note 4.

[10] Thomas, Schwab & Hansen, supra note 3, at 173-75.

[11] Working Notes: Deliberations of the Committee on Research About the Future of the Legal Profession on the Current Status of the Legal Profession, 16 Maine Bar J. 236, 238 (2001).  See also Yarbrough, supra note 4, at 645, stating that a survey by the International Bar Association deemed accountants as the main threat to law firms in competition for legal services.

[12] Hawkins, supra note 1.

[13] Id.

[14] Yarbrough, supra note 4, at 653-55.

[15] Thomas, Schwab & Hansen, supra note 3, at 173-75.

[16] Marc N. Biamonte, Note: Multidisciplinary Practice: Must a Change to Model Rule 5.4 Apply to All Law Firms Uniformly?. 42 B.C.L. Rev. 1161, 1163-64 (2001).

[17] Stuart S. Prince, Comment: The Bar Strikes Back: The ABA’s Misguided Quash of the MDP Rebellion, 50 Am. U. L. Rev. 245, 246 (2000).

[18] Yarbrough, supra note 4, at 653-55.

[19] Michael W. Loudenslager, Cover Me: The Effects of Attorney-Accountant Multidisciplinary Practice on the Protections of the Attorney-Client Privilege, 53 Baylor L. Rev. 33, 56 (2001).

[20] Yarbrough, supra note 4, at 653.

[21] Biamonte, supra note 16.

[22] Yarbrough, supra note 4, at 655.

[23] Id.

[24] Yves Dezalay & Bryant G. Garth, From the Trenches and Towers: MDPs after Enron/Anderson [sic]: The Confrontation Between the Big Five and Big Law: Turf Battles and Ethical Debates as Contests for Professional Responsibility,  29 Law & Soc. Inquiry 615, 618 (2004).

[25] Susan Saab Fortney, National Symposium on the Role of a Corporate Lawyer: Chicken Little Lives: The Anticipated and Actual Effect of Sarbanes-Oxley on Corporate Lawyers’ Conduct, 33 Cap. U.L. Rev. 61-65 (2004).

[26] Janice A. Alwin & Jason P. Eckerly, Raising the Tax Bar: Redefining the Rules of Accountants and Lawyers for a Practical Solution to the Multidiciplinary Practice Debate, 1 DePaul Bus. & Comm. L.J. 257, 267 (2003).

[27] Id.

[28] Id.

[29] Hawkins, supra note 1, at 496.

[30] Id.

[31] Alwin, supra note 26, at 264.

[32] John H. Matheson, Governance Issues In the Multidisciplinary Corporate Practice Firm, 69 U. Cinn. L. Rev. 1107, 1111 (2001).

[33] Hawkins, supra note 1, at 507.

[34] Thomas, Schwab & Hansen, supra note 3, at 175.

[35] Biamonte, supra note 16, at 1163-64.

[36] Yarbrough, supra note 4 at 653-55.

[37] Bryant G. Garth & Carole Silver, The MDP Challenge in the Context of Globalization, 52 Case W. Res. 903, 913 (2002).  See also Hawkins, supra note 1, at 508; Loudenslager, supra note 19 at 45; Yarbrough, supra note 4, at 660; Thomas, supra note 3 at 175-76 (2001); and Prince, supra note 17. at 265.

[38] L. Harold Levinson, McKee, Nelson to Remove E&Y From Name, The Attorney-CPA, 2001, available at http://findarticles.com/p/articles/mi_qa3703/is_200101?pnum=3&opg=n8945204, noting that “the precise nature of the relationship has not been disclosed. Without full disclosure, it is difficult to assess the propriety of the arrangement, either as it was in 1999, or as it is projected to continue in the future, and whether the applicable -standards are those of D.C., New York, or other jurisdictions.”

[39] Garth, supra note 37, at 913. 

[40] Id.  See also Prince, supra note 17, at 267.

[41] Nathan Carlile, McKee Nelson: The Richest Guys in Town, Legal Times, Aug. 13, 2007, available at http://www.law.com/jsp/article.jsp?id=1186736520377, calling the richest firm in D.C. “an unprecedented alliance between a small law firm and a Big Five accounting firm, a deal industry watchers tabbed as a model for the 21st-century legal practice. But that all went up in flames years ago…Yet the phoenix that arose from those ashes may well be more spectacular than the original model.”

[42] Loudenslager, supra note 19, at 54.

[43] Hawkins, supra note 1, at 497.

[44] Loudenslager, supra note 19, at 54.

[45] Hawkins, supra note 1, at 497.

[46] Id.