Are Multi-Disciplinary Practices Cause for Concern or Celebration?

Introduction & Background

Ancient Judiciary and even society is well acquainted with the term Lawyer. In short we can define Lawyer as ‘The Officer of the Court’ the wise person with whom his client can establish ‘Fiduciary Relations’. The ambit into which working of Lawyer is restricted is only Court. Other than Court matters there are many other Government Institutions where there is need of Law interpretation and also actual implementation of it. Now as far as working beyond Court is concerned, this part cannot be alone performed by Lawyers. The need of cooperation and Co-ordination has given rise to the concept called as Multi-Disciplinary Practices (MDPs). The concept MDP originated in Germany after World War II, where they allowed Accountants and Lawyers to practice togetherand since then it has gained support across Europe and in other parts of the world.Multi-Disciplinary Practices (MDPs) have more than one name – they’re also called alternative business structures (ABS).

The term MDP is precisely difficult to define because it can be in many forms and encompass literally hundreds of different industry professionals.For example a real-estate based MDP may provideestate agency,mortgage, insuranceand conveyance services all under one roof or brand, in commercial terms one can call it as “one stop shop”.According to ABA MDPs are defined as a “partnership, professional corporation, or other association or entity that includes lawyers and non lawyers and has one and not sole object / purpose to deliver legal services however, it is also meant out to the public for providing non 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

Going through the definition of MDPs it is quite clear that, MDPs are an attempt to draw the entire legal services market within one regulatory framework and that major emphasis should be given to scrutinize the MDP concept effectively. No doubt MDP cannot be considered as a revolution concept in present rigid Society, but its usefulness to the society can be affirmed by slow but steady evolution in the concept. Notice of MDP taken by the various Countries and their attempt to make out modified and unique codified rules in respect of MDP itself shows its growing popularity. The various developments on MDP discussed in later part will affirm my above statement.

In recent years, significant debate has taken place over the issue whether MDP’s are a cause for concern or celebration? Not only within the Law Society of England and Wales, the issue has attracted study by the international Bar Association, the American Bar Association, the U.S. State Bar Association, English and Scottish Royal Commissions, and governing bodies of the legal profession in Europe, Australia and New Zealand. Now, less than 6 months away when the United Kingdom, the enactment of the Legal Services Act of 2007 created a regulatory structure that allows “legal disciplinary practices—law firms whose professional rosters may be up to 25 percent nonlawyers—and alternative business structures”,we arestarting to see lawfirms declaring their intentions to adopt alternative business structures (ABS) as wellrevealing, in fairly specific terms, theambitionsbehind these plans. Those in opposition to amending the Model Rules to allow MDPs believe that the core values of the legal profession will be destroyed while those who support MDPs believe that the “MDP represents a fundamental change in the way lawyers will serve their clients.If we consider the views of Opposite Party the only point which they resist about MDP is Multi Disciplinary Partnerships and not against Multi Disciplinary Practices. In later part of my discussion I have thrown light on the factors which are in favour and which go against MDPs. I even have evaluated Harms and Risks which can be apprehended from MDPs which is also a part of discussion later on.

The discussion is divided into five parts; part I of this essay as narrated above Introduction/Background which relates to Background and history of MDP Concept. Part II explains Benefits and Demerits of Multidisciplinary Practices, Part IV discusses Ethical Considerations of Multidisciplinary Practices and part V is Conclusion.

TRACING THE DEVELOPMENT OF MDPs ACROSS THE GLOBE

If we consider in widest amplitude we can gather lots of merits about MDP. Not only that but we can even conclude that MDP is the requirement of Next Generation. In assessing the desirability of MDPs, I begin my task by tracing developments of MDPs across the Globe.

A. UK and MDPs

The backing for MDPs in UK comes from the City of London Law Society, Law Society of England and Wales, the Office of Fair Trading (OFT), the Consumers’ Association, the institute of Directors, the Director General of the Confederation of British Industry (CBI), and even Labour Government. The Solicitors always worked closely with non-Lawyers because of the number of changes introduced by Law Society since the mid 1980’s. OFT had been favouring the removal of restrictions on the formation of MDPs ever since the “Entities report” which was published in 1986, recommending changes to the Law Society’s Practice rules by amending Act 1974 to remove statutory barriers to fee sharing by solicitors. It was finally achieved with the enactment of section 66 of the Courts and Legal Services Act 1990.The Viability of MDPs was under a big question mark after the Worldcom, Enron and Xerox scandals (Big Four) and had negative impact on the development of MDPs in UK and US. Later in 2003 the Report by Government supported the principle of enabling legal services to be provided through ABS. A recommendation came from Sir David Clementi, in his report in 2004 recommending the facilitation of legal disciplinary practices (LDPs) to allow lawyers to work together, with or without external ownership or management.A clear distinction was drawn by him between LDPs and MDPs. He concluded that the creation of LDPs would represent “a major step towards MDPs. Later the Draft Bill was published on 24 May 2006 following a period of consultation and a series of reports on the regulation of legal services in England and Wales. This was the first time Government proposed for new regulatory frame work for legal services in England and Wales and MDPs where part 5 of the draft bill makes provision for new, ABS in legal services. The draft Bill was by in large based on Review of the RegulatoryFramework for Legal Services in England and Wales by Sir David Clementi. The Bill proposed a new, Licensing Structure for ABS under Legal Service Board. A Joint committee which was appointed on 23 May 2006 to examine the draft Legal Bill and Reported it by July 2006, pointed out concerns about the policy in regards with the approach to ABS for providing legal services. Maintaining quality legal advice, Conflict of Interest, Conflicts between lawyers and non-lawyers, Safeguards, Ring-fenced law firms in MDPs, Legal professional privilege, Speed of approach to ABS, Impact of ABS provisions, “One-stop shops” for legal and other services, “Cherry picking” profitable legal services, The impact of reputation, Impact of a restructuring of the market, Impact on access to justice and the legal aid network, Impact on regulatory bodies currently licensing ABSs, International impact, Regulatory “competition” and A dual licensing regime under ABS where the areas of concern raised by the committee in their report submitted on 26th July 2006.The committee report stated that:

“The approach to liberalising business structures in the draft Bill is the one area where the Government seeks to go well beyond the recommendations of Sir David Clementi and where we find the reforms the most troubling. We have been told about the potential for conflicts of interest in ABS firms, both between lawyers and shareholders and between lawyers and non-lawyers. We are worried both about the speed of approach and the level of uncertainty about the impact of the reforms, particularly on access to justice in rural areas and legal aid provision. Our over-riding concern is that that nothing in the reforms should have a detrimental impact on the quality of legal services provided by a legal professional to a client.”

In the United Kingdom, the enactment of the Legal Services Act of 2007 are enacted in such a fashion that allows “legal disciplinary practices. This enactment gives emphasis upon involvement of 25 % non – lawyers and also it gives stress upon the topics as to what forms the part of topic – Alternative business structures, which will encompass [MDPs], External ownership of legal businesses and other like subjects. In Australia, “multidisciplinary practices and incorporated legal practices with outside ownership” are permitted. Also, lawyer-accountant MDPs have functioned successfully for many years in Germany. All above experiences give strong boost for the concept of MDP’s around the world. Just like the concept that the way in which U.S. governs the Economy of the whole world in the similar fashion the ideas adopted by the U.S. states in regard to MDP’s are likely to be adopted by their follower Nations.

Washington, D.C., is regarded as a pioneer in MDP regulation and legislation and could be used as an example for other states that are interested in allowing MDPs or some form of them. In 2001, the New York State Bar became the first state to address MDPs directly by implementing a rule that allowed regulated business alliances between attorneys and nonattorneys. New York and Washington, D.C., are not alone in their consideration of MDPs; California, Colorado, Georgia, Maine, and South Dakota are considered pro-MDP because they have recommended it. There was not universal acceptance among witnesses of the principle of ABS licensing. Whilst some welcomed the provisions, others did not. According to opposition MDPs are wrong in principle for legislation to authorize forms of legal practice that may be deeply damaging to the public interest.

“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:

1. 1. lawyer members maintain control through the exercise of majority voting rights and receive at least 51% of firm income;
   2. non-lawyer members are bound to the same professional rules as lawyers, and
   3. (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 multidisciplinary 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.”

Conclusion

The multidisciplinary practice is here to stay. It is in its infancy and will need to evolve into maturity. This will happen whether the chiropractic profession embraces it or attempts to degrade it. This is one moment in history where we can clearly set our own course. We can chose if we take the helm and direct it toward our dream, or sit back and again allow others to define who and what we are.