Multidisciplinary Practices and the Main Street Lawyer
Many small firm and small town lawyers see multidisciplinary practices as a "big firm issue," which is understandable given that discussion of multidisciplinary practices has usually occurred in reference to large law and accounting firms.
Unfortunately, this emphasis obscures the critical fact that small firm, small town, "everyday" lawyers will be the group most impacted by multidisciplinary practices.1 Susan Hackett, senior vice-president and general counsel for the American Corporate Counsel Association, at a State Bar of Michigan panel presentation on January 21, 2000, stated: "The vast majority of multidisciplinary practices would be main street practices."2
What exactly is a multidisciplinary practice (MDP) and why will it impact ‘‘main street’’ lawyers? The ABA Commission on multidisciplinary practices defines an MDP as
a partnership, professional corporation, or other association or entity that includes lawyers and nonlawyers 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 nonlegal, 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, and there is a direct or indirect sharing of profits as part of the arrangement.
Given this expansive definition, the array of possible MDPs is dizzying. In addition to lawyers and accountants joining forces, your main street could see a lawyer and doctor team, a lawyer and investment banker team, a lawyer and psychologist team, a lawyer and accident reconstructionist team, or any combination involving a licensed professional.
The advantages to the "main street" lawyer are obvious. Attorneys, free to share fees with nonlawyers, could join forces to offer "one-stop shopping" to clients, offering them comprehensive, cost-effective services. Further, forming an MDP allows for an exponential expansion of a solo or small firm attorney’s client base and market share. Recognizing the need for multidisciplinary counseling of individual and business clients and the current inefficiency in meeting this need through different professional firms, the Council of the ABA General Practice, Solo & Small Firm Section urged the ABA Commission on MDPs to relax the ethics rules to accommodate MDPs.3
Fueling the drive toward MDPs are market-based considerations. Many clients want the ease of one-stop shopping. Many of the larger law firms are already creating ancillary businesses to serve their clients’ needs and expand their income base.4 Larry Ramirez, chair of the ABA General Practice, Solo & Small Firm Section, says: "I don’t think we can just ignore the issue....We can’t simply bury our heads in the sand and say ‘We won’t permit this to happen.’ The fact is, it’s already occurring, it’s already occurred."5
This past July, the ABA House of Delegates voted to disband the ABA Commission on Multidisciplinary Practices and rejected any revision of the Model Rules of Professional Conduct to allow MDPs. As Mr. Ramirez points out, the move towards MDPs may occur, regardless of the ABA’s current position.
Opponents of MDPs correctly point out that attorneys are different from regular business people and that we have special responsibilities. Opponents worry about erosion of the core values of the profession, attorney independence, client loyalty and confidentiality, and the ultimate impact on the public. Jack Dunbar, in his article, "Multidisciplinary Practice Translated Means 'Let’s Kill All the Lawyers,'" argued that
The independence of the lawyer is just as critical as the independence of the judiciary. Under our system of government, lawyers are unique. We are special. We are in the Constitution. We are officers of the court. We are fiduciaries whose charge is to preserve the rule of law. We have kept the playing fields level and made sure that people were honest in the market place for over 200 years. We, lawyers and judges, have provided the glue that has held the fabric of this country together, and have contributed in great measure to the success of an economic system and a democratic form of government that is the envy of the world. We have literally been and are the guardians of this Republic.
So, we and the American public should become very nervous when anyone suggests that we blend this noble profession into a business unit as a profit center in a company controlled by nonlawyers, or shareholders in a publicly owned company, who hold the purse strings.6
In one example of the myriad ethical complications posed by MDPs, the SEC has prohibited accounting firms from providing professional services to clients for whom they perform independent audits.7
The points raised by both the proponents and opponents of MDPs are valid and important considerations. Despite the importance of these considerations and regardless of how the ethics rules may or may not be revised, the real world, in the form of the market place, may very well dictate what happens to your "main street" law practice.
Many opponents argue that a lawyer’s independent professional judgment is subject to erosion in an MDP setting. However, current ethics rules permit certain informal arrangements between professionals that are more visible and liberal than have been seen in the past, including office sharing arrangements. You may believe that your clients are best served by maintaining the status quo, but the ease of one-stop shopping may lure your clients to a competing MDP. How would you compete if the local attorney down the street joined with an accountant, a tax preparer, and a real estate broker to provide multiple services to the community from one office? How can a "main street" lawyer survive a transition to an MDP marketplace and still maintain the vital ethical standards of professional independence, confidentiality of client information, and client loyalty?
In terms of the marketplace:
1.Start now to build strategic alliances.
Think of the accountant, financial planner, real estate professional, or other licensed professional you most like working with. Are you the only attorney these people do business with? If MDPs are the future, experts say you should act now to create alliances that can be formalized if approval is given. Think of what kind of nonlawyer services would be most useful to your clients.8
2.Expand your credentials if you cannot or choose not to join forces with another professional.
Does your practice lend itself to earning additional certifications? Could you compete better if you earned a certification as a financial planner, insurance broker, or securities broker?9
3.Obtain feedback from your clients.
Whether you form an MDP or not, obtaining feedback from your clients is one of the most valuable things you can do to improve your practice. Ask your clients what they want. What are their needs? What aspect of your services are they pleased with? What could you do better? Use your clients’ responses as a guide for future planning.
4.Obtain input from an attorney specializing in legal ethics and malpractice issues before you structure your alliance.
Anthony Davis, a partner with the Denver firm of Moye, Giles, O’Keefe, Vermeire & Gorrell, speaking at the ABA 26th National Conference on Professional Responsibility in New Orleans in June of this year, posited the following scenario: An MDP is comprised of a lawyer, a surgeon, and an investment banker. A client of the firm is physically incapacitated by the surgeon’s negligence and the investment banker negligently invested the client’s funds, leaving her destitute. However, the attorney, who did not malpractice the client, is the only member of the firm with malpractice coverage and is the only member subsequently sued by the client. Will the policy exclusions prevent the client from recovering? What will this do to the cost of malpractice insurance? Will coverage be by project rather than individuals? Davis recommends that up front agreements between participants in MDPs be drawn regarding important issues.
MDPs would be new territory and the risks to practitioners are high. As all of us have told clients at one time or another, up front advice can spare much subsequent frustration.
How to maintain our ethical standards is a more amorphous task but is the most important task of all. According to Mary C. Daly,
For the lawyer in an MDP, the challenge will be to create institutional structures that preserve the core values of independence of professional judgment, confidentiality of client information, and loyalty....In small MDPs, it will mean a heightened consciousness of the day-to-day, routine events that may pose a threat to the core values. Lawyers in both settings will face the organizational challenge of having to learn to work in teams, something that lawyers in general do quite poorly today. They will also have to develop a sense of their "professional" self.10
Regardless of whether the ethical rules are modified to allow multidisciplinary practices, the marketplace will challenge attorneys to better serve their clients within the confines of the applicable ethical framework. Small and solo firms, the "main street" lawyers of our society, have just as much opportunity to offer new and broader services as the large firms. Many small town and small firm lawyers take pride in the fact that they often find themselves on the front line of justice and are the "last line of defense" for many of their clients. Their clients tend to be real individuals in need, not large corporations for whom litigation is just part of doing business. With the move towards MDPs, the "main street" lawyers have a unique opportunity to lead the way in illustrating that a new way of doing business and better serving our clients does not have to mean a diminishment of our core values as attorneys.
1 "Are You Ready?" How Small Firms Can Position Themselves To Compete in the Era of Multidisciplinary Practice, Michael M. Bowden, Lawyers Weekly, USA, February 21, 2000.
2 The presentation, sponsored by the State Bar of Michigan’s Multidisciplinary Practice Committee, chaired by Dick Rassel, consisted of distinguished panelists, in addition to Ms. Hackett: Steven C. Nelson (Dorsey & Whitney), who sits on the ABA Commission on Multidisciplinary Practice; Gary T. Johnson (Jones, Day, Reavis & Pogue); Joseph Petito (PricewaterhouseCoopers); and George Madison, executive vice president, general counsel and corporate secretary of Comerica Inc.
3 "Choosing Wise Men Wisely: The Risks and Rewards of Purchasing Legal Services from Lawyers in a Multidisciplinary Partnership," Mary C. Daly, Vol. 13:217, Georgetown Journal of Legal Ethics, p 217 (Winter 2000).
4 "As ABA Debates, MDPs Are Spreading," Michael J. Goldhaber, The National Law Journal, July 10, 2000.
5 Bowden, Id., at 1.
6 "Multidisciplinary Practice Translated Means 'Let’s Kill All the Lawyers,'" Jack F. Dunbar, 79 Michigan Bar Journal 64 (January 2000).
7 "MDP in Crosshairs," John Gibeaut, ABA Journal, April 2000, p 16.
8 Bowden, Id., at B11.
9 Bowden, Id., at B11.
10 See supra, n 3.