July 1999 Issue

ABA Commission Recommends Change to Allow CPAs to Partner with Lawyers

By Lillie Balinova

An American Bar Association (ABA) commission announced on June 8 its recommendation to permit lawyers to form partnerships with accountants and other professionals. Breaking with the legal profession's long-standing prohibition on sharing fees with nonlawyers, the ABA proposal reflects the growing trend toward "one-stop shopping" for professional services.

The ABA's Commission on Multidisciplinary Practice unanimously recommended the proposal, citing the fact that many U.S. lawyers are leaving law firms to join Big Five accounting firms that provide a variety of professional services. If implemented, the changes to the ABA Model Rules of Professional Conduct would permit fee-sharing between lawyers and other owners of multidisciplinary practices (MDPs).

"This is a wise and forward-looking proposal on the part of the commission, but I don't believe the Bar will receive it favorably," said Dan L. Goldwasser, attorney for the Society and many CPA firms.

Multidisciplinary practice is common in Europe, where international accounting firms provide legal services, including litigation.

Under the new rules, existing safeguards regarding conflict of interest, ethics, and confidentiality would still apply. However, when a lawyer and nonlawyer in the MDP both serve the same client, the lawyer would be required to protect confidential information, while the nonlawyer might have a legal responsibility to disclose that same information.

The proposal also calls for safeguards with respect to the MDP itself if non-lawyers control it. It requires the MPD to give the court of jurisdiction a written statement saying that the MDP will not interfere with, and will establish and enforce procedures to protect, a lawyer's exercise of independent professional judgment, it will enforce procedures to protect a lawyer's obligation to segregate client funds, it will deliver legal services according to the rules of professional conduct, and lawyers will fulfill their obligation to render voluntary pro bono publico legal services. The MDP must also include in the written statement that it will review its procedures annually for compliance, file a compliance certificate annually with the court, and permit the court to conduct an administrative audit for compliance for which the MDP will bear the cost.

The ABA's House of Delegates will debate and vote on the recommendation at its annual meeting August 9­10. If approved, the suggested changes would be referred for drafting to the ABA Standing Committee on Ethics and Professional Responsibility and the ABA Ethics 2000 Commission before being presented to the House of Delegates for a final vote.

The ABA Model Rules of Professional Conduct are only advisory--rule changes must be adopted by the lawyer-licensing authority at the state level (generally the highest state court) before changes can take effect.

Watch future issues of The Trusted Professional for updates. *

Ann E. Spaulding contributed to this article.