Garvey, a tax partner at Heller Ehrman White & McAuliffe LLP who served as liaison to the American Bar Association Commission on Multidisciplinary Practice, spoke as a member of an MDP panel convened in San Francisco, in August, by the Bay Area Chapter of the Legal Marketing Association. "The Changing Landscape of Law Practice: Multi-Professional Approaches -- MDPs or What?" was intended to afford law marketers some insight into the phenomenon that, they repeatedly are warned, will metamorphose, and perhaps doom, their profession.

 

According to Garvey, the commission launched by the ABA two years ago was intended to ensure that the MDP trend did not threaten the profession's traditional protections for clients. The panel, she said, initially sought to draft rules to accommodate multiprofessional services provided mainly by small firms to small clients.

 

Ultimately, the commission recommended rules changes to allow fee-splitting between attorneys and nonlawyers -- historically, the principal ethical barrier to MDPs. Such splitting is permitted now only in the District of Columbia, and there, only between a law firm and an "ancillary business" -- a nonlegal service provider owned by the firm.

 

Garvey recalled that the commission report was not greeted warmly by the ABA House of Delegates, which demanded empirical evidence that clients and the public at large actually want MDPs. At the ABA annual meeting in July, the house passed a resolution, introduced by a coalition of delegates from Ohio, New Jersey and Illinois, firmly rejecting MDPs as inimical to the core values of the legal profession.

 

Tax-Practice Saltation
Thomas Steele, who chairs Morrison & Foerster LLP's state and local tax practice groups in San Francisco and Denver, was another panelist. He agreed with Garvey that the ethical restrictions of the various state bars prevent MDPs only nominally. He should know: He was instrumental in forging a true multiprofessional alliance -- between a consortium of law firms' tax practice groups and accounting giant KPMG LLP -- to provide a broad range of state and local tax services to clients.

 

In 1997, Steele was one of the founders of the State & Local Tax Network (SALTNET), which comprises more than 40 state and local tax practitioners from Chicago's Horwood Marcus & Berk Chartered, Florida-based megafirm Holland & Knight LLP, and MoFo. Walter Hellerstein, professor of taxation at the University of Georgia School of Law, also is a member of SALTNET.

 

In August 1999, SALTNET members, with the exception of Holland & Knight, formed a strategic alliance with management-consulting and accounting behemoth KPMG. Clients of alliance members have access to an array of tax services, from advice to strategic planning to litigation in various jurisdictions, but Steele asserts that there is no fee-splitting and that client-sharing is not mandatory -- hence, it technically falls somewhere short of an "MDP" under the rules.

 

Brain Drain
Steele also pointed to a disconcerting trend in the legal labor market: the movement in recent years of good lawyers away from law firms toward accounting firms and banks. With their new employers, he said, these attorneys may be doing more planning, with more diverse resources at their disposal -- and no litigation -- but they are doing largely the same things they did at their law firms.

 

This, Steele noted, is relegating the law firm tax practice to the specialty of litigation. Law firms are becoming increasingly concerned about this marginalization and the loss of nonlitigating attorneys and recruits.

 

Louis Duffy, an international consultant for Martindale-Hubbell who served as the panel's moderator, suggested that those concerns are justified. He pointed out that last year, for the first time, the two largest recruiting presences at Harvard Law School were not law firms -- they were McKinsey & Co. and PricewaterhouseCoopers.

 

Delaware Scenario
As for the ABA's anti-MDP vote, Steele felt that the delegates had latched onto legitimate considerations: lawyer independence, client confidentiality, lawyer loyalty, and the duty to "promote justice" through public service and pro bono work. In establishing an MDP, there must be certain administrative protections to ensure independence and client confidentiality, and structural protections to "wall off" the lawyers from the financial and business decisionmaking process.

 

After passing the resolution rejecting multidisciplinary practices, the ABA House of Delegates discharged the MDP commission. That, concluded Garvey, signaled that the ABA had "taken itself out of the picture," leaving the MDP issue to the various state bar associations. Among the state bars, Garvey named Arizona, California and Colorado as giving serious consideration to authorizing some form of multidisciplinary practice, making these states leading candidates to become the "MDP Delaware."

 

Under the "Delaware scenario," as described by Anthony E. Davis, a partner at Denver's Moye, Giles, O'Keefe, Vermeire & Gorrell LLP, one state eventually will become the first to offer its blessing to MDPs. Virtually overnight, that state will become the home to a slew of national MDPs established by large accounting firms and banks -- as Delaware became America's corporate headquarters after enacting a management-friendly corporations code -- and the opposition of other state bars will become irrelevant.

 

Whether the formalization of MDPs comes about via the Delaware scenario or some other route, multiprofessional entities like SALTNET already are catering to a market demand. As the San Francisco panel observed, there is nothing preventing the careful establishment of an "MDP in fact" under a different name. And if clients demand MDPs, the professions -- and their marketers -- ultimately must join together to service them.