Martin Rosenberg, ICPAS president and chief executive.

The ICPAS/LMA/Martindale survey focuses on how clients perceive multi-disciplinary practices, known as MDPs for short, rather than on the issue of whether or not they should exist. The survey questioned participants about conflicts of interest, preferred providers, advantages and disadvantages and the services to include in a combined practice. The results are interesting.

When asked which action they would take if their current accountant and current lawyer became partners in a combined practice, 76 percent of owners said they would continue to use both professionals, but nearly two-thirds would insist on full disclosure of potential conflicts.

Twenty-four percent said they would have an objection; 12 percent would find a new accounting firm; 5 percent would find a new law firm; 7 percent would sever relationships with both, according to the report.

"The results show a high degree of confidence and trust in the relationship between clients and their CPAs and their lawyers," noted Martin Rosenberg, ICPAS president and chief executive.

If their current lawyer/accountant set up a partnership with an accountant/lawyer they had never used before, about 20 percent of respondents said they would meet with the new partner and consider switching some or all of their business. About one-third would meet with the new partner but would resist suggestions to switch business, while about 33 percent would refuse to meet with the new partner, but would keep their current relationship. The remaining 14 percent would either consider severing or immediately sever the relationship with their current provider, according to the survey.

MDPs have been a hotly debated topic among the accounting and legal communities for years. Advocates in both professions claim that market forces, particularly client demand for one-stop-shopping, necessitate a change in the rules that bar lawyers and accountants from sharing fees, while opponents of the idea contend that such arrangements create enormous conflicts of interest.

The American Bar Association temporarily put the kibosh on MDPs in July by voting to reinforce the group's stance against fee sharing with other professionals and non-lawyer ownership of law firms, effectively rejecting the concept of MDPs. However, many state and local bar associations, which set their own rules on MDPs, have approved them, and they exist, if not formally, in many areas.

The report's findings suggest that clients look almost exclusively towards either accountants or lawyers for the traditional practice services: Financial statement audits and tax return preparation belong to accountants, while litigation and patent protection belong to attorneys. However, the results also suggest that clients see a number of practice areas where services could be provided by an attorney, a CPA or both.

For many services, including mergers and acquisitions; business succession planning; business organization/formation; employee benefits and compensation; and e-commerce, respondents said they would call their accountant, their attorney or both for assistance.

"The survey should serve as a catalyst for professional service firms to look at their futures," Rosenberg said. "The results suggest strategic opportunities for both law firms and accounting firms to build a true professional services environment," he said. "Firms should take a careful look at the way they structure their businesses to provide those services."

Asked to design a professional services firm that would meet the needs of their companies, the services chosen by most executives were: Tax planning; tax return preparation; financial statement attestation; acquisitions, mergers, and sales; litigation; contract preparation; valuation; compliance review; insurance and information systems.

When asked to rate the advantages of MDPs on a 1-5 scale from unimportant to very important, clients rated better advice (3.33) and cost efficiencies (3.26) as the most important advantages, while single billing, single point of contact, and "one-stop-shopping" were rated less important, all scoring below 2.5.

Interestingly, respondents rated all five listed disadvantages of MDPs: conflicts of interest (3.69); confidentiality (3.54); uncertainty of uniform quality (3.55); conflicting advice (3.61); and loss of objectivity (3.80), as more important than any of the advantages. And 44 percent said the disadvantages could be sufficient enough to cause them to change their service provider. However, 25 percent thought a combined practice would have an advantage in soliciting their business, according to the report.

The full survey results are available on the Illinois CPA Society Web site at www.icpas.org and the Legal Marketing Association Web site at www.legalmarketing.org.

-- By Melissa Klein

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