Focusing the MDP debate: Historical and practical perspectives

Temple Law Review

Volumn 72, Issue 4, 1999, Pages 989-999

  Jones, James W ^a  

^a APCO Associates Inc   (United States)

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EID: 0347008030     PISSN: 08998086     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (36)

1. The term "ancillary business" is the phrase used by the American Bar Association ("ABA") to describe law-related services offered by a law firm. The term "law-related services" is defined in the Model Rules as "services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer." MODEL RULES OF PROFESSIONAL CONDUCT Rule 5.7(b) (1999).
2. The operational rules established by Arnold & Porter for its subsidiaries were quite restrictive. First, all subsidiaries were held to the same ethical requirements in terms of conflicts, protections of client confidences, advertising of services, etc., as applied to the law firm itself, and all questions arising in this area were resolved by the law firm's Ethics and Practice Committee. Second, for purposes of conflicts of interest screening, the subsidiaries and the law firm were considered to be one and the same entity, and any potential conflicts that were identified were resolved by the Policy Committee of the law firm. Third, all brochures and other promotional literature produced by the subsidiaries were required to be cleared by the law firm's Ethics and Practice Committee, using principles consistent with those applied in the legal profession. Finally, all promotional literature and all retainer agreements used by the subsidiaries clearly disclosed the relationship of the subsidiaries to TEMPLE LAW REVIEW [Vol.72 the law firm. This material specifically notified clients of the consulting groups that the services provided by the subsidiaries were not legal services and that communications with the consulting groups were not entitled to the protections of the attorney-client privilege. These disclosures also made clear that no client of any of the consulting groups was required to use the services of Arnold & Porter, or vice versa.
3. Arnold & Porter sold its interests in all three of its subsidiaries during the early 1990s: APCO Associates was sold to Grey Advertising Inc. in 1991; MPC & Associates was sold to Sallie Mae in 1994; and The Secura Group was sold to Andersen Consulting in 1995.
4. A 1987 survey by the National Association of Law Firm Marketing Administrators found a considerable number of ancillary businesses being operated by law firms of all sizes across the nation. The diversity of these activities was quite impressive. The survey found, for example, law firms engaged in investment banking in Atlanta and Memphis; energy and environmental consulting, management services, and employer-benefits consulting in Atlanta; advertising in Arizona; labor-relations consulting in Philadelphia; real estate brokering in Los Angeles; office support services, seminars, and videos in Pittsburgh; real estate development services nationwide; and business consulting services dealing with international trade in New York. The survey also found that in Washington, D.C., law firms had spawned a great variety of nonlegal affiliates, ranging in specialization from energy and environmental consulting to healthcare consulting and management, from educational consulting to economic research and legislative services. See Phyllis Weiss Haserot, Multiprofessional Mixes Are Proliferating, NAT'L. L. J., Oct. 19, 1987, at 16.
5. The process by which the ABA's House of Delegates ultimately adopted the current Rule 5.7, during its Midyear Meeting in early 1994, was quite tortuous. At its Annual Meeting in 1991, the House of Delegates, specifically rejecting the recommendations of the ABA's Standing Committee on Ethics and Professional Responsibility, narrowly adopted a version of Rule 5.7 that purported to prohibit lawyers from engaging in any ancillary business activities outside of their law firms. See SELECTED STATUTES, RULES AND STANDARDS ON THE LEGAL PROFESSION 97 (John S. Dzienkowski & Grace Whittenburg eds., West 1994) (reprinting former version of Rule 5.7). That action led to a wave of protest around the country that resulted in the repeal of the prohibitory version of the rule at the 1992 Annual Meeting of the House of Delegates, again by a narrow vote. Id. In November 1992, the Chair of the House of Delegates appointed a special Committee on Ancillary Business to attempt to construct an appropriate ABA position on the controversial issue. The result was the current version of Rule 5.7 that was, as noted above, adopted in early 1994. Id.
6. The process by which the ABA's House of Delegates ultimately adopted the current Rule 5.7, during its Midyear Meeting in early 1994, was quite tortuous. At its Annual Meeting in 1991, the House of Delegates, specifically rejecting the recommendations of the ABA's Standing Committee on Ethics and Professional Responsibility, narrowly adopted a version of Rule 5.7 that purported to prohibit lawyers from engaging in any ancillary business activities outside of their law firms. See SELECTED STATUTES, RULES AND STANDARDS ON THE LEGAL PROFESSION 97 (John S. Dzienkowski & Grace Whittenburg eds., West 1994) (reprinting former version of Rule 5.7). That action led to a wave of protest around the country that resulted in the repeal of the prohibitory version of the rule at the 1992 Annual Meeting of the House of Delegates, again by a narrow vote. Id. In November 1992, the Chair of the House of Delegates appointed a special Committee on Ancillary Business to attempt to construct an appropriate ABA position on the controversial issue. The result was the current version of Rule 5.7 that was, as noted above, adopted in early 1994. Id.
7. The process by which the ABA's House of Delegates ultimately adopted the current Rule 5.7, during its Midyear Meeting in early 1994, was quite tortuous. At its Annual Meeting in 1991, the House of Delegates, specifically rejecting the recommendations of the ABA's Standing Committee on Ethics and Professional Responsibility, narrowly adopted a version of Rule 5.7 that purported to prohibit lawyers from engaging in any ancillary business activities outside of their law firms. See SELECTED STATUTES, RULES AND STANDARDS ON THE LEGAL PROFESSION 97 (John S. Dzienkowski & Grace Whittenburg eds., West 1994) (reprinting former version of Rule 5.7). That action led to a wave of protest around the country that resulted in the repeal of the prohibitory version of the rule at the 1992 Annual Meeting of the House of Delegates, again by a narrow vote. Id. In November 1992, the Chair of the House of Delegates appointed a special Committee on Ancillary Business to attempt to construct an appropriate ABA position on the controversial issue. The result was the current version of Rule 5.7 that was, as noted above, adopted in early 1994. Id.
8. For purposes of this discussion, I use the term "multidisciplinary practice" to refer to a structure in which lawyers and nonlawyers join together to offer a combination of legal and non-legal services through a single entity, typically with some sharing of fees and ownership interests. This definition is essentially the same as that used by the ABA's Commission on Multidisciplinary Practice (the "MDP Commission") in its August 1999 Report to the House of Delegates, which defined 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. . . . [An MDP] 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. ABA Commission on Multidisciplinary Practice, MDP Final Report (visited Dec. 28, 1999) .
9. ABA Special Coordinating Committee on Professionalism, Working Group, Final Report on the Ancillary Business Activities of Lawyers and Law Firms 10 (Nov. 30, 1990). The following observations are based, in part, on the author's participation in the ABA Special Coordinating Committee, Working Group.
10. Id.
11. Id. at 9.
12. Id. at 2-3.
13. Id. at 5.
14. Id.
15. Id. at 5 & n.10.
16. See United Transp. Union v. State Bar of Michigan, 401 U.S. 576, 585 (1971) (holding right to seek collective legal action through cooperative union of workers is protected by First and Fourteenth Amendments); Brotherhood of R.R. Trainmen v. Virginia State Bar, 377 U.S. 1, 8 (1964) (holding union's program of advising injured workers to seek legal advice and making referrals to counsel is protected under First and Fourteenth Amendments); NAACP v. Button, 371 U.S. 415, 437 (1963) (holding Virginia law prohibiting solicitation of business for attorney violated First and Fourteenth Amendments).
17. See Unauthorized Practice of Law Committee v. Parsons Tech., Inc., No. 3:97-CV-2859-H, 1999 U.S. Dist. LEXIS 813, at *18 (N.D. Tex. Jan. 22, 1999) (holding software program providing legal forms to users violates state statute prohibiting unauthorized practice of law). This case was subsequently vacated and remanded when the Texas legislature amended its statute to provide that the practice of law does not include "the design, creation, publication. . . display or sale. . . [of] computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney." Unauthorized Practice of Law Committee v. Parson Tech., Inc., 179 F3d 956, 956 (5th Cir. 1999).
18. ABA Section of Litigation, Report with Recommendations to the House of Delegates, 1991 Annual Meeting, Report, at 37 (1991).
19. Jim Kelly, Big Five: Long Arm of the Law, FIN. TIMES, Sept. 9, 1999, at 29, available in .
20. See American Corporate Counsel Association, Multidisciplinary Practice (visited Dec. 28, 1999) .
21. See Letter from Wayne Moore, J.D., Director, Legal Advocacy Group, AARP, to the Commission on Multidisciplinary Practice, Center for Professional Responsibility, American Bar Association (July 27, 1999) (visited Dec. 28, 1999) .
22. See Letter from the Consumer Alliance Community to the MDP Commission (July 15, 1999) (visited Dec. 28, 1999) .
23. See John S. Skilton, Chair, ABA Standing Committee on the Delivery of Legal Services, Written Testimony before the MDP Commission (Aug. 8, 1999) (visited Dec. 28, 1999) .
24. See Larry Ramirez, Chair, General Practice, Solo and Small Firm Section, Oral Remarks before the MDP Commission (Feb. 1999) (visited Dec. 28, 1999) .
25. See, e.g., Charles F. Robinson, Solo Practitioner, Oral Remarks before the MDP Commission (Feb. 1999) (visited Dec. 28, 1999) ; Philip Matthew Stinson, Sr., Statement Before the MDP Commission (Oct. 9, 1999) (visited Dec. 28, 1999) .
26. See, e.g., Charles F. Robinson, Solo Practitioner, Oral Remarks before the MDP Commission (Feb. 1999) (visited Dec. 28, 1999) ; Philip Matthew Stinson, Sr., Statement Before the MDP Commission (Oct. 9, 1999) (visited Dec. 28, 1999) .
27. The Consumer Alliance, Written Remarks to the MDP Commission (Mar. 31, 1999) (visited Dec. 28, 1999) .
28. ABA Commission on Multidisciplinary Practice, MDP Final Report, Appendix C, Reporter's Notes (visited Dec. 28, 1999) .
29. Note I said the public interest and not the interests of the legal profession.
30. Letter from Robert W. Gordon, Professor of Law, Yale Law School, to Sherwin P. Simmons, Esq., Chair, MDP Commission (May 21, 1999) (visited Dec. 28, 1999) [hereinafter Gordon letter].
31. Id.
32. See MODEL RULES OF PROFESSIONAL CONDUCT Rule 5.4 (1999).
33. Geoffrey C. Hazard, Jr., Lawyers and Accountants Must Make It Work, NAT'L L.J., Jan. 11, 1999, at A28.
34. Gordon letter, supra note 27.
35. I am, of course, aware that the bar from time to time attempts to assert its control over such activities through its enforcement of prohibitions on the unauthorized practice of law. However, such efforts have been largely ineffective, both because of limited bar resources and because of numerous adverse court decisions. Moreover, it is somewhat anomalous that the bar should rely on unauthorized practice restrictions - which were, after all, designed to protect the consuming public from lay practitioners and others deemed incompetent to practice - to regulate persons trained as lawyers (many of whom are extremely well qualified and experienced) but who elect to offer their services in ways not sanctioned by the bar's highly restrictive organizational rules.
36. ABA Commission on Multidisciplinary Practice, MDP Final Report to the House of Delegates, Recommendation (visited Dec. 28, 1999) .