REPORT OF THE ORANGE COUNTY BAR ASSOCIATION
TASK FORCE ON MULTIDISCIPLINARY PRACTICE

I. INTRODUCTION

The original assignment of the Task Force was to look at the growing phenomenon of multidisciplinary firms (primarily in the accounting field) branching out into the performance of legal services in European countries and assist in determining what position, if any, the OCBA should take on the building pressures to introduce such multidisciplinary practices in the United States. To some extent, the American Bar Association Commission on Multidisciplinary Practice (the "Commission") stole our thunder in its recent Report for the consideration of the House of Delegates at the upcoming August 1999 meeting. That Report recommends that multidisciplinary practice be allowed in the United States with certain safeguards. The advent of the Report caused a shift in the Task Force’s focus from the broad and conceptual issues to essentially the question of whether to give the Commission’s Report a thumbs up or thumbs down.

II. SUMMARY OF THE COMMISSION’S REPORT

It is not an understatement to state that the Report recommends an abrupt departure from the way law has always been practiced in this country. The issues under consideration represent, in the words of one submittor, an example of the tug and pull between professional independence and the perceived needs of the market place. The Commission’s recommendations give the nod to the market place.

The Report’s drafters believe that what they refer to as the "core values of the legal profession" can be maintained within a multidisplinary structure with certain recommended safeguards. The core values identified are the independence of professional judgment, the protection of confidential client information and loyalty to the client through avoidance of conflicts of interest.

Perhaps the most startling departure is that through a multidisciplinary practice (MDP) a lawyer would be permitted to share legal fees with a non-lawyer as a MDP by definition would be made up of persons from a variety of disciplines.

If the House of Delegates moves to accept the Report, then the ABA Model Rules of Professional Conduct would have to be amended and then those rules would have to be adopted in the individual states. It would have no effect in California until and unless all rules of professional conduct were substantially amended to conform to the ABA Model Rules.

The ABA views the issues of such "extreme importance" that it sent the members of the House of Delegates the Commission’s Report well in advance of the regular mailing of House materials.

III. OPINION OF THIS TASK FORCE

This Task Force has neither the time nor the resources to engage in the type of investigation performed by the Commission with hearings across the country so that its analysis could deservedly be described as superficial. Time and resource constraints notwithstanding, the Task Force believes that the Commission’s recommendations should be viewed with cautious skepticism and more consideration to the ramifications should be given before the concepts can be embraced.

IV. BASIS FOR THE TASK FORCE’S OPINION

The Report’s lack of clarity and guidance caused this Task Force to raise questions instead of reaching any recommendations or conclusions. With such a major departure from the way law is practiced, the Commission could have or should have provided, among other things, a clearer definition of a MDP, any limitations on who can form MDPs, and better thought to client confidentiality and conflicts of interest instead of stating that these issues need more study.

By raising the questions below, the Task Force believes that appropriate dialogue will follow by the OCBA Board.

A. Who can be part of MDPs?

Absent any clear limitations on who can form MDPs, the territory is wide open. This leads to questionable combinations of professions which could result in corruption and poor legal services to consumers.

Will an attorney be allowed to form a MDP with a doctor and a chiropractor and share in the fees generated by a personal injury client? What will prevent the attorney asking for or the doctor recommending a course of treatment which may be unnecessary because the fees generated will benefit the MDP? Can the doctor in the MDP properly serve as an expert witness in a case when a positive outcome will financially benefit the MDP and ultimately the doctor and attorney personally? Is it enough to state that the alliance can affect the credibility of the expert witness and to let the jury decide?

Will an estate attorney be allowed to form a MDP with a tax planner, certified financial planner and bank, which is consistent with "one stop shopping" but could lead to the bilking of the client for fees?

What will prevent a corporate giant such as Microsoft from forming a MDP with its legal department and then offering the MDP’s legal services for patent, copyright and other intellectual property matters to other high technology companies? What would happen to client confidentiality in such a scenario?

Is it possible for an attorney to form a MDP with JAMS or with another ADR organization where the attorney sends all cases to JAMS in exchange for a fee. Perhaps the attorney insists that a clause be included in any contract which requires dispute resolution by JAMS. Must the relationship be disclosed to the client?

Can a criminal defense attorney form a MDP with a bail bonds group and share in fees generated by the bond issuance? Then, what will cause the attorney to seek a lower bond when a higher bond could benefit the MDP financially?

Will the MDP be permitted to take cases on contingency where all the professionals and experts on the case will be from the same MDP? What will prevent the bringing of unmeritorious cases?

B. What is the Potential Impact on the Exercise of Independent Judgment?

The opportunities for financial gain in some of the above examples could adversely impact the attorney’s exercise of independent judgment when rendering legal services to clients. Profitability could be a driving force instead of the attorney delivering legal services that are warranted and are necessary. Moreover, it cannot be assumed that the attorney will always be an equal "partner" in the MDP. The doctor, the banker or the financial planner could be the driving force or rainmaker of the enterprise making the attorney the subject of that person’s direction. Will the attorney be allowed to exercise independent judgment or be fired for refusing to follow the boss’s instructions? Even with rules of professional conduct which might preserve independent judgment, in the real world, will an attorney then risk unemployment based on ethical concerns?

C. Can Client Confidentiality Be Protected?

The Task Force is unable to reconcile how various professions can combine and properly preserve client confidentiality. In the example cited by the Commission, how will the auditor in a MDP keep the confidences of the client who has disclosed confidential information to the MDP attorney? How do the differing roles of auditor and attorney mesh because they serve such distinct roles? It is easy to say that such issues need further study, but the fundamental differences on the rules of disclosure of various professions will be difficult to reconcile.

D. How Will Legal Services Be Delivered?

The Commission’s Report states that the delivery of legal services by a MDP will be through attorneys only. What will happen to the traditional roles that paralegals play in our industry? From a practical standpoint, how will non-lawyers be prevented from delivering legal services in a MDP? There are no guarantees that only the lawyer will render the legal services. Reality and practicality dictate that there will be many non-lawyers in the MDP that will be performing legal services in some form.

E. Who Certifies the MDP?

The Commission proposes that each MDP must be certified and that such certification must be approved by the highest court in the jurisdiction. Which high court will have sufficient time or energy to review and approve such certifications?

Who will administer and enforce the rules of professional responsibility on MDPs? Can you imagine the havoc on our State Bar in terms of funding and administration?

Who comprises any certification committee when various professional disciplines can be involved? Do you need a professional on the committee in the discipline with which the attorney is seeking to form a MDP? Who pays for the administration?

F. Will There Be Adequate Protection Against Conflicts of Interest?

The concern over conflicts of interest is based on differences between the rules on an attorney's obligation of loyalty to the client and the ethics rules of other professions which might be combined with a legal practice in the MDP. This might result in the dilution of an attorney's obligation of loyalty to the client.

Any attorney who provides legal services through an MDP must be subject to the rules of professional conduct on avoiding conflicts of interest and the representation of adverse interests. The consequences of any violation of the rules should be attorney disqualification and/or suitable discipline.

While most general rules on avoiding conflicts of interests and the representation of adverse interests are fairly well defined by jurisdiction, it would benefit practitioners to have access to advisory opinions on potential scenarios. For example, while it is clear that one MDP client who is sued by another MDP client cannot be represented by the MDP attorney, does the same rule apply where an accounting only client is sued and the MDP is asked to represent the adverse party on an unrelated legal transactional matter? Could a family law attorney represent one spouse in a divorce proceeding against the other when both were previously counseled by a MDP marriage counselor? Should an attorney be allowed to continue the representation of one spouse against another spouse who was previously not a marriage counseling client where the latter seeks the services of the MDP marriage counselor for either separate counseling or for reconciliation purposes? While there are numerous other scenarios which will arise if MDPs are allowed to form, there should be a source of either advisory opinions or a hot line specifically designed for addressing such issues.

G. Will Multi-State Practice of the Law Be Permitted?

Large MDPs will cross state boundaries and will form national practice groups. What will prevent the multi-state practice of law under the banner of the MDP? The MDPs can grow into a huge number and the attorneys operating under a MDP banner may not even be licensed to practice in the jurisdiction where services are rendered. Will the result be the end to the state bar associations?

V. CONCLUSION

The Task Force is unable to reach a concrete conclusion of a thumbs up or thumbs down on the Commission’s recommendation and MDPs. We generally lean towards a thumbs down because of the many unanswered questions raised by the recommendation.

However, we did reach one unanimous conclusion. California has remained independent of the ABA in terms of its own rules of professional responsibility. The case should be no different in the face of the current movement of allowing MDPs. The OCBA could consider focusing on a strong recommendation to the California State Bar to remain independent and not allow MDPs until questions and issues can be adequately addressed. Let some other jurisdiction undertake the risks associated with MDP formation and be the guinea pig. The consumers of legal services in California and the attorneys here will benefit from that approach in the long run.

Respectfully submitted,

The OCBA Task Force on Multidisciplinary Practice

Frederic I. Albert
Todd D. Irby
Richard W. Millar, Jr.
Kevin K. Takeuchi