Euro block on MDPs with accountants

By Neil RoseA ban on multi-disciplinary partnerships (MDPs) between lawyers and accountants is anti-competitive but can be justified, as there is a 'certain incompatibility' between the duties of the two, the European Court of Justice (ECJ) ruled in a preliminary decision this week.In a blow to the ambitions of the Big Five accountants, Advocate-General Philippe Lger said the 'very essence of the legal profession may preclude the establishment of a community of financial interests' with accountants.However, it is for national courts to decide whether the unique obligations of lawyers - 'independence, respect for professional secrecy and the need to avoid conflicts of interest' - justify a ban.The decision of the Advocate-General is not binding on the ECJ when it comes to try the case, but it is unusual for the court to come to a different conclusion.The case went to the ECJ on a referral from the Netherlands about whether European competition law should be applied to the professions, with reference to the Dutch Bar's ban on MDPs, which was challenged by both Arthur Andersen and PricewaterhouseCoopers.While recognising that a ban on MDPs has 'appreciable negative effects on competition', Mr Lger said the application of competition rules to authorise MDPs 'would compromise the obligations which are peculiar to the legal profession'.Given the 'certain incompatibility' between lawyers' advisory activities and accountants' supervisory activities, the Advocate-General said the restriction on competition caused by the Dutch ban on MDPs is lawful, adding that other forms of co-operation between the two professions remain possible.Tony Williams, head of Arthur Andersen's associated firm Garretts, said the ruling was encouraging, as he was confident a UK court could be satisfied by MDP structures which protect lawyers.

'The test [to justify the ban] is a high one which very few Bars will be able to satisfy,' he said.

The Law Society is moving towards allowing MDPs, and has proposed bringing non-lawyers into partnerships as a first step, so long as they do not outnumber the solicitor partners.

The recent Office of Fair Trading report on the professions also expressed support for MDPs.Law Society Vice-President David McIntosh said: 'While the Law Society remains in favour of finding a way forward for MDPs, it always appreciated that the duties of lawyers to clients and society in general should not be compromised and today's decision endorses the step-by-step approach of the Society to MDPs.'