Law firms to move into the brave new world of MDPs

Sue Allen examines how linked partnerships could change the landscape of legal practice

After years of waiting, it looks as if the Law Society will finally take its first tentative steps towards allowing multi-disciplinary partnerships (MDPs) this year.

The first model to get off the blocks will be 'legal practice plus'.

In December, Society President Michael Napier went as far as to say that he hoped firms would be able to opt for legal practice plus before the end of 2001.

The legal practice plus model would see non-solicitors joining firms as partners and entering into a contract with the Law Society, agreeing to be bound by its professional rules (see [2000] Gazette, 15 December, 1).

Paul Venton, chairman of the Law Society's MDP working party, says that although questions surrounding the preservation of legal professional privilege remains a challenge, he hopes they will not 'derail the process'.

Linked partnerships, a second scheme devised as an interim step towards full MDPs, is stalled, pending a full review of the Law Society's rules, specifically that on fee-sharing.

Linked partnerships would build on the existing alliance model, allowing firms to link with other professional firms, for example accountants, and to enter a fee for the first time.

Alison Crawley, the Law Society's head of professional ethics, says she hopes a solution can be found to deal with fee-sharing so that linked partnerships can come in at the same time as legal practice plus.

How far the Society goes with changing the rules could, in effect, change the face of legal practice.

The Law Society could do away with the rules altogether, which would, for example, allow Sir Richard Branson to take a franchise on high-street firms branded under Virgin Law, or the changes could be less radical and allow fee-sharing just with professional firms, she explains.

Mr Venton says linked partnerships raise more complicated questions, such as passive investment.

Banks and accountants could effectively own the businesses, which brings into question how solicitors can be ring-fenced to ensure the independent provision of legal services.As the Law Society takes its first steps towards allowing MDPs, the same cannot be said of the rest of Europe, where a more restrictive attitude prevails, as indicated by the generally negative disposition of the Council of Bars and Law Societies of Europe.

But pressures are all around: the European Court of Justice will this year hear a challenge mounted by Big Five accountancy firms PricewaterhouseCoopers and Arthur Andersen against the Dutch Bar's ban on MDPs.

Then there is interest from regulators, such as the Office of Fair Trading and even the European Commission.

Above them is the World Trade Organisation, currently investigating cross-border legal services.

A ban on MDPs must be shown to be proportionate to achieve justifiable policy goals.

Elsewhere, Canada and Australia will push forward with MDPs while the American Bar Association - which voted against them last year - is likely to have to revisit the decision, perhaps as early as this summer.