US states in surprise move towards allowing multi-disciplinary partnerships

SERVICES: Supreme Court of Minnesota and District of Columbia debate MDPs post-Enron

Multi-disciplinary partnerships (MDPs) have made a surprise return to the agenda in the post-Enron US, with two states set to consider whether they will be the first to allow MDPs.

The Supreme Court of Minnesota will this month hear a petition from the Minnesota State Bar Association, which would allow MDPs so long as lawyers retain majority control.

And the Bar Association of the District of Columbia (DC), which covers Washington, is to file a petition shortly with its Court of Appeals to allow MDPs under certain conditions.

In the US, state courts set practice rules for the local profession.

MDPs are currently banned everywhere, although DC allows law firms to have non-lawyer partners so long as they are only there to support the supply of legal services.

The Minnesota proposal would also require lawyers in MDPs to obtain written confirmation from each member of the MDP that there will be no interference with the lawyers' independence of judgement or the lawyer/client relationship.

In addition, it would impute conflicts firm-wide by treating clients of non-lawyer professionals as clients of the firm's lawyers.

Rebecca Moos, chairwoman of the Minnesota bar's MDP task force, conceded that Enron 'does present some challenges in terms of people's perceptions'.

However, she argued that the Enron situation was not relevant, noting that the law firms involved in the scandal are traditional practices.

She said the proposed changes are 'quite conservative' and would prohibit those relationships where the differing disclosure duties of lawyers and accountants could potentially lead to conflict.

The DC model allowing broader MDPs has four key features: clients and potential clients are fully informed of the fact of the collaboration between lawyers and non-lawyers, and its possible consequences; lawyers retain their independence; lawyers and their legal practice remain subject to legal professional conduct rules, especially those related to conflicts, confidentiality, and the provision of pro bono services; and lawyers in MDPs can effectively be held responsible for compliance with those rules.

Charles Buffon, chairman of the DC Bar's MDP task force, predicted that the US Securities and Exchange Commission would ban auditors from joining MDPs, adding that there was nothing in Enron that militated against MDPs with business consultants such as Accenture.

He argued that there was no 'principled reason why the public and businesses shouldn't be able to make the choice' between traditional law firms and MDPs.

In 2000, the American Bar Association - which has no regulatory power - rejected MDPs, but eight other state bars have approved pro-MDP agendas.

The most prominent supporter is the Californian State Bar.

In England and Wales, Law Society plans to relax the ban on MDPs have been held up by a lack of parliamentary time to effect necessary changes.

Neil Rose