Academic journal article Journal of Accountancy

ABA Gives Thumbs Down to Lawyers' Fee-Sharing

Academic journal article Journal of Accountancy

ABA Gives Thumbs Down to Lawyers' Fee-Sharing

Article excerpt

After two years of research and debate, the American Bar Association (ABA) voted in July to reject a proposal that lawyers be allowed to form multidisciplinary practices (MDPs). This continued the group's long-standing ban on lawyers' sharing of fees with other professionals.

Such arrangements are increasingly common in Europe, however, where MDPs have met market demands by closely integrating legal services with those of nonlawyers. Nevertheless, despite reportedly strong client interest in the United States, the ABA rebuff has dimmed the prospects for MDPs here. Reflecting the finality of its decision, the ABA discharged the special commission it had convened to study them.

The issue is now being examined at the state level, where the practice of law is actually regulated. However, because many states base their standards on rules issued by the ABA, its move has more than symbolic significance.

The vote, taken during the ABA annual meeting, was far from close, with 75% of the 421 members of the ABA house of delegates casting their ballots for a resolution against MDPs. Delegates from Florida, Illinois, New Jersey, New York and Ohio sponsored the resolution.

Ethical aspects of the controversy were a key issue for the majority. "This was a victory for those who want to preserve the core values of the legal profession," said Illinois delegate Gary T. Johnson, a partner in the Chicago law firm of Jones, Day, Reavis & Pogue. Johnson said that by combining lawyers and other professionals "under the same roof," MDPs would make it difficult to avoid conflicts of interest and preserve client confidentiality--fundamental responsibilities in the lawyer's code of professional conduct.

Others, though, saw the vote as an attempt to maintain the status quo by stifling innovation. Jeffrey Peck, managing director of Arthur Andersen's office of government affairs in Washington, D.C., characterized the ABA's action as "clearly anti-competitive and monopolistic."

Against the tide?

The rejected proposal had originated with the commission on multidisciplinary practice, which the ABA appointed in 1998 to study MDPs. Its research, published last year, showed individual consumers and corporate clients want integrated teams of lawyers, accountants and financial planners to help them address challenges posed by new technologies, the globalization of markets and increased governmental regulation. (See "E&Y First of Big Five in the U. …

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