Magazine article The CPA Journal

MDP Update: The Empire State Strikes Back

Magazine article The CPA Journal

MDP Update: The Empire State Strikes Back

Article excerpt

When a recent headline announced "New York Adopts Multidisciplinary Practice Rules, it appeared that a big break in the movement toward MDPs that provide legal services in the U.S. had finally occurred. Unfortunately, appearances can be deceiving. True, on November 1, New York State will become the first U.S. jurisdiction to officially address multidisciplinary practice by lawyers. But that fact will be no cause for celebration among the Big Five and other ardent MDP supporters. Because New York's MDP rules will likely establish the pattern for other states, it is important that accounting professionals understand the background of this development.

The ABA awd New York

In 1998, the American Bar Association (ABA) formed a blue-ribbon commission to study legal MDPs in the United States. After much study and many hearings, the MDP Commission developed a proposal that, among other things, would have permitted accounting firms to provide legal services by directly employing lawyers.

Meanwhile, opposition to the MDP proposal developed so rapidly that by the time of the 1999 ABA convention, the MDP Commission was essentially told to scrap its "accountant-friendly" proposal and go back to the drawing board.

While the MDP Commission was attempting to rewrite its MDP proposal, the New York State Bar Association led the opposition to accountant-- friendly MDPs by issuing a 388-page MDP study dubbed the MacCrate Report. The MacCrate Report lambasted the entire accountant-friendly MDP concept and concluded that: "Multidisciplinary practice between lawyers and nonlawyers is incompatible with the core values of the legal profession."

By the time the MDP Commission's second proposal reached the 2000 ABA convention, the opposition of NewYork and other states to any changes regarding MDPs was so overwhelming that not only was its proposal soundly defeated, the MDP Commission was disbanded and sent packing.

Which leads to the summer of 2001: Based on the same MacCrate Report, New York's highest courts approved changes to professional ethics rules that will permit NewYork lawyers to be the first to officially enter into "cooperative business arrangements" with nonlawyers.

When Is an MDP Not an MDP?

The reason that New York's MDP rules appear to simultaneously condemn and sanction MDPs has to do with the difference between an accountant-friendly MDP and a lawyer-- friendly MDP To many accountants, MDP means a fully integrated merger of various professionals under one roof. Outside of the United States, the Big Five extended the MDP concept to include legal services by "sponsoring" law firms or by directly hiring lawyers to work side by side with other professionals. …

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