Breaking NewsLaw.com and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.

 
X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In a move that’s bound to generate heated debate, the State Bar of Georgia soon may lift its ban on lawyer-nonlawyer fee-splitting. Allowing multidisciplinary practices is inevitable, says Linda A. Klein, chairwoman of the Bar’s MDP committee and former Bar president. A Bar committee recommendation would allow one-stop shopping for clients wanting, for example, legal and financial consulting services. But it would seem to offer little to accountants, whose potential relationships with law firms have been the focus of most discussions about MDPs. The MDP report recommends that the Georgia Rules of Professional Conduct be amended to allow lawyers and nonlawyer professionals to share fees in an MDP that provides legal services. RECOMMENDATIONS The report also recommends: � That attorneys own and control the MDP. � That only licensed lawyers practice law in the MDP. � That MDP lawyers be vicariously liable for nonlawyers who assist in providing legal services within the MDP; those nonlawyers also must comply with Georgia’s Rules of Professional Conduct. � That clients of the MDP be protected by the conflict of interest rules that protect the lawyers’ clients. � That funds for all of the MDP’s clients held in fiduciary capacity be protected. The report suggests prohibiting the MDP from: � Offering legal and audit services to the same client. � Having passive investors. NEW YORK FIRST TO REGULATE Last August, the American Bar Association issued a recommendation that all state bar associations address MDPs. Almost a year before the ABA’s recommendation, then-State Bar of Georgia President Rudolph N. Patterson appointed an MDP committee. New York became the first state to regulate MDPs last week when the state’s Appellate Divisions established rules for business relationships between lawyers and nonlawyers. Georgia could be the second state to regulate MDPs depending on how quickly its process moves. The proposed amendments must pass muster with the Bar’s executive committee and Board of Governors as well as the Georgia Supreme Court. First, the State Bar’s rules and procedures committee will prepare rules that incorporate the MDP committee’s report. The rules committee then will submit its proposal to the Bar’s executive committee in two or three months, says Kilpatrick Stockton partner Anthony B. Askew, chairman of the rules committee and vice-chairman of the MDP committee. If the Bar’s executive committee approves the proposed changes, the Bar’s board of governors will then vote on the rules. Askew estimates that the issue would be addressed in at least three board meetings. The changes then would be reviewed by the Georgia Supreme Court. Currently, the Bar’s Rules of Professional Conduct don’t address business alliances between attorneys and nonattorneys or directly regulate the alliances. But Rule 5.4 prevents the creation of MDPs by specifying that lawyers cannot form partnerships with nonlawyers if any of the partnership’s activities consist of practicing law. MDP lore traditionally has held that tax lawyers would be more affected by the advance of nonlawyer partners than any other legal discipline. But N. Jerold Cohen, an Atlanta-based partner of Sutherland Asbill & Brennan and former chief tax counsel to the IRS, questions whether that’s true. The Bar only became interested in MDPs when the Big Five accounting firms moved beyond tax work and into other such areas as litigation consulting, estate planning, mergers and acquisitions, and document drafting, he says. EFFECT ON ACCOUNTING FIRMS Of the Bar committee’s seven recommendations, three are incompatible with Big Five accounting firms, according to Cohen. The first needs no explanation, he says: that the MDP be majority-owned and controlled by lawyers. The second is that an MDP not offer legal and audit services to the same client. Cohen says that some — not all — accounting firms now limit themselves from offering litigation and audit services to the same client. Broadening the prohibition to legal services — which, Cohen points out, the committee’s proposal never defines — could hamper an accounting firm’s business. Finally, the proposal provides that all MDP clients be protected by the same conflict of interest rules as the lawyers’ clients. “That’s the thing accountants won’t live with,” says Cohen. He uses his experience during a panel discussion to illustrate why. Cohen says he proposed this hypothetical to a group of accountants: Suppose your Atlanta office is doing litigation support in a case against BellSouth, and your New York office wants to sell tax products to BellSouth. Is there a conflict? No, said the accountants. But lawyers’ rules prohibit them from advising a client to whom they are adverse, says Cohen, adding, “There’s not a law firm in the country that wouldn’t feel that’s a conflict.” The issue is, either accountants wouldn’t want to limit their practices by bowing to attorneys’ rules, or they’d form MDPs, but would ignore the rules. Cohen says enforcement is likely to be the biggest problem the Georgia MDP rules would face, if they pass. By way of example, he mentions a much-publicized Texas case, where the state’s Bar sued accounting and consulting firm Arthur Andersen, now Andersen, for the unauthorized practice of law. The firm “allegedly prepared legal documents, formed and registered companies, prepared legal tax opinions on behalf of clients, and hired lawyers,” according to a written statement from Arthur Andersen. While the case was pending, Jean Rothbarth, managing director of firm tax standards for Arthur Andersen, said that the firm had filed petitions on behalf of clients. But, she pointed out, accountants and other nonlawyers are allowed to practice before the tax court. According to Cohen, the Bar ran out of money to pursue the case and asked large local firms to bankroll the litigation. The lawyers refused because accounting firms were on their client rosters, he says. Unable to find funding, the Bar dropped the case, Cohen says. The Bar can make rules governing accountants, but “the issue is enforcement,” he says. “The question is whether the Bar is a patsy or a sleeping elephant that’s going to rise up.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.