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In January of last year, Coral Springs, Fla., lawyer John Hume filed a complaint against Thomas M. Cryan, accusing him of violating Florida Bar rules by providing legal services to outside clients while employed by the Andersen accounting firm office in Burke, Va. “Thomas M. Cryan is engaged in fee splitting, [which is] clearly prohibited,” wrote Hume, a member of the Bar’s board of governors, in a letter dated Jan. 19, 2000. “I am afraid that it is incumbent upon the Florida Bar … to complete the investigation and, if a violation is found, to prosecute the violator.” Earlier this year, the complaint went before the Bar grievance committee charged with investigating possible violations of Bar rules against so-called multidisciplinary practice (MDP) — lawyers and nonlawyers partnering and splitting fees for providing legal services to the public. The Bar launched the committee in February. So far, Hume’s complaint is the only one the committee has received or handled. The Florida Bar, the American Bar Association and every state bar in the United States have strict rules against MDPs; only the District of Columbia Bar allows MDPs. These activities are prohibited under Rule 4-5.4 of the Rules Regulating the Florida Bar. The ostensible reason for such rules is to protect the legal profession’s “core values,” including attorney-client confidentiality, and the best interests of clients. Last year, both the Florida Bar and the ABA rejected proposals to let attorneys provide legal and nonlegal services through partnerships with nonlawyers. Yet in the last few years, the Big Five accounting firms, including Andersen, have stepped up their hiring of lawyers as they’ve rapidly expanded their services beyond their core accounting and auditing lines. Lawyers working for the accounting giants provide various types of law-related consulting, in fields including intellectual property, tax and financial planning, lobbying; regulatory compliance, due diligence for mergers and acquisitions, and litigation support. While the Big Five invariably insist that the lawyers they hire do not provide “legal services” to clients, many attorneys — including some who have worked for accounting firms — say that lawyers employed by accounting firms frequently provide law-related services which are indistinguishable from what law firms offer. Given all this, the lack of activity of the Bar’s anti-MDP enforcement committee bodes ill for the Bar’s efforts to halt the incursion of accounting firms and other nonlawyer professionals onto the legal profession’s tradition turf. Some Bar officials say the policing effort is a nonstarter because neither the public nor Bar members have any appetite to turn in offenders. Plus, even legal ethics experts at the Florida Bar and the ABA say the difference between what lawyers and accounting firm consultants do in many cases has become very murky. Many lawyers see the competition from the big accounting firms as too powerful — and the appeal of affiliations with them and other nonlawyer professionals as too attractive to continue to fight against MDPs. Starting next month, law firms in New York state will be allowed to form “strategic alliances” through contracts with accounting firms and other nonlawyer professionals, as long as lawyers remain in full control of legal services. That worries bar leaders, including some who favor greater flexibility in the rules. Sherwin Simmons, chairman of the tax group at Steel Hector & Davis in Miami, who formerly chaired the ABA’s commission on multidisciplinary practice, predicts that many bar groups are poised to follow New York. But he frets that “if lawyers lose control of their operations, we are going to have big-time problems.” SKIRTING THE EDGE There are no statistics on how many lawyers are employed by accounting firms in the United States, but some observers put the number in the thousands. Mike Boyle, director of forensic accounting and litigation services for KPMG in Miami, says he has lawyers on his staff who conduct accounting investigations and consult with clients on regulatory compliance issues dealing with tax law, health care law, and other areas. These staff attorneys also give advice to banks on guarding against money laundering schemes, and provide expert testimony in a variety of litigation matters. He says he doesn’t know how many lawyers KPMG employs overall. Boyle stresses that while attorneys bring valuable skills and experience to KPMG, they don’t practice law there or hold themselves out as attorneys. Legal work, he says, is always referred to outside counsel. Still, he refused to define what KPMG considers a “legal service.” Says Boyle: “I’m reluctant to get into specific terms. No matter what definition I gave you, someone would find fault with it.” But other knowledgeable sources say lawyers who work for accounting firms, at the very least, are skirting the edge of practicing law. One Florida lawyer, who spoke on condition of anonymity, says she worked for KPMG in 1998 after graduating from law school. While there, she conducted research for tax planning and drafted memos suggesting how those clients’ plans should be crafted. She also gave clients advice directly on tax compliance issues. After working at KPMG for less than one year, she moved to a major law firm in Florida because she wanted more control over the tax plans she crafted. She says there’s little difference between some of the work she did at KPMG and some of the services she provides for the law firm. “A lot of times the research we did, the memos we drafted and the compliance advice we offered was the same work that’s done in law firms,” she says. “There is a very fine line in the way people interpret what legal work is.” Another attorney who worked in the Miami office of a large accounting firm says she was constantly running up against the boundaries of legal practice in designing tax products for clients. She says the firm’s policy was to hire outside law firms to put the finishing legal touches on the tax packages — even though she could have done it herself. One problem with this, however, was avoiding giving away valuable trade secrets to outside lawyers who were potential competitors. Martin Press, chairman of Broad and Cassel’s taxation practice group in Miami, agrees that the boundaries are tenuous. He worked at three large accounting firms in the late ’60s and early ’70s. Armed with both law and accounting degrees, Press interpreted tax law, gave accounting advice, and crafted tax shelters for individual and corporate clients. He says he never represented clients in tax court or prepared legal documents. Clients, he says, were referred to an outside attorney for those services. Looking back, Press says much of the work he did at the accounting firms was identical to what he now does at a law firm. “We gave advice, just like lawyers,” he says. “It was the same.” Terry Russell, a partner at Ruden McClosky Smith Schuster & Russell in Fort Lauderdale and president of the Florida Bar, says it’s permissible for lawyers working at accounting firms to offer estate planning and tax advice. And he says he has no basis for assuming that just because so many lawyers work at accounting firms in Florida, they must be practicing law “beyond the allowed scope.” But if they are, he vows, the Bar will go after them. “To the extent we hear complaints,” he says, “we’ll prosecute them.” LAW-RELATED SERVICES GROWING There’s no mystery about why the lines are blurring. Clients are looking for aggressive solutions to their business problems, not just legal advice, and the giant accounting and consulting firms are eager to help, in many cases hiring lawyers to deliver the services. Consulting and compliance work — much of it law-related — is a large and growing percentage of the Big Five accounting firms’ business. According to Bowman’s Accounting Report, consulting sales made up about 40 percent of total sales in 1999. According to an analysis in The Wall Street Journal in April, the accounting firms received three times as much in fees for nonauditing services, particularly consulting, as they received for auditing, which is one of their largest traditional lines. These, of course, also happen to be important and lucrative practice areas for law firms. On its Internet site, Montvale, N.J.-based KPMG makes no secret of the fact that it offers law-related services. It advertises help with tax matters, employee benefits, due diligence for mergers and acquisitions, Securities and Exchange Commission registration, litigation support and regulatory compliance. Washington, D.C.-based Deloitte & Touche also employs hundreds of lawyers in the United States, according to a spokesman. Most of them work on tax matters. Perhaps the largest lawyer shop is Chicago-based Andersen, employing more than 3,600 lawyers worldwide. In addition to the types of consulting offered by KPMG, Andersen provides help with patent, copyright and trademark disputes, lobbying and human resources issues. In April, Andersen’s Miami office hired Steven J. Solomon as director of corporate restructuring. He was previously a bankruptcy lawyer with Stroock & Stroock & Lavan in Miami. That same month, Andersen also hired attorney Maria Yip as director of litigation support services in Miami. Jennifer Frost, a spokeswoman for Andersen, insists that her firm does not actively seek to hire lawyers in the United States — unlike its units in Europe, which are allowed to provide legal services in many countries directly or through affiliations with law firms. Andersen United Kingdom offers legal services through Garretts and Dundas & Wilson. KPMG has KLegal, and PricewaterhouseCoopers has the Landwell legal network. The American accounting giants would like to do the same in the United States, but so far have been blocked by resistance from the U.S. bar. Client appetite for these legal-related services from accounting firms is large and growing. Last year, Wilmington, Del.-based DuPont Co. paid its auditor, PricewaterhouseCoopers, $7 million for audit services — compared with $30 million for other consulting, according to SEC reports. A March 21 proxy statement submitted by the chemical maker said PricewaterhouseCoopers “provided various nonaudit services, including benefit plan administration services, tax services and other business advisory services.” DuPont officials would not comment on what other consulting services it received. But a company spokesman says that having accounting firms offer legal and compliance advice in addition to auditing is attractive because it provides “one-stop shopping” for needed professional services. Press says it’s only natural that a client who needs law-related consulting would seek such services from the same firm that’s handling its auditing or tax work. Clients have lots of contact with their accountants, and generally trust them. So they feel comfortable getting a referral from the accountant to affiliated consultants and lawyers for law-related services. “The accountant is like the barber,” he says. “You see him every few weeks no matter what. That’s a kind of contact lawyers don’t always have.” NO CONFIDENTIALITY, BIG HASSLES While many lawyers are sympathetic to the legal profession’s need for flexibility on the MDP issue, even they fret that lowering the wall between lawyers and nonlawyers is fraught with peril for the legal profession and for clients. Bill Spratt, a health care attorney at Kirkpatrick & Lockhart in Miami, stresses that attorney-client privilege is critical in his field. For example, if the federal government decides to investigate a physician practice on suspicion of Medicare or Medicaid fraud, Spratt says, one of the first things investigators ask is whether the physician group has used a consultant. If the answer is yes, investigators can force the consultant, if it’s not a law firm, to turn over the physician’s last audit report or any other consulting documents, because the relationship between the consultant and client is not privileged. This evidence can make it difficult for an attorney later to build a defense for the physicians. “Clients have to be careful,” Spratt says. “If you don’t maintain that attorney-client confidentiality, you can open yourself up to a lot of hassles.” Citing such concerns, the Florida Bar Board of Governors voted 44-1 last year to affirm that lawyers may not provide legal services to clients in settings where they share fees with nonlawyers, where the firm is partially or entirely owned by nonlawyers or where the core values of the profession — including independence of judgment and protection of client confidences — are compromised. BAR HAS MIXED FEELINGS In February, the Bar activated an MDP grievance committee to investigate complaints against lawyers who are suspected of practicing in multidisciplinary practice settings. But Bar officials seem reluctant to talk about the MDP grievance panel and its progress. Martin Garcia, of counsel at Hill Ward & Henderson in Tampa, Fla., and chair of the grievance committee, referred questions to Bar ethics counsel Elizabeth Tarbert, who referred questions to Bar legal division director Tony Boggs, who was unavailable for comment. Edward Iturralde, the Bar’s assistant staff counsel, says MDP investigations are difficult to conduct because there is almost no legal precedent that explicitly defines what a legal service is. “The line is getting finer and finer,” he says. “It’s weird.” There are other problems as well. Several Bar sources who didn’t want to be identified say MDP committee members and other Bar officials are hesitant to crack down on violators. First, the public isn’t complaining about accounting firms and other entities providing legal services. Second, attorneys are worried that if they do name names, they may end up fingering attorneys and accounting firms with whom they might have to do business in the future. Making matters even more complicated is that some leaders of the Bar quietly support MDPs and don’t want to see strong enforcement action in this area, these sources say. But Terry Russell insists that it’s “premature to conclude that the enforcement model isn’t working. We’ve only been at this for a few months. “I’m not ready to conclude that the problem is nonexistent or not of a nature that would result in the need to protect the public.” Still, others believe the MDP issue is shifting to whether law firms should be allowed to set up “business alliances” with accounting firms and other entities that aren’t law firms. Last week, the Florida Bar’s multijurisdictional practices commission met and discussed new MDP rules passed by New York state’s Administrative Board of the Courts, which take effect next month. The New York rules allow for limited business alliances between attorneys and nonattorneys while trying to protect the “core values” of the legal profession and the best interests of clients. Contending that strategic business ventures between lawyers and nonlawyers are inevitable, the board gave the green light for lawyers to enter limited contractual relationships with nonlegal professionals. But the latter may not hold any ownership or investment interest in a law practice. Attorneys remain solely responsible for legal work, and any interference by nonlawyers in the attorney-client relationship is prohibited. That’s still too much for Russell. He contends that the strategic alliance model holds no more appeal for the Bar’s board than the straight MDP approach. Having lawyers form exclusive referral relationships with nonlawyer professionals has great potential for compromising core values and harming the public. “I send you business, you send me business: That’s a lame effort to create an MDP without calling it that,” he says. ENFORCEMENT GOING NOWHERE Still, strategic alliances may offer a compromise approach for Florida Bar officials, especially since the enforcement model doesn’t seem to be going anywhere. According to Iturralde, the only MDP complaint received and handled so far has been John Hume’s complaint against Thomas M. Cryan. Hume, a partner at Hume & Johnson in Coral Springs, is Bar governor; he was co-chair of the Bar’s special commission on MDPs and ancillary businesses — subsidiaries of law firms which provide law-related services and which allow law firms to compete with accounting firms in the consulting business. According to Hume’s complaint, Cryan appeared before the U.S. Tax Court on behalf of clients and gave legal advice and counsel to clients concerning their rights and obligations under the law. Furthermore, Hume contended that Andersen billed Cryan’s clients for his legal services while also paying him a salary. Hume claimed that Cryan “may have violated and may continue to violate” the Bar’s rules prohibiting lawyers from practicing law while working for nonlawyers. Hume refused to comment on the complaint. But in a letter to the Bar dated May 31, 2000, Cryan denied that he violated Bar rules. He claimed that under Tax Court rules, one is not required to be a lawyer to be admitted to practice before the court. He also said that he was paid a salary by Andersen and did not share in the profits or fees for his services charged by the firm. In addition, he denied that the services he provided were legal services. Rather, he called them “professional services.” In February of this year, the Bar’s legal division referred Hume’s complaint to the MDP grievance committee. On April 9, the committee “found no probable cause for further disciplinary proceedings.” The reason? Insufficient evidence.

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