Bar Urges Nontraditional Partnerships for Lawyers

In a dramatic break with laws in all 50 states, an American Bar Assn. commission recommended Tuesday that attorneys be allowed to share fees and form partnerships with professionals from other fields such as accounting, engineering and psychiatry.

If the controversial proposal took effect, it could have a dramatic impact on consumers of legal services as well as attorneys.

“These changes would allow clients more options in where they obtain legal services and lawyers more choices in how they serve clients, but maintain the core values of the legal profession,” said Miami attorney Sherwin P. Simmons, who headed the commission.

For example, he said, a small law firm that had a number of elderly clients could better serve those clients if its partners included an accountant and perhaps a social service worker.

Doing that would require changes in state rules that govern lawyers. In California, for example, it would be necessary to change the rule of professional conduct that provides that neither a law firm nor one of its members may share fees--either directly or indirectly--with a person who is not a lawyer. Attorneys’ rules of conduct typically are recommended by the state Judicial Council and approved or rejected by the seven-member California Supreme Court.

The bar commission stressed that it is not in favor of permitting nonlawyers to do legal work. Some legal observers say that even now, accountants working with attorneys on tax matters occasionally are engaging in the practice of law.

The commission also recommended that all rules applicable to a law firm, expressly including those dealing with conflicts of interest, should apply to a so-called multidisciplinary firm too. Moreover, the proposal recommends that for such a firm to be licensed, it would have to attest to a state regulatory agency that nonlawyers would not interfere with lawyers’ exercise of professional judgment.

A number of lawyers across the country think the proposal is unwise and could undermine some of the legal profession’s most cherished values--including the need to preserve client confidences. Philadelphia attorney Lawrence J. Fox, one of the most vocal opponents of the proposal, said the independence of lawyers will be threatened if states adopt the plan.

Fox evoked the specter of huge multinational accounting firms swallowing up lawyers and dictating what they do.

“If for President Clinton it was ‘It’s the economy, stupid,’ for our profession the watchword is, ‘It’s the money,’ ” he said. “Follow the money and you’ll follow the power. . . . And as soon as the power rests with nonlawyers not trained in . . . and not subject to discipline for our ethical principles, you will see the independence of the profession fall away.”

Anticipating Tuesday’s move, Century City corporate attorney Jay G. Foonberg recently introduced a resolution urging that current laws and regulations remain unchanged. Both measures will be considered at the 400,000-member bar association’s annual meeting in Atlanta in August, the first time the partnership recommendation will receive a formal airing.

If the bar association’s House of Delegates adopts the proposal, the organization’s committee on ethics and professional responsibility will draw up formal amendments to its rules of practices. Any changes would have to be approved state by state by authorities regulating lawyers’ conduct.

The proposal is already generating discussion in California legal circles.

“This is very controversial,” said Lee Smalley Edmund, president of the Los Angeles County Bar Assn., who said the organization’s board of trustees will take up the issue at a meeting later this month.

With 164,000 attorneys, California has more lawyers than any other state, or indeed any other country in the world besides the United States. State Bar President Raymond C. Marshall said the organization would closely review the American Bar Assn.’s recommendations to see if they make sense for California.

Marshall and other legal experts said the proposal is a sign of the changing realities of the world in which lawyers operate and comes against the backdrop of international accounting firms increasingly providing legal services in Europe and other parts of the world that do not prohibit such arrangements.

“In my view, the reason this is happening now . . . is that American law firms have come to realize there is economic value to have nonlawyer partners or for lawyers to be able to become partners in other types of firms,” said New York University law professor Stephen Gillers.

In the United States, experts say, major accounting firms are employing a growing number of attorneys working as consultants--but not formally practicing law--primarily on tax matters.

“Market forces cannot be stopped, but they can be channeled,” American Bar Assn. President Philip S. Anderson said at a Washington news conference presenting the commission recommendations. He said the proposal was aimed at enabling the U.S. legal profession to keep pace with a global economy while ensuring that current ethics rules continue to apply to lawyers wherever they work.

The commission spent 10 months before concluding that hybrid firms providing “one-stop shopping” for people seeking legal and other professional help were possible without violating current legal ethics rules.

The commission acknowledged that other professions have ethics rules that potentially conflict with lawyers’ rules. For example, mental health workers have an obligation to report suspected cases of child abuse. The report states that in situations where such conflicts could arise, clients would have to be warned of the differing obligations and the fact that confidentiality might be sacrificed.

Earlier this year, an official of the Securities and Exchange Commission told the national bar group that the role of lawyers--advocates for a client--and auditors--with full disclosure obligations--are incompatible under federal securities law. That issue is now under review by an SEC standards board.