Should accountants and lawyers get into bed?

Overcoming our differences

Let’s start with the proposition that anything should be allowed unless there
is a good reason to prohibit it: possibly an unfashionable view, but one that I
think is worth pursuing.

The ICAEW certainly takes that line with multi-disciplinary practices. We
have been consistent supporters of the freedom of professional people to
practise in MDPs, if they so wish.

Accountants thrive in competitive environments and we believe it is in the
best interests of the economy for competition to be extended as widely as
possible, subject to the maintenance of professional standards.

The Office of Fair Trading’s findings on the subject explained the
advantages, and the likely beneficiaries, clearly in its report on the
professions in 2001.

It stated that ‘restrictions on MDPs may inhibit new entry and prevent the
exploitation of possible economies of scale and scope. MDPs might achieve
advantages in branding, overhead cost savings, and the ability to transfer
resources in response to fluctuations in demand and to give a seamless service
to clients. While these advantages may benefit firms of all sizes, they are
likely to be especially marked at the level of the high-street firm.’

Some argue that MDPs of accountants and lawyers would create conflicts of
interest, but these are nothing new and there are ways of managing them.

Our ethics code adopts a principles-based approach to ensure that ethical
principles are adhered to: individuals have procedures to identify potential
conflicts, assess whether they pose a threat, and implement safeguards. These
might be Chinese walls, informed consent, independent review or whatever. If
such safeguards cannot be implemented, you don’t do the work.

There are regulatory issues to be resolved. For example, lawyers and
accountants have different ethical codes and the client needs to know which
framework any work is being carried out under. Standards should be maintained
and regulators should ensure regulation is complete, but not duplicated. We are
certainly willing to play our part.

Tony Bromell is head of accountancy markets and ethics at the ICAEW

Don’t get your hopes up

A few years ago, a court in New York decided that it was legal for members of
the public, of either sex, to travel topless on the New York subway. This caused
a considerable degree of public comment.

The US press cannot normally compete with the UK tabloids for lurid,
speculative reporting, but on this occasion they managed to imply that New
Yorkers might now have rather more than the adverts to grab their attention when
travelling on the subway.

They were, of course, wrong, as is anyone who concludes that just because
something has been legalised it will become common.

Something of this reaction can be seen in relation to the government’s
unexpected proposal that lawyers will now be permitted to operate in the context
of alternative business structures. Inevitably, the suggestion has been raised
that we shall now see a flood of merged legal and accountancy firms. I doubt it.

Although it has not previously been possible for lawyers and accountants to
join together in partnership it has not, in practice, been difficult for them to
work together. The Big Four accountancy firms all formed legal wings in the
1990s, working through the regulatory system as it existed at the time.

In the aftermath of Sarbanes-Oxley, these arrangements have been dismantled.
We are not about to see a flood of similar arrangements because Lord Falconer
now says they are legal.

Lawyers and accountants generally get on well and, I think, understand each
other better than they used to; but just because they are allowed to get married
does not mean they will do.We shall undoubtedly see supermarkets and department
stores setting up legal arms for more routine work. And some law firms will see
the benefit of having a few specialistson board.

However, these specialists are as likely to be estate agents as accountants
and one profession or another will still be in charge in each case. On the
whole, our two professions are too independently minded to merge their fortunes
with each other to a greater degree than this.

John Young is senior partner atinternational law firm Lovells

Related reading