The American Bar Association (ABA) proclaims itself the world’s largest professional voluntary grouping with 400,000 working in law firms, corporations and academia mostly in the US.
And, after two years of deliberation, the membership of this body has voted to maintain its position that lawyers should not be permitted to share fees with non-lawyers and that non-lawyers should not be permitted to own or control entities that practice law. One of the delegates who was urging colleagues to keep the ABA’s Model Rules of Professional Conduct unchanged called the rules ‘our clients’ bill of rights’.
The vote to reject MDPs is in contrast to the UK where they have been approved in principle by the Law Society. The UK partners in the large accountancy firms were putting a brave face on the vote. This is not the end of the road for MDPs, they said, it is just another obstacle. For a start, although the ABA might be respected its vote is only advisory – the decision on US MDPs lies with the Supreme Courts in each state.
With the profession under attack from US regulators and with all the voluntary changes the Big firms are currently undertaking it is easy to confuse the various threads of the development of the profession. In particular, critics of the profession, or those who compete against them, raise the potential threat of conflict of interest without any real understanding of what it means. In some instances in MDPs – such as forensic accountancy – work has to be passed on where there has been a prior involvement. But both clients and advisors understand and accept that.
The commercial reality is that lawyers and accountants want to work together in the same commercial entity – and more importantly so do their corporate clients. Lawyers and accountants are currently working together successfully and should be allowed to do so in an open way rather than having to wriggle around rules and regulations that are outdated.
The truth is that lawyers on both sides of the Atlantic have always been less commercially aware and less commercially successful than accountants.
Only now are lawyers in the UK starting the fight back to try and win much of the tax and corporate finance work which the accountancy firms took from them in the 1980s and 1990s.
The decision of the ABA is more to do with commercial envy than the desire to do the best for their clients and as such is ultimately unsustainable.
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