California Bar Journal
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Ending out-of-date restrictions
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Restrictions on non-lawyer professionals practicing law are being challenged by new "multidisciplinary" consulting firms that use attorneys and other specialists to provide both legal and non-legal professional services. They usually combine expertise in law, accounting and business consulting.

Some business lawyers worry that the new multidisciplinary operations threaten them the same way that independent paralegals threaten solo and small firm practitioners. Clients' needs, economic forces and an increasingly diverse legal profession that lacks a unified view of what constitutes the practice of law are all conspiring to break down barriers to practice by non-lawyers.

Many attorneys believe that the answer to increased competition from non-lawyers is more restrictive rules and regulations. But maintaining barriers to practice and defending a guild system doesn't benefit the public. Nor does it help forward-looking attorneys who think that clients' needs should determine how legal services are provided in the future.

Instead, California lawyers should be permitted to create their own multi-disciplinary practices that can provide the same variety of services. Smaller firms should be allowed to make greater use of paralegals, including admitting them as partners. Law firms should be free to raise operating capital the same way that other businesses are, without restrictions on who can or cannot hold an ownership interest.

California lawyers currently are not allowed to split fees with non-lawyers like paralegals. Nor can firms admit accountants, economists or management consultants as partners, unless the latter are admitted to practice. And law corporations are not allowed to sell stock to non-lawyers, which is why they cannot become publicly owned corporations or raise money from private stock sales to venture capitalists.

Misguided bar leaders in the United States and abroad are trying to block the inevitable changes that will broaden the options available to legal consumers. The opponents claim that multi-disciplinary firms especially are a danger to consumers - because lawyers may be supervised by non-lawyers and because the lawyers' work may not be protected by attorney-client privilege and other confidentiality restrictions.

George M. KrawThe American Bar Association has appointed a 12-member "Commission on Multidisciplinary Prac-tice" to study the situation. The commission, which has no public members, held its first meeting last fall in Washington and plans at least two more sessions, including one in Los Angeles next month. It is scheduled to issue a report at next summer's annual meeting in Atlanta. In November, the Paris bar held an international conference on the issue, which was largely critical of the new firms.

The critics argue that the public and clients will suffer if the "core ethical standards" are abandoned - these core values presumably include restricting the practice of law to lawyers and preventing fee sharing with other professionals. But it's not clear that the public shares these worries. Why not let consumers of legal services decide for themselves who will be their lawyers?

Over the years, bar associations have helped build barriers to exclude competition by non-lawyers. Last year, the Texas state bar brought legal proceedings against an accounting firm in a failed attempt to limit the tax services the firm provided. The Texas bar has even tried to curtail the sale of self-help books by Nolo Press in that state. Currently, the District of Columbia is the only jurisdiction in the United States that currently allows lawyers to split fees with non-lawyers, a necessary first step before a law firm can create a multidisciplinary practice.

Lawyers can adapt to whatever changed circumstances may bring - so long as they are not constrained by out-of-date views about what the profession of law should be. In the long run, everyone - attorneys, consumers and the public alike - will benefit from a legal system that recognizes economic realities and eschews out-of-date restrictions on both lawyers and non-lawyers.

George M. Kraw is a San Jose attorney.