MINUTES
OF THE VSB/VBA JOINT COMMISSION
ON MULTIDISCIPLINARY PRACTICE
Tuesday, July 17,
2001
Virginia State Bar - Board Room
Richmond, Virginia
The
VSB/VBA Joint Commission on Multidisciplinary Practice met in
the Board Room of the offices of the Virginia State Bar at the
Eighth & Main Building in Richmond, Virginia, on Tuesday, July
17, 2001, commencing at 10:00 a.m. Commission members in attendance
were:
Ann
T. Burks
Theodore I. Brenner
John A. C. Keith, Chair
Paul E. Fletcher
Donna D. Lange
Jeffrey G. Lenhart *
Leigh B. Middleditch
Robert C. Nusbaum *
Gary T. Piacentini
Craig L. Rascoe
Thomas E. Spahn
Frank A. Thomas, III *
Robert C. Wood, III
Unable
to attend were:
John D. Epps
Brian V. Ebert
Heman Marshall
Howard McElroy
James M. McNider, III
Nina E. Olson
Clark H. Worthy
Also
attending were:
Thomas A. Edmonds, VSB Executive Director
James M. McCauley, VSB Ethics Counsel
Leslie A. T. Haley, VSB Assistant Ethics Counsel
* Attended by phone
GENERAL
DISCUSSION
The
Chair invited members of the commission who have lectured on
MDP to share with the group the reaction members of the bar
have toward the concept. The Chair's report at the VSB Council
Meeting in June did not generate any discussion. Tom Edmonds
reminded the Chair that it was a long day for the Council and
a number of controversial subjects were on the agenda for action
before John Keith got up to speak about MDP. Leigh Middleditch
submitted an ABA Statewide Report as of May 21, 2001 indicating
that about 13 states have voted against MDP while an equal number,
13 (including Michigan which acted in late June) have made recommendations
favoring MDP. Many of the "Pro-MDP" reports, however, propose
a "lawyer majority-owned model" as opposed to permitting lawyers
to work in a MDP firm controlled by non-lawyers.
PREPARATION
OF REPORT FOR EXECUTIVE COMMITTEE AND VSB COUNCIL
The Chair next discussed the timetable for preparing a report
for the Executive Committee which meets in early September and
VSB Council in late October. The report will be a concept paper,
including some basic recommendations, but not any proposed rule
changes. The report will be for informational purposes and not
for any action by Council. Barbara Allen appeared at the meeting
to offer assistance in communicating with local bar leaders.
The thought was that any member of the commission could do a
one-hour CLE program about MDP during which the local bar members
could become acquainted with the commission's recommendations,
and the commission member could come back with some feedback.
Barbara Allen, together with the Publications section, have
placed a notice in the Local Bar Leader's newsletter, indicating
that the commission is available to put on a program at a local
bar meeting if requested. We will follow up with a letter, signed
by John Keith, that will be sent out to the local bar leaders,
offering to present a program on MDP if requested.
The discussion turned next to the content of the report itself.
There should be some discussion of the historical development
of MDP as well as a summary of the activity and study undertaken
by the joint commission. In addition, there should be summary
of action taken by the other states with respect to MDP. The
commission's recommendations should be included with comments
or annotations following each recommendation.
John Keith agreed to prepare an outline for the proposed report.
DRAFT RECOMMENDATIONS
The last two meetings in May and June were spent developing
and revising the commission's recommendations. As a starting
point, the commission reviewed and studied the recommendations
of the Arizona Task Force, which recommended that the Arizona
Rules of Professional Conduct be modified to allow a "fully
integrated" model, as proposed by the ABA Commission. The consensus
of our commission was that lawyers should be permitted to work
in MDP firms, even if controlled by non-lawyers, and that it
is not necessary that the MDP be lawyer-controlled. Using Arizona's
recommendations as a starting point, the commission, after three
meetings, arrived at the following draft recommendations:
-
Limited
Ability to Practice in MDPs. Lawyers should be permitted
under certain circumstances to practice law in firms (commonly
called "MDPs") in which non- lawyers hold an ownership interest,
as long as the non-lawyers' interest is not merely a passive
investment. The MDP need not be limited to ownership by licensed
professionals. MDPs should not be required to register with
the state, and should not be restricted to entities that are
majority-owned by lawyers. MDP ownership should not be limited
to licensed professionals.
Discussion: This first recommendation generated significant
discussion. Some commission members felt that lawyers in an
MDP should disclose, among other things, the fact that the firm
is an MDP and not a traditional law firm, and tell a prospective
client about the differences, including the risk of losing the
attorney-client privilege, depending upon whom the client consults
with in the firm and the circumstances surrounding such communications.
Additionally, the prohibition against "passive investment" resurfaced
(the commission having addressed this issue before) and some
members of the commission questioned the prohibition. Others
felt that some definition is necessary. The commission asked
Jim McCauley to research this further to see why the ABA and
other states have taken the approach that "passive investment"
should not be allowed. The decision was made to leave the prohibition
in the recommendation pending further study.
-
Requirement
to Follow All Ethical Obligations. Lawyers who practice
law in MDPs must abide by the Rules of Professional Conduct,
including the Rules protecting the "core values" of competence,
loyalty, independence, confidentiality and avoidance of conflicts,
and must assure that their legal services clients receive the
same level of professionalism and protection as clients of lawyers
who are not practicing law in MDPs.
-
Requirement
of Lawyers' Independence. Lawyers who practice law in MDPs
must possess sufficient autonomy within the MDP to maintain
their independence and to assure their adherence to all of their
other ethical obligations.
-
Requirement
to Avoid Assisting UPL. Lawyers (whether or not they are
practicing law) shall not participate in any MDP or other entity
in which non-lawyers are allowed to engage in the unauthorized
practice of law.
Discussion: Lawyers practicing in MDPs cannot assist
nonlawyer employees in the unauthorized practice of law. See
Rule 5.5(a)(2). Only lawyers in an MDP can provide legal services
to clients.
-
Requirement
to Explain Different Confidentiality Duties. Lawyers who
practice law in MDPs must explain, in writing, the duties of
confidentiality and disclosure governing others in the MDP who
will provide services to the lawyer's client, including any
differences between the lawyer's duties and the others' duties.
Discussion: There was agreement to include in the commentary
to this recommendation, the requirement that a lawyer practicing
law in an MDP must advise the client regarding the risk of losing
the attorney-client privilege and that lawyers must establish
appropriate intake and screening processes to ensure protection
of client communications and information.
-
Requirement
to Explain Client Options. Lawyers who practice law in MDPs
must explain, in writing, that: (a) the lawyer may benefit financially
if the lawyer's client obtains other services offered by the
MDP; (b) the lawyer's client is not obligated to use any other
services offered by the MDP; and (c) the lawyer's client may
consult with an independent lawyer before obtaining other services
offered by the MDP.
-
Requirement
to Avoid Conflict of Interests. Lawyers who practice law
in MDPs must consider all MDP clients as legal services clients
for purposes of avoiding conflicts of interest.
Discussion: There was discussion regarding imputation
of clients of MDP partners from practices outside the MDP. For
example, if a MDP partner had a separate practice outside of
the MDP, are those clients to be treated as clients of the MDP
for purposes of conflicts? Jim McCauley expressed the point
that our legal ethics opinions permitting lawyers to be employed
by more that one firm would require client imputation. Some
members of the commission, however, questioned why this should
be the case for clients of non-lawyers and how that would work.
The commission asked Jim McCauley to research and study this
issue and report back on it. There was also agreement to put
in the comments to this recommendation that some conflicts may
be curable after consultation and consent in accordance with
Rule 1.7 (c).
-
Requirement
to Attend Mandatory CLE. Lawyers who practice law in MDPs
must attend additional educational programs that address their
ethical obligations, and emphasize the legal profession's core
values.
Discussion: The commission would include commentary clarifying
that such mandatory CLE is in addition to the 12 MCLE hours
required annually of each lawyer. Some question was raised as
to how much detail and specificity should be included, such
as how many additional hours and what types of programs. The
consensus was to leave the recommendation in its current form
rather than fleshing out the details.
-
Responsibility
to Perform Pro Bono Work. All lawyers, including lawyers
practicing law in the MDPs, should provide pro bono legal services.
-
Further
Bar Review. The Virginia State Bar should direct further
review of the MDP issue, including evaluation of specific Rules
modifications implementing these recommendations.
NEXT MEETING AND
ADJOURNMENT
The Chair adjourned the meeting. The next meeting will be on August
21, 2001 at 10:00 a.m. in the Board Room at the offices of the
Virginia State Bar.
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