MINUTES OF THE VSB/VBA JOINT COMMISSION
ON MULTIDISCIPLINARY PRACTICE

Tuesday, September 26, 2000

Eighth and Main Building - 2nd Floor Conference Room
RICHMOND, VIRGINIA

The VSB/VBA Joint Commission on Multidisciplinary Practice met in the Second Floor Conference Room of the Eighth and Main Building in Richmond, Virginia, on Tuesday, September 26, 2000, commencing at 10:00 a.m.

Committee members in attendance were:

John A. C. Keith, Chair Nina E. Olson
Ann T. Burks Thomas E. Spahn
Paul E. Fletcher Frank A. Thomas, III
Heman A. Marshall * James M. White, III
Leigh B. Middleditch, Jr. Robert C. Wood, III
Robert C. Nusbaum *
* by telephone

Unable to attend were:

Theodore I. Brenner Howard C. McElroy
Brian V. Ebert James S. McNider, III
John D. Epps Craig L. Rascoe
Donna D. Lange Clark H. Worthy
Jeffrey G. Lenhart

Also attending were:

Thomas A. Edmonds, VSB Executive Director
James M. McCauley, VSB Ethics Counsel
Flora Townes

I Review and Approval of Minutes from Meeting of August 29, 2000.

The minutes of the meeting conducted on Tuesday, August 29, 2000, were reviewed and approved.

 

II Reports From Subcommittees.

Education, Communication, Funding and Consumer Demand. Robert Wood reported that Donna Lange was in contact with a public relations group to explore how the commission might communicate with the public concerning its work.

UPL/Ethics. Tom Spahn reported that Jim McCauley had provided the subcommittee with an explanation of UPL enforcement in Virginia, including information concerning the investigations of Ernst & Young and Allstate Insurance Company. The subcommittee concluded it would be difficult, if not impossible, to determine the cost of stepped-up enforcement against MDPs. Mr. Spahn reported that Mr. McCauley will contact other jurisdictions to obtain additional information. Frank Thomas observed that whatever action is taken should involve the General Assembly.

Mr. Spahn briefly discussed the "MDP Models" used by the ABA Commission. Most lawyers affiliate with non-legal professionals on an ad hoc basis, sometimes referred to as the "cooperative model." The "command and control" model permits lawyers to share fees with nonlawyers in a single firm, but the single firm must be organized solely to provide legal services. This is the District of Columbia's version of Rule 5.4. The "ancillary business" model is one in which a law firm owns and controls a separate entity which delivers non-legal services. For example, McGuireWoods, L.L.P., owns and controls a lobbying group, McGuireWoods Consulting, L.L.P. The next model is the "contract" model in which a company or corporation, which delivers non-legal services, owns or holds captive a law firm. The "contract" model is used in Europe by the "Big Five" accounting firms. Also used is the "fully integrated" model, in which lawyers and nonlawyer professionals practice together in one entity, share fees and deliver legal services and services unrelated to the practice of law. This is the model the "Big Five" would like U. S. regulators to permit.

Mr. Spahn invited Flora Townes to report on her research concerning bars in the U.S. which have issued pro-MDP proposals. According to Ms. Townes' research, South Carolina and Arizona support "fully integrated" MDPs. Minnesota and Oregon have issued pro-MDP reports, and the model they propose is similar to the "command and control" model, much like D.C.'s version of Rule 5.4. The Colorado proposal seeks to permit "ancillary businesses" controlled or owned by lawyers. Maine and South Dakota have also issued reports favoring MDPs, but it is not clear which model their proposals support. The Arizona bar is the farthest along, having taken final action to approve the necessary rule changes to implement MDPs.

Tom Edmonds reported that he has contacted other bars to inquire what types of funding have been used to finance programs and public education. He reported that South Carolina did not involve lay persons in the deliberative process, and the costs were slight. The Arizona bar conducted town hall meetings and involved civic groups, local bars, media contacts, professional associations and the public. Over 200 groups and/or persons were involved. They also made an effort to educate members of the bar, especially small firms. Consequently, the Arizona proposal garnered much support from small-firm lawyers, who began to see MDPs as an alternative approach to meeting the needs of clients in a more comprehensive and efficient way.

Impact of MDPs on Small and Solo Practices. Paul Fletcher reported that other bar groups and sections, i.e., general practice and trial lawyers, are not pursuing MDP issues, nor does it appear that local bars are concerned or focused on MDPs.

Regulation of Accountants and Other Professions. John Keith presented a report from Craig Rascoe concerning this subcommittee's effort to accumulate information concerning how other professions regulate their activity. John Keith commented that perhaps each profession would need to be governed under its own rules. However, currently we have no real "ties" to lawyers practicing in an MDP. Mr. Keith urged the commission to envision how MDPs will be regulated.

 

III Other Discussion

Robin Wood commented favorably on the thoroughness of Mary Daly's law review article published in the Georgetown Journal of Legal Ethics.

Nina Olson stated that she will attend a tax conference at William & Mary Law School entitled, Surviving in an MDP World. Steven Tucker, past chair of the ABA Tax Section, is a featured speaker. Ms. Olson will report on this program to the commission. Ms. Olson also added that the commission needs to generate informative articles from different perspectives to educate the general public and members of the bar about MDP and the commission. Possibilities include approaching local bars about holding town hall-type meetings. It was also suggested that Jim McCauley speak with Rod Coggin, VSB Director of Publication, concerning a web page for the commission. Flora Townes will contact the head of the University of Richmond business school to see what input they may have concerning MDP.

 

IV Adjournment

There being nothing further to discuss, the Chair adjourned the meeting until the next meeting on Tuesday, October 24, 2000, at the Virginia State Bar offices in Richmond.