State Bar Board defeats MDP proposal

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Daniel L. Shneidman

The State Bar of Wisconsin Board of Governors has rejected a proposal that would have allowed lawyers to participate in multidisciplinary practice (MDP) firms. During its Friday meeting, the board voted overwhelmingly – 39-5 – against the recommendation of the State Bar’s MDP Commission.

Some people, including Gov. Benton C. Strauss who presented the motion to adopt, saw the vote as a "foregone conclusion."

Strauss’s comment referred to a large quantity of e-mail opposing the recommendation, which had circulated prior to the meeting.

Despite that, Strauss noted, "It’s important for any governing body to consider the long-range consequences of its actions not just the news of the day."

He acknowledged the impact that the Enron-Arthur Andersen scandal has had on the discussion. Media coverage of improprieties by accounting firms has fanned the flames of opposition to the idea of lawyers partnering with acc-ounting firms or other professions.

Other opposition raised during discussions included the potential loss of professional independence, concerns about confidentiality, conflict of interest and a lack of adherence to the rules of conduct which bind attorneys.

Strauss, of Strauss & Malk in Deer-field, Illinois, said the key consideration when looking toward the future is whether or not clients would be served better by allowing some form of MDP, where clients could receive a variety of coordinated services by lawyers and non-lawyers.

State Bar Secretary Pamela Pepper, who has a law office in Milwaukee, noted the importance of considering "the public interest law aspect" of MDPs.

"Inasmuch as I have gotten very negative feedback with regard to the MDP proposal, I have gotten positive feedback as well," Pepper said. As an example, she noted an e-mail containing a 40-page law review article detailing how MDP would help people in need of elder law legal services.

MDP Concerns

Gov. Daniel L. Shneidman, of Shneidman Law S.C., opposed the motion, but wanted to make sure the board took action on the proposal. He described the concept of a multidisciplinary practices as being "very seductive," however, he raised concerns about elements that need to be addressed. Those tenets included conflict of interest, confidentiality and undivided loyalty, which need to be worked out.

"I think there is merit to a regulated multidisciplinary practice," Shneidman said. "But the program that the majority commission is recommending, in my opinion, puts us very close in jeopardizing what I believe to be tenets of our profession."

Looking at how other states have dealt with the MDP issue, State Bar Treasurer Dean R. Dietrich, of Ruder, Ware & Michler in Wausau, observed that the majority has opposed the idea of lawyers partnering with non-lawyers. Only three states, he said, have moved forward with some form of MDP proposal. However, many are continuing to keep an eye on the issue.

"Perhaps the best thing for us to do at this time is to bring this back a year from now and look at this report," Dietrich suggested.

In the end, the majority of the board agreed to oppose the MDP recommendation at this time, but agreed with Dietrich’s suggestion that the Executive Committee present a report a year from now updating the group on the current status of MDP in other states. At that time, the board could decide whether to readdress the issue.

The defeated proposal urged the board to support a change in the Wisconsin Rules of Professional Conduct to allow lawyers to participate in MDP firms. That proposal laid out a number of restrictions that would have limited partnerships to professions approved by the Wisconsin Supreme Court, but would have allowed fee-sharing within that partnership.

The proposal also stated that lawyers needed to maintain majority ownership of MDP firms and needed to be actively engaged in the profession. The ability of lawyers to maintain their independence of judgment was another issue covered by the proposal. The proposal would have restricted the ability of lawyers to practice in firms that conducted financial audits.

The proposal went on to consider client confidentiality, conflict of interest and adherence to the Rules of Professional Conduct by all members of the MDP firm.

Unauthorized Practice of Law

The Board of Governors did approve a second motion related to the MDP Com-mission report regarding the unauthorized practice of law. Past President Gerald W. Mowris, of Pellino, Rosen, Mowris & Kirkhuff S.C. in Madison, brought forth a motion designed to help define what constitutes the practice of law.

The majority board overwhelmingly approved the plan to petition the state Supreme Court for the creation of a new committee to help define the practice of law. Mowris indicated that this was an important step in protecting the public from the unauthorized practice of law.

"The current unauthorized practice of law definition is ineffectual," Mowris said. "We need something that works, that’s got some teeth to it and an organization that can look at particular problems that arise and that can look at particular complaints that can formulate a definition that will work for all groups and protect the public."

Ancillary Businesses

Finally, the board unanimously approved a proposal to have both the State Bar Executive Committee and the Professional Ethics Committee review and refine the MDP Commission’s proposed rule on ancillary businesses owned by lawyers.

The MDP Commission proposal sought to clarify that lawyers operating ancillary businesses were not violating the Rules of Professional Conduct provided:

• "the ancillary business is a separate entity distinct from the legal services provided by the lawyer or the lawyer’s firm:

• "the ancillary business does not engage in the practice of law; and

• "the person obtaining law-related products or services from ancillary businesses knows that such products or services are not legal services and that the protections of the client-lawyer relationship do not exist with respect to the provision of such products or services."

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In an earlier vote during the meeting, the board defeated a motion to simply approve the commission’s proposed rule by a vote of 25-17. However, Dietrich proposed a second motion providing for the review and refinement of the original proposal. His motion urged the State Bar to work within the framework that was currently being established by the state Supreme Court to review the

Rules of Professional Conduct. His proposal stated:

"That the proposed Rule (after reviewed and revised if necessary) be submitted to the Commission appointed by the Wisconsin Supreme Court to study the Rules of Professional Conduct for Wisconsin attorneys contained in Supreme Court Rule Chapter 20 and that the representatives of the State Bar on such Commission be directed to bring this proposal to the discussion and study to be undertaken by the Supreme Court Com-mission for the purpose of considering the right and opportunity of Wisconsin lawyers to participate in ancillary businesses in a competitive fashion with other businesses."

The group approved it unanimously.

Tony Anderson can be reached by email.