1. American Bar Foundation, Lawyers Statistical Reports. In one four-year period, 1980 to 1984, the profession grew by 107,000.
2. Source: 2000 Edition ABA Approved Law Schools, at 450.
3. Data incomplete for this year.
4. U.S. Industry & Trade Outlook ‘99 (The McGraw-Hill Companies U.S. Department of Commerce/International Trade Administration) Table 49-8, at 49-10. The most recent Lawyer Statistical Report of the American Bar Foundation reported the total number of lawyers in 1995 as 857,931.
5. Source: 2000 Edition ABA approved Law Schools, at 450.
6. These figures were derived from the American Bar Foundation, 1985, 1988 and 1995 Lawyer Statistical Reports.
7. Defined id. at 242: Private association. A private association is any nongovernmental organization that does not qualify under private industry. It excludes legal aid, public defender, or educational institutions. Examples of private associations are trade associations, unions, special interest groups, public interest groups, and charitable and religious organizations.
8. American Bar Foundation, 1995 Lawyer Statistical Report, at 24.
9. See National Association for Law Placement, Class of 1988 Employment Report and Salary Survey (ERSS) (1990) at 118-121, Class of 1989 ERSS (1991) at 68-75, and Class of 1990 ERSS (1991) at 62-70; see also American Bar Association Young Lawyers Division, The State of the Legal Profession 1990, Chapter 14, "The Status of Women in the Profession," at 63-70.
10. See Judith S. Kaye, Women Lawyers in Big Firms: A Study in Progress Toward Gender Equality, 57 Fordham L. Rev. 111 (1988).
11. See Geraldine Segal, Blacks in the Law, Philadelphia and the Nation, 27 et seq. (1983).
12. See Pearson v. Murray, 168 Md. 478, 187 A. 590 (1936); Cf. Missouri ex rel. Gaines v. Canada, 305 U.S. 337 (1938).
13. 347 U.S. 483 (1954).
14. Association of American Law Schools Proceedings, Part One: Reports of Committees, at 159 (1964).
15. Report of the Philadelphia Bar Association’s Special Committee on Pennsylvania Bar Admissions Procedures, Racial Discrimination of Pennsylvania Bar Examinations, 44 Temple L. Q. 141, 182 (1971).
16. Source: 2000 Edition, ABA Approved Law Schools, at 453.
1. This characterization of the law is of obscure origins.
2. J. P. Heinz & E.O. Laumann, Chicago Lawyers, at 56 (1982), reported that lawyers in their study tended to practice more than one specialty, reflecting the needs of their clients and not any logic of the law.
3. See Report of American Bar Association Standing Committee on Specialization (August 1990).
4. See web-site ABA Standing Committee on Specialization at www.abanet.org/specialization.
5. See N.Y.S.B.A. Report on the Future of the Profession (January 11, 1999) at 21-22.
6. See ABA Standing Committee on Specialization, Informational Reports to the House of Delegates, February and August 1999.
7. 22 NYCRR § 1200.11.
8. M. Crichton, Electronic Life, at 3 (1983).
9. Id. at 139.
10. Id. at 144.
11. ABA Legal Technology Resource Center, 1998 Small Law Firm Technology Survey Report; 1998 Large Law Firm Technology Survey Report; 1998 Corporate Law Department Technology Survey.
12. See Lawyer Advertising at the Crossroads, American Bar Association Commission on Advertising (ABA 1995), at 29-32. See also American Bar Association Commission on Advertising White Paper "A Re-Examination of the ABA Model Rules of Professional Conduct Pertaining to Client Development in Light of Emerging Technologies" (July 1998) (www.abanet.org/legalservices/whitepaper.html), at 2.
13. Bates & O’Steen v. State Bar of Arizona, 433 U.S. 350 (1977).
14. See Lori B. Andrews, Birth of a Salesman: Lawyer Advertising and Solicitation (1980).
15. Ohralik v. Ohio State Bar Association, 436 U.S. 447 (1978). The companion case of In re Primus, 436 U.S. 412 (1978), allowed solicitation of clients in non-profit settings.
16. See Appendices D and E to NYSBA Report (June 28, 1996).
17. Id.., White Paper, fn. 12 supra, at 3-4.
18. See NYSBA Report on the Future of the Profession (January 11, 1999) at 33-36.
19. Id.., Crossroads, fn.12, supra, at 48.
20. Id. at 49.
21. Id. at 50. The Yellow Pages frequently contain a Guide of Lawyers Arranged By Practice that bears the legend: "Lawyers in this guide have chosen to list themselves by Field of Law to which they concentrate their practice. This guide may not include all lawyers." The following Fields of Law are commonly listed:
Accidents-Personal Injury/Property Damage
Health Care & Hospital Law
Administrative & Governmental Law
Immigration & Naturalization
Admiralty & Maritime Law
Alcoholic Beverages Practice
Labor & Employment Law
Landlord & Tenant
Malpractice Law-Legal & Medical
Civil Rights Law
Marital & Family Law
Civil Service Law
Pension & Profit Sharing Law
Corporation, Partnership & Business Law
Real Property Law
Social Security Law
Driving While Intoxicated & Drug Defense
Vehicle & Traffic Law
Estate Planning & Administration
Wills, Trust & Probate Estates
Zoning, Planning & Land Use Law
22. Id. at 50.
23. Id. at 50-51.
24. Id. at 54.
25. Id. at 53-54.
26. Id. at 55.
27. Id.. White Paper, fn. 12 supra, at 25.
28. Harrison Tweed, The Changing Practice of Law (1955).
29. See infra, The "large firm" phenomenon.
30. 421 U.S. 773 (1975).
31. 433 U.S. 350 (1977).
1. See W.K. Hobson, "Symbol of the New Profession: Emergence of the Large Law Firm 1870-1915," reprinted in The New High Priests: Lawyers in Post-Civil War America, at 5-7 (Gawalt ed., 1984).
2. See F. Zemans & V. Rosenblum, Making of A Public Profession, at 65-66 (1981).
3. W. Weinfeld, Income of Lawyers, 1929-48 in U.S. Department of Commerce, Survey of Current Business (August 1949).
4. See D.D. Landon, Country Lawyers–The Impact of Context on Professional Practice, at 9-10 (1990).
5. See Zemans & Rosenblum, supra, at 65-90. Heinz & Laumann estimated that somewhat more than half (53 percent) of the total effort of Chicago’s bar at the time of their study done in the late 1970s was devoted to the corporate client sector. J.P. Heinz & E.O. Laumann, Chicago Lawyers, at 42 (1982).
6. See S.R. Hickerson, Structural Change in Nebraska’s Legal Profession, 15 Creighton L. Rev. 1, 21 (1981); Weinfeld supra; R.H. Sander & E.D. Williams, Why Are There So Many Lawyers? Perspectives on a Turbulent Market, 14 Law & Soc. Inquiry 431, 478 (1989); and R.L. Sandefus & E.O. Laumann, Changing Patterns of Income Stratification in the Chicago Bar (1997), unpublished paper presented at Law & Society Association annual meeting in St. Louis, at 16-17.
7. Sandefus & Laumann, supra id..
8. Sources: B.A. Curran, The Legal Profession in the 1980s: A Profession in Transition, 20 Law & Society Rev. 19 (1986); American Bar Foundation 1988 Supplement to the Lawyer Statistical Report; C.N. Carson, The U.S. Legal Profession in 1995 (American Bar Foundation 1999).
9. See National Resource Center for Consumers of Legal Services, Legal Plan Letter (1997 Legal Services Plan Census) February 1998, at 1.
10. See Eve Spangler, Lawyers for Hire, Salaried Professionals at Work (1986).
11. J.P. Heinz & E.O. Laumann, Chicago Lawyers, The Social Structure of the Bar 319 (1982); cf. J.P. Heinz, E.O. Laumann, R.L. Nelson &.E. Michelson, The Changing Character of Lawyer’s Work: Chicago in 1975 and 1995, 32 Law Society Review 751 (1998).
12. See P.D. Landon, Country Lawyers - The Impact of Context on Professional Practice 9-10 (1990).
13. See P. Langrock, Beyond the Courthouse - Tales of Lawyers and Lawyering, (Paul S. Eriksson, Publisher) 1999.
14. Solo practice: 34.7%; small firms 16.8%; combined 51.5%. Clara N. Carson, The Lawyer Statistical Report - The U.S. Legal Profession in 1995, American Bar Foundation (1999).
15. Id. at 25.
17. Id. at 25-26.
18. Id. at 25.
19. D.D. Landon, supra, at 96; C. Seron, The Business of Practicing Law - The Work Lives of Solo and Small-Firm Attorneys, Temple University Press (1996).
20. See C. Seron, id. at 79-82. Eve Spangler, in Appendix A to her book on salaried lawyers, surveys the scholarly literature on "Solo Practitioners" and summarizes the findings to be compared with her findings regarding the work life of salaried lawyers who are in large law firms, corporate staff counsel, civil service attorneys and legal services advocates. (Eve Spangler, supra note 10, Appendix A at 199-212).
21. National Association of Law Placement, Class of 1997 and 1998 Surveys, at 21 and at 28, respectively.
22. C. Seron, Temple University Press (1996).
23. Id. at 12.
24. Id. at 17-18. The President of the Erie County, New York, Bar Association, Donald Eppers, recently observed: "Most attorneys have a sense that they’re working harder to earn less." Buffalo Law Journal, Nov. 22, 1999, at 1.
25. See Economics of Legal Services in Illinois - A 1975 Special Bar Survey, 64 Ill. Bar Jour. 73-102 (1975); Preliminary Report: Results of Survey on Certification of Specialists, 44 Cal. St. Bar Jour. 140, 142-144 (1969).
26. California State Bar Association, Survey Results (September 1991), at 26 and 27.
27. See American Bar Association Young Lawyers Division, The State of the Legal Profession 1990, at 14.
28. T.C. Fischer, Legal Education, Law Practice and the Economy: A New England Study (1990), at 80. The California 1991 Survey, supra note 37, at 25, reported that the areas practiced in by the greatest number of individual attorneys were Business Law, Real Estate, Plaintiffs’ Personal injury, Domestic Relations, Landlord-Tenant and Bankruptcy.
29. Final Report of the NYSBA Special Committee on the Future of the Profession (January 11, 1999), at pp. 6-7.
30. Joe Catalano, "Here Come the New Contracts," Newsday, Jan. 13, 2000, at C6; Daniel Wise, "Suit Seen Near in Bar’s Dispute With Realtors," N.Y.L.J., Jan. 10, 2000, at 1; "Agents and Lawyers Battle Over Real Estate Contracts," The New York Times, Dec. 12, 1999, Sec. 14 at 1, 14.
31. J. Atkinson, Assisting Children and the Courts, 83 Judicature No. 1.
32. For an appraisal of the distinctive character of a matrimonial law practice, see Sarat & Felstiner, Law and Strategy in the Divorce Lawyers Office, 20 Law & Soc’y Rev. 93-134 (1986).
33. In an address to the National Council of Juvenile and Family Court Judges in November 1999, Chief Judge Judith S. Kaye called for a radical departure from "the traditional adversary model" of judging in Family Court matters, suggesting that jurists take a hands-on approach to addressing the health and safety needs of children and that "simply issuing an order and moving on to the next case may not give the greatest assurance that the child’s best interests will be protected." New York Law Journal, Nov. 16, 1999, at 1.
34. See The New York Times, Oct. 23, 1999, at B2.
35. See proceedings of NYSBA House of Delegates, June 26, 1999, in Cooperstown, NY and proceedings of ABA House of Delegates, August 9-10, 1999, in Atlanta, GA.
36. Seron, supra note 19, at 137.
37. See id. at 105-09. See also Daniels & Martin, "It’s Darwinism – Survival of the Fittest: How Markets and Reputations Shape the Way in Which Plaintiffs’ Lawyers Obtain Clients," 21 Law & Policy 377 (1999).
38. See discussion of "Networks and Affiliation Groups" in Galanter & Palay, Tournament of Lawyers 130 (1991).
39. Wall Street Journal, October 8, 1999, at B1.
40. Code of Professional Responsibility, EC 1-1.
41. Reginald H. Smith, Justice and the Poor (1919).
42. It was not until the Scottsboro case in 1932 that the right to legal representation in state courts even in capital cases was recognized. Powell v. Alabama, 287 U.S. 45 (1932). See John M. Maguire, The Lance of Justice, 238-245 (1928), for a history of legal aid 1876 to 1926.
43. See R.L. Abel, American Lawyers (1989), at 131.
44. Johnson v. Zerbst, 304 U.S. 458 (1938).
45. Gideon v. Wainwright, 372 U.S. 355 (1963).
46. Argersinger v. Hamlin, 407 U.S. 25 (1972).
47. See E. Johnson Jr., "The Neighborhood Lawyer Experiments and the Goal(s) of Social Reform" in Justice and Reform (1974, new edition 1978), at 21-35.
48. Richard Kluger, Simple Justice, Vantage Press (New York, 1975).
49. See E. Johnson, supra note 47, at 5-10: A Brief History of the Legal Aid Movement; see also, R.L. Abel, Law Without Politics: Legal Aid Under Advanced Capitalism, 32 UCLA L.Rev. 474, 502 (1985).
50. See, for example, The Alabama Code of Ethics of 1887 setting forth a code of duties for attorneys and concluding with the duty to be a friend to the defenseless and the oppressed.
51. See M.L. Schwartz Changing Patterns of Legal Services in Law in a Changing Society, 109-124 (Geoffrey Hazard, ed. (1968)).
52. See E. Johnson, supra note 47, at 39-70: Birth of the Federal Program.
53. Id., at 7-102: Development of Local Legal Services Organizations.
54. Id., at xxix. See also A.W. Houseman, A Short Review of Past Poverty Law Advocacy, Clearinghouse Rev. 1514 (April 1990).
55. R.L. Abel, American Lawyers, Tables 5 and 6, at 254-255.
56. A striking example of what happened following the 1982 budget cut was the closing in 1983 of the Southeast Legal Aid Center in Compton, California, requiring the State Bar to take responsibility for some 36,000 case files abandoned by the Legal Aid Center. R.L. Abel, supra note 43, at 133.
57. See National Legal Aid and Defender Association 1998/99 Directory, 17-123 (1998).
58. Legal Services Corporation, 1997 at a Glance.
59. Anthony Lewis, Gideon’s Trumpet (1964).
60. R.L. Abel, supra note 43, at 131, citing D.J. Scari, "The Financial Impacts of the Right to Counsel for Criminal Defense of the Poor," Law & Society annual meeting, San Francisco (May 1979).
62. 1988 is the latest year for which there is data of this kind available from the National Criminal Justice Reference Service, U.S. Department of Justice, Bureau of Justice Statistics (July 1990 Bulletin).
63. National Legal Aid and Defender Association, The Other Face of Justice at 83 (1973); P.B. Wise, The Endangered Species: America’s Private Criminal Lawyers (1973).
64. National Legal Aid and Defender Association, 1998/99 Directory (1998), at 127-189.
65. Information provided by Susan Hendricks, Deputy Attorney in Charge, Criminal Defense Division, New York City Legal Aid Society. Indicative of the fiscal constraints placed on the Legal Aid Society in recent years: in 1992, with a substantially larger average complement of 675 attorneys, the Criminal Defense Division handled 170,000 cases, 24,000 fewer than the Division handled in the 1999 fiscal year with 224 fewer attorneys.
66. See NLADA, 1998/99 Directory of Legal Services Offices.
67. See National Directory of Criminal Lawyers (B. Tarlow ed. 3rd Ed. 1991): a directory of lawyers who the editor represents have been evaluated for demonstrated ability and commitment to conscientious representation.
68. See "Unclogging Gideon’s trumpet," National Law Journal, January 10, 2000 at A1, relating to lawsuits challenging the lack of financial support for criminal defense of the poor and the resulting erosion of the Sixth Amendment right to counsel.
69. American Bar Association Reports, Standing Committee on Lawyer Referral Services.
70. Bates & O’Steen v. State Bar of Arizona, 433 U.S. 350 (1977).
71. Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).
72. See B.F. Christensen, Lawyers for People of Moderate Means, Some Problems of Availability of Legal Services (1970) at 1-39; see also Report of the Staff to the Federal Trade Commission, Improving Consumer Access to Legal Services (1984).
73. G. Singsen, Report on the Survey of Legal Clinics and Advertising Law Firms, ABA Special Committee on Delivery of Legal Services (August 1990), at 1.
74. See L. Brickman, Expansion of the Lawyering Process Through a New Delivery System: The Emergence and State of Legal Paraprofessionalism, 71 Colum.L.Rev. 1153 (1971).
75. Carol Richards, Legal Clinics: Merely Advertising Law Firms? (ABA Special Committee on the delivery of Legal Services, November 1981), at 86.
76. Id. at 6-7.
77. Singsen, supra note 73, at 131-33.
78. Seron, supra note 19, at 126-27.
79. So advised by the Ohio Secretary of State’s office, 2-3-00.
80. PR Newswire: Wednesday December 8, 1999.
81. Mover, Jacoby & Myers’ Gail Koff keeps changing the face of legal profession, Long Island Newsday, April 10, 2000, at C8-C9.
82. PR Newswire: Tuesday November 16, 1999.
83. Singsen, supra note 73, at 132-33.
84. Seron, supra note 19, at 68-73. Compare the picture provided by Jerry Van Hoy, who describes the pressure from management to mislead clients. Franchise Law Firms and the Transformation of Personal Legal Services (1997).
85. Id. at 129-30.
86. The information on lawyer referral services is drawn from the Reference Handbook published in 1988 by the ABA Lawyer Referral and Information Service Committee and from Lawyer Referral and Information Services, A Profile at the Turn of the Century published by the Committee in 1999.
87. DontNeedALawyer.com at its website offers referrals to "lawyers, paralegals, accoutants and other professionals, in your areas, standing by, ready to assist you with a free initial consultation of 30 minutes by telephone." In New York, a recent amendment to the Code of Professional Responsibility (see DR 2-103(D)(3)) will permit lawyers to operate private for-profit referral services provided court rules are implemented to govern them.
88. See NAACP v. Button, 371 U.S. 415 (1963); Brotherhood of Railroad Trainmen v. Virginia, 377 U.S. 1 (1964); United Mine Workers of America v. Illinois State Bar Association, 389 U.S. 217 (1967); United Transportation Union v. State Bar of Michigan, 401 U.S. 576 (1971).
89. The Executive Director of the ABA’s American Prepaid Legal Services Institute states that it is difficult to determine which plans today are the largest, since the private commercial plans (other than Prepaid Legal Services, Inc.) consider that data proprietary.
90. Letter of Curtis R. Berger to Robert MacCrate, December 10, 1991.
91. See also Who’s Who in Prepaid Legal Services, published by the American Prepaid Legal Services Institute (1999).
92. NewsBriefs, "Bar Foundation Study Yields Prepaid–Lawyer Use Data," American Prepaid Legal Services Institute, Chicago (June, 1989).
93. National Resource Center for Consumers of Legal Services, Legal Plan Letter (February 1998) at 1; Alec M. Schwartz, executive director of the APLSI, greatly assisted the Committee in the development of the material on legal service plans.
94. Pursuant to the July 1999 amendments, closed panel prepaid legal service plans are now permitted in New York under DR 2-103(D)(4).
95. Barbara A. Curran, 1989 Survey of the Public’s Use of Legal Services, in American Bar Association Consortium on Legal Services and the Public, Two National Surveys: 1989 Pilot Assessments of the Unmet Legal Needs of the Poor and the Public Generally (September 1989), at 57.
96. ABA Consortium on Legal Services and the Public, Legal Services for the Average Citizen (Discussion papers 1977, reprinted 1978).
97. 371 U.S. 415.
98. N. Aron, Non Traditional Models for Legal Services Delivery, presented at the ABA Conference on Access to Justice in the 1990s (May 1989).
99. See the listings of legal services programs in the NLADA 1998/99 Directory, at 17-123.
100. See "Fighting the good fight" "Breachhead for conservatism," National Law Journal, December 27, 1999 – January 3, 2000, at A10-A11, relating to the exoneration of death-penalty defendants and the Center for Individual Rights’ furthering of libertarian and conservative causes.
101. Justice Thurgood Marshall, "Financing Public Interest Law: The Role of the Organized Bar." Address to the Award of Merit Luncheon of the Bar Activities Section of the American Bar Association (August 10, 1975). (Quoted by N. Aron, Liberty & Justice for All (1988), at 2.)
102. See F. Zemans & V. Rosenblum, Making of a Public Profession, at 66 (1981).
103. T.C. Fischer, supra note 28, at 79.
104. See J.S. Studley, "Building on the Assets of Mid-size Firms," Manhattan Lawyer (November 1991), at 45.
105. See chart, supra at 66.
106. See R.L. Nelson, Partners with Power: Social Transformation of the Large Law Firm (1988), at 1.
107. Sander & Williams, supra note 6, at 478.
108. L.W. Friedman, A History of American Law (1985), at 636.
109. W.K. Hobson, supra note 1, at 141 et seq., Chapter 5 "Rise of Large Law Firms."
110. Cited by Sander & Williams, supra note 6, at 436; the Census figures did not distinguish between salaried lawyers and other salaried employees.
111. Galanter & Palay, supra note 38, at 20-36.
112. Galanter & Palay, supra note 38, at 77-110.
113. The National Association for Law Placement’s Directory of Legal Employers indicates that nearly all firms with more than 100 lawyers list over a half-dozen specialties covering most major areas of corporate law (even though many are best known for a single specialty). Cited in Sander & Williams, supra note 6, at 436, fn. 14.
114. It has been suggested that 25% of the corporations going public change law firms in the process. R.L. Abel, supra note 43, at 184.
115. See G. Taylor, Party’s Over in Insurance, National Law Journal, September 23, 1991.
116. "Insurers score another victory," National Law Journal, November 29, 1999, at B1, B4; see also Chapter 12, Section 3.
117. J.W. Jones, The Challenge of Change: The Practice of Law in the Year 2000, 41 Vand. L. Rev. 683 (1988).
118. See B. Johnson, Administration Grows Up, Nat. L. Jour. (April 28, 1986) at 17.
119. S. Schmidt, Firm Development Mobilized by a "New Breed" of Resource, Nat. L. Jour. (August 25, 1986) at 15.
120. Galanter & Palay, supra note 38, at 123 (Table 7).
121. A government study of eight major professions in the 1940s found that lawyers had the most unequal distribution of income. U.S. Dept. of Commerce, Survey of Current Business (May 1944): in 1941, the most affluent 5% of lawyers accounted for 28% of all lawyer income.
122. Sander & Williams, supra note 6, at 446-451 (Table 10).
123. Id. at 466-467 (Table 14).
124. Id. at 450-451. It is appropriate to note that the less systematic and more limited surveys done by independent consulting firms and published in the legal press failed to report the general decline in income, but focused instead only on the general prosperity of "the most elite end of the lawyer spectrum."
125. Id. at 441 (Table 5).
126. Id. at 440-441.
127. Id. at 475.
128. Id. at 441. Included in receipts from individual clients are the contingent fees paid plaintiffs’ lawyers in personal injury and product liability cases. There are firms of every size, including many medium-sized firms, which specialize in handling these cases on a contingent fee basis.
129. Id. at 475.
130. Id. at 475-476.
131. R.B. McKay, The Rise of the Justice Industry and the Decline of Legal Ethics, 68 Wash. Univ. L. Quarterly 829 (1990), at 846.
132. E.J. Pollock, Big Firms Learn That They, Too, Are A Cyclical Business, Wall Street Journal (August 15, 1991), at 1.
133. The National Law Journal’s annual listing of the nation’s largest law firms, December 13, 1999.
134. See Galanter & Palay, supra note 38, Table 7, at 123; see also S. Brill, The Law Business in the Year 2000, American Lawyer (Management Report, June 1989); D. Bradlow, The Changing Legal Environment, The 1980s and Beyond, ABA Journal (December 1988), at 72.
135. Galanter & Palay, supra note 38, at 138.
136. See J. D. Donnell, The Corporate Counsel - A Role Study (1970), at 27-28.
137. B. Lyne, The Pressure Is On, Nat. Law Jour. (Corporate Counsel Supplement, Sept. 9, 1991), at 51. See also 2. Johnstone & D. Hopson, Lawyers and Their Work, Chapter 6: Corporate Law Departments (1967).
138. Lyne, Id. at 51.
139. See W. S. Lipsman, American Corporate Counsel as In-House Advisers Overseas, ACCA Docket (Spring 1991), at 18.
140. Lyne, Id. at 52.
141. Laurel-Ann Dooley, Law Firms Cope With Request for Proposals, National Law Journal, November 22, 1999, B1.
142. G.C. Hazard, Ethical Dilemmas of Corporate Counsel, 46 Emory L. Journal 1011-12 (1997).
143. Business Watch, National Law Journal, January 31, 2000, at 134.
144. U.S. Census Bureau, 1997 Census of Governments, vol. 1, at v.
145. The Municipal Year Book 1997, at 114-152.
146. 1991 Report of the National Association of District Attorneys.
147. This estimate is based on information provided by the National Institute of Municipal Law Offices (NIMLO), the Municipal Yearbook and the National Association of Counties (NACO).
148. The NYSBA staff estimates that between 12 and 15 percent of the 120,000 New York lawyers are government employees: 14,400 to 18,000. Letter from John A. Williamson, Jr., Associate Executive Director, February 23, 2000.
149. Many lawyers employed by state and local units of government seem to find no purpose in providing listing information to the Martindale-Hubbell Directory, the basis of the Lawyer Statistical Report, suggesting that the figure is significantly less than the actual number of lawyers employed by state and local governments.
150. E.N. Griswold, OuldFields, New Corne (1991), at 119.
151. 1995 Lawyer Statistical Report at 7.
153. "Public defender ranks shrinking", Poughkeepsie Journal, March 24, 2000, at 6A.
1. We base this conclusion in large part on an examination of all of the Internet home pages of the 100 largest law firms in the United States and on a sampling of the 150 next largest firms (as ranked in the most recent National Law Journal "250" survey).
2. See Brief of Amicus Curiae American Association of Attorney-Certified Public Accountants, Inc. in Support of Petitioner, Ibanez v. State of Florida, No. 93-639, at 14 (Feb. 28, 1994); Nassau County Ethics Op. 86-37.
3. See generally ABA/BNA Lawyers’ Manual on Professional Conduct 81:2009, 81:3012-13 (1999) (collecting authorities); Jorge L. Carro & Lisa A. Martinez, Ohio’s Ethical Prohibition Against the Use of Dual Degrees in Letterheads: A Time for Change?, 18 U. Dayton L. Rev. 63 (1992); New York State Ethics Ops. 711 (1999) and 687 (1997); New York County Ethics Op. 685 (1991); Nassau County Ethics Ops. 92-12 and 92-18; Los Angeles County Ethics Opinion 477 (1994).
4. See, e.g., ABA Informal Ethics Op. 1422 (1978); Alabama Ethics Op. 86-101; Ohio Informal Ethics Op. 88-2; Philadelphia Ethics Op. 87-22.
5. See Chapter 12, Section 1.
6. See N.Y. County Ethics Op. 388 (1949); Note, Attorneys Who Are Also Certified Public Accountants May Properly Practice Both Professions in the Same Office. 63 Harv. L. Rev. 1457, 1458 (1950).
7. See ABA Informal Ethics Op. 83-1497 n.2; Massachusetts Ethics Op. 82-2; Michigan Ethics Op. CI-795 (1983); Texas Ethics Op. 406 (1983). See generally discussion in Chapter 12, Section 1.
8. See generally Darryl Van Duch & Edward Kensik, "Entrepreneurial Firms May Face Ethical Barriers," New Jersey Law Journal, Sep. 14, 1998, at 25.
9. See Thom Weidlich, "Law Firms Struggle to Define — and Describe — the Entity," National Law Journal, Dec. 21, 1992, at 32.
10. "Ancillary Businesses of the Nation’s 250 Largest Law Firms," National Law Journal, Dec. 21, 1992, at 31. See also Thom Weidlich, "Ancillary Businesses Prospering Quietly," National Law Journal, Dec. 21, 1992, at 1.
11. American Bar Association, "...In the Spirit of Public Service: A Blueprint for the Rekindling of Lawyer Professionalism," 112 F.R.D. 243 (1986) (the "Stanley Report").
12. Id. Stanley Report, at 280-81.
13. Id. at 281.
14. See generally Darryl Van Duch & Edward Kensik, "Entrepreneurial Firms May Face Ethical Barriers," New Jersey Law Journal, Sep. 14, 1998, at 25 (discussing Littler Mendelsohn, Howrey & Simon and Dickinson Wright).
17. "Bundling Legal Services with Others Gets Mixed Reviews," The Business Journal, Feb. 25, 2000, at 26; see also www.hklaw.com/whoweare/ancillary/index.shtml.
18. T. R. Goldman & Dierdre Shesgreen, "Lobby Talk: McGuire, Woods Ventures Out," Legal Times, Jan. 19, 1998, at 4.
19. See New York Law Journal, Jan. 11, 2000, at 1, col. 1.
20. See Newsday, Feb. 21, 2000.
21. They have done so notwithstanding the fact that the American Bar Association has sent an ambiguous message to the bar by reversing its position at least twice on the question of lawyers operating ancillary businesses. See generally William B. Dunn, "Legal Ethics and Ancillary Business," 74 Michigan Bar Journal 154 (Feb. 1995). See discussion in Chapter 12, Section 1.
22. The District of Columbia has permitted nonlawyer partners in law firms for several years. District of Columbia Rules of Professional Conduct, Rule 5.4(b) ("[a] lawyer may practice law in a partnership or other form of organization in which a financial interest is held or managerial authority is exercised by an individual nonlawyer who performs professional services which assist the organization in providing legal services to clients, but only if . . . the partnership or organization has as its sole purpose providing legal services to clients . . . ."). See generally Randall Samborn, "Non-Lawyers as Firm Partners: D.C. Court Expected to Approve Long-Awaited Ethics Rule Change," National Law Journal, Mar. 5, 1990, at 1.
23. Steven Wilmsen, "Law Firm Partners With Broker," Boston Globe, Oct. 5, 1999, at C6; "Legg Mason and Bingham Dana Form Joint Venture," Legg Mason press release, Oct. 4, 1999 (on file).
24. The Mintz Levin firm was one of the first to create subsidiaries to provide nonlegal services to clients. ML Global LLC, formed in 1996, advised clients on airport and seaport ventures, real estate issues and international business strategies. ML Strategies Inc., created in 1992, assisted clients on management issues in health care organization and compliance, public relations, government affairs and strategic planning. (These two wholly owned subsidiaries were merged in January 1999.) E. Douglas Banks, "Tocco Heads Up New Mintz, Levin Consulting Affiliate," Boston Business Journal, Jan. 1, 1999, at 9.
25. The Miller & Chevalier alliance prompted the first significant press coverage in the United States of the MDP issue and the activities of the "Big Six" accounting firms in other parts of the world. "Big Six Mobilize Legal Forces," International Tax Review, April 1997, at 1; "Price Waterhouse Forms Alliance with US Law Firm," International Accounting Bulletin, Feb. 27, 1997, at 4; Phillippa Cannon, "The Big Six Move In," International Financial Law Review, Nov. 1997, at 25.
26. Meera Somasundaram, "Local Law Firm Branches Out in Big 5 Link: Growing Services Under KPMG Deal," Crain’s Chicago Business, Aug. 16, 1999, at 22; Marthan Neil, "As Firm Here Forges Alliance With CPAs," Chicago Daily Law Bulletin, Aug. 9, 1999, at 1; Sara Hazlewood, "Coalition Blurs Lines Between Law Firms, Accountants," The Business Journal, Aug. 13, 1999, at 6; Laura Impellizzeri, "S.F. Law’s New Order," San Francisco Business Times, Aug. 20, 1999, at 1. The national firm of Holland & Knight LLP was originally announced as a participant in this venture but ultimately did not join. "KPMG Links Tax Practice to Morrison & Foerster," International Tax Review, Sept. 1999, at 5. Holland & Knight is no stranger to ancillary services, maintaining an Ancillary Professional Services Department (known as Holland & Knight Professionals) to provide technology services, translation services, government relations assistance, corporate relocation incentive assistance, employee benefits analysis, environmental services, corporate integrity services, and strategic planning advice, among other things, to clients of the law firm. Information derived from Holland & Knight LLP web site, URL www.hklaw.com/whoweare/ancillary/index.shtml.
27. See, e.g., Tom Herman, "Ernst & Young Will Finance Launch of Law Firm in Special Arrangement," Wall Street Journal, Nov. 3, 1999, at B10; Siobhan Roth, "Inside the Ernst & Young Deal," The Recorder, Nov. 10, 1999. Use of the Ernst & Young trade name as part of the firm name may or may not be permissible in the District of Columbia, depending upon whether it is viewed as deceptive or misleading to the public. District of Columbia Rules of Professional Conduct, Rules 5.4(b), 7.5(a); see District of Columbia Ethics Opinion 244 (1993) (permitting name of non-lawyer partner to be included in a law firm name assuming compliance with Rule 5.4(b)). McKee Nelson Ernst & Young is listed as part of Ernst & Young Intenational in Ernst & Young 2000 Worldwide Corporate Tax Guide, at page 696.
1. See Joint Public Hearing New York State Assembly on Proposed Amendments to the State Accountancy Statute, November 16, 1999.
2. New York in 1870, Cincinnati in 1872, Cleveland in 1873, St. Louis and Chicago in 1874, Memphis and Nashville in 1875, and Boston in 1876.
3. Dates of the initial organization of state bars:
District of Columbia
4. Some 75 lawyers from 21 states and the District of Columbia came together for the organizational meeting of the ABA in the upstate New York resort of Saratoga, in response to a call of the Connecticut Bar Association based on a resolution adopted a year earlier by the American Social Science Association that had commended the future of the legal profession to the emerging law schools of the country. See Goetsch, Essays on Simeon E. Baldwin, 24-30, cited by R.B. Stevens, Law School: Legal Education in America from the 1850s to the 1980s (1983) at 34; G. Carson, A Good Day at Saratoga (1978).
5. See R.B. Stevens, Law School: Legal Education in America from the 1850s to the 1980s (1983), at 51 to 72.
6. Id. at 92-93.
7. W.A. Seavey, The Association of American Law Schools in Retrospect, 3 Journal of Legal Education 153 (1950) at 157-58: the requirements for Association membership: (1) accept students for admission only who had a high school or equivalent education; (2) require 10 hours-a-week of instruction for at least two years; (3) only graduate students after an examination; and(4) provide students with access to a law library having reports of the state in which located and of the U.S. Supreme Court.
8. Id. at 160.
9. See R.B. Stevens, supra at 115 and Seavey, supra at 161-62; cf. A.Z. Reed, Training for the Public Profession of Law (1921).
10. One aroused critic declared:
"I protest in the name of 111,000,000 people against so reactionary, so narrow, so unfair a position as says: ‘It matters not what your competency in every particular; if you did not acquire it in one of about a half dozen great endowed universities, then, not prima facie, but conclusively, you are unfit to represent your fellow citizens or to advise them upon their legal rights.’" 4 American Law School Review 682 (1921), cited by R.B. Stevens, supra note 5, at 125 (fn. 18).
11. R.B. Stevens, supra note 5, at 114.
12. If the applicant for admission were a college graduate, it was common to require a year less of "law" training. See, for example, the first New York State Admissions Standards prescribed in 1895. J. Newton Fiero, Albany Law School Semi-Centennial Remarks (1901).
13. See ABA Comprehensive Guide to Bar Admissions Requirements, 1999 at 10-12; in Alaska, a clerkship program is provided for by statute, but has not been implanted by the University of Alaska in recent years.
14. R. MacCrate "The Lost Lawyer" Regained: The Abiding Values of the Legal Profession, 100 Dickinson L. Rev. 587 (1996).
1. See supra, Chapter 1 "The Salient Changes in the Demography."
2. Supra, Chapter 3 "The Differentiation in Practice Settings;" see also, Report of the Task Force on Law Schools and the Profession: Narrowing the Gap, Legal Education and Professional Development-An Educational Continuum 29-102 (1992).
3. Michael I. Powell, From Patrician to Professional Elite: The Transformation of the New York City Bar Association (1988); John P. Heinz & Edward O. Laumann, Chicago Lawyers: The Social Structure of the Bar, 234-41 (1982); Richard L. Abel, American Lawyers 45, 90, 100, 290 (1989).
4. Charles Wolfram, Modern Legal Ethics § 2.2 (1986).
5. See, e.g., John Leubsdorf, Man In His Original Dignity: Legal Ethics in France (2000); Kenneth F. Ledford, From General Estate to Special Interest: German Lawyers 1878-1933 (1996).
6. On barristers, see, e.g., J.H. Baker, Judicial Review of the Judges as Visitors to the Inns of Court, 1992 Public L. 411. Solicitors, although subject to court discipline, have now owed much of their regulation to judges, who of course were never solicitors themselves. Brian Abel-Smith & Robert Stevens, Lawyers and the Courts: A Sociological Study of the English Legal System, 1750-1965 (1967).
7. United Mine Workers v. Illinois State Bar Ass’n, 389 U.S. 217 (1967); Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975); Bates v. State Bar of Arizona, 433 U.S. 350 (1977).
8. Jay Feinman, Economic Negligence, ch. 9 (1994).
9. Thomas D. Morgan & Ronald D. Rotunda, 1999 Selected Standards on Professional Responsibility 133-42 (1999).
10. Commission on Evaluation of Disciplinary Enforcement, Law Regulation for a New Century 89-129 (1992).
11. Compare Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (Calif. 1998)(New York firm’s initiation of California arbitration unauthorized practice) with Calif. Code of Civ. Pro. § 1282.4 (responding to Birbrower by authorizing similar behavior); see also Spanos v. Skouras Theatres Corp., 364 F.2d 161 (2d Cir.), cert. den., 385 U.S. 987 (1966)(considering interstate federal law); Restatement of the Law Governing Lawyers § 3.
12. E.g., Attorney Grievance Comm’n v. Hopp, 623 A.2d 193 (Md. 1993)(disciplining Maryland lawyer for California misconduct); Paramount Corp. v. QVC Network, 637 A.2d 34 (Del. 1994) (discussing Delaware discipline for Delaware misconduct by Texas lawyer); see ABA Model Rules of Professional Conduct, rule 8.5; Symposium, Ethics and the Multijurisdictional Practice of Law, 36 S. Tex. L. Rev. 657 (1995).
13. E.g., In re American Airlines, Inc., 972 F.2d 605 (5th Cir. 1992) (ethical common law governs disqualification of lawyers in federal court action); In the Matter of John H. Gutfreund, Securities Exchange Act of 1934, Release No. 34-31554 (SEC 1992)(discussing duties of brokerage firm lawyer under federal law).
14. E.g., Virginia Supreme Court v. Friedman, 487 U.S. 59 (1988) (striking down residence requirement for admission, but accepting that state may impose other requirements); 28 U.S.C. § 530B (federal government lawyers subject to state ethical standards).
15. Charles Wolfram, note 4 supra, at 40-41, 912-913.
16. For perhaps the most extensive set of statutes, see Calif. Business & Professions Code §§ 6067-6228. England and France, where circumstances are different, have recently passed far more comprehensive legislation. Courts and Legal Services Act 1990 (c. 41) (Eng.); Access to Justice Act 1999 (c. 22) (Eng.); Law no. 71-1130 of Dec. 31, 1971, amended by Law no. 90-1259 of Dec. 31, 1990 (France).
17. Charles Wolfram, note 4 supra, at 756-57, 751-53.
18. E.g., Marc Galanter, Predators and Parasites: Lawyer-Bashing and Civil Justice, 28 Ga. L. Rev. 663, 667-68 (1994) (discussing HALT-Americans for Legal Reform, an "antilawyer" organization); Symposium on the American Law Institute: Process, Partisanship, and the Restatements of Law, 26 Hofstra L. Rev. 567 (1998) (discussing lobbying and the Restatement of the Law Governing Lawyers).
19. See David B. Wilkins, Who Should Regulate Lawyers?, 105 Harv. L. Rev. 799 (1992).
20. David Hoffman, Professional Deportment, in A Course of Legal Study 324-34 (1817); George Sharswood, An Essay on Professional Ethics (1854); see M.H. Hoeflich, Legal Ethics in the Nineteenth Century: The "Other Tradition," 47 Kan. L. Rev. 793 (1999).
21. Geoffrey C. Hazard, Jr., The Future of Legal Ethics, 100 Yale L.J. 1239 (1991).
22. John Leubsdorf, Legal Malpractice and Professional Responsibility, 48 Rutgers L. Rev. 101 (1995).
23. See Richard L. Abel, note 3 supra, at 112-41(1989).
24. See Model Rules 1.11, 1.12, 2.1, 2.2, 2.3, 3.8, 3.9.
25. Canons 33; Model Rules 5.1-4.
26. Susan D. Carle, Lawyers’ Duty to Do Justice: A New Look at the History of the 1908 Canons, 24 L. & Social Inquiry 1 (1999); Geoffrey C. Hazard, Jr., note 21 supra; Ted Schneyer, Professionalism as Bar Politics: The Making of the Model Rules of Professional Conduct, 14 L. & Social Inquiry 677 (1989); Proposed American Lawyer’s Code of Conduct (rev. draft 1982).
27. E.g.,The Florida Bar Re: Amendments to Rules Regulating the Florida Bar, 624 So. 2d 720 (Fl. 1993); Steven C. Krane, Proposed Amendments to the Code of Professional Responsibility: A Continuing Process of Change, 69 N.Y. St. B.J., May/June 1997, at 42; Massachusetts is Latest State to Adopt ABA Model Rules, 13 ABA/BNA Lawyers’ Manual on Professional Conduct 181 (1997).
28. E.g., N.Y. Code of Prof. Responsibility, DR 1-102(A)(6), 5-111; Colo. Rules of Prof. Conduct, rule 1.2.
29. 22 N.Y.C.R.R. §§ 521.1-.8 (permitting foreign lawyers to register as legal consultants).
30. N.Y. Code of Prof. Responsibility, DR 1-104; N.J. Rules Prof. Conduct, rule 5.1(a).
31. Report of the Task Force on Law Schools and the Profession: Narrowing the Gap, Legal Education and Professional Development-An Educational Continuum 111-14 (1992).
32. Robert Stevens, Law School: Legal Education in America from the 1850s to the 1980s (1983).
33. Michael J. Kelly, Legal Ethics and Legal Education 7-21 (1980); LeRoy L. Lamborn, Legal Ethics and Professional Responsibility (1973); authorities cited note 15, supra.
34. Clinical Education for the Law Student (1973).
35. ABA Standards for the Approval of Law Schools, standard 304(a)(iv) (as amended August 1974).
36. See Deborah L. Rhode, Professional Responsibility: Ethics by the Pervasive Method (2d ed. 1998).
37. Symposium, Teaching Legal Ethics, 58 Law & Contemp. Probs., Nos. 3 & 4 (1995); see Report of the Professionalism Committee, Teaching and Learning Professionalism (1996); Teaching and Learning Professionalism: Symposium Proceedings (1997).
38. Compare Geoffrey C. Hazard, Jr., Susan Koniak & Roger Cramton, The Law and Ethics of Lawyering (3d ed. 1999); John F. Sutton, Jr. & John S. Dzienkowski, Cases and Materials on the Professional Responsibilities of Lawyers (1989) with Thomas L. Shaffer, American Legal Ethics: Text, Readings, and Discussion Topics (1985); Daniel R. Coquillette, Lawyers and Fundamental Moral Responsibility (1995).
39. See John Leubsdorf, Three Models of Professional Reform, 67 Cornell L. Rev. 1021 (1982).
40. Andrew W. Boon & Jennifer Levin, The Ethics and Conduct of Lawyers in England and Wales 152-72 (1999); Jean-Claude Masclet, et al., Legal Education and Training in Europe: France, 2 Int’l J. Leg. Prof. 7 (1995).
41. Charles Wolfram, note 4 supra, at 198-202, 858-64.
42. ABA/BNA Lawyers’ Manual on Professional Conduct 21:601-02; Comprehensive Guide to Bar Admission Requirements 20 (1999).
43. Robert M. Jarvis, An Anecdotal History of the Bar Exam, 9 Georgetown K. Legal Ethics 359, 384-85 (1996); Leslie C. Levin, The MPRE Reconsidered, 86 Ky. L.J. 395, 409-11 (1997).
44. Report of the Task Force on Law Schools and the Profession: Narrowing the Gap, Legal Education and Professional Development-An Educational Continuum 273-304 (1992).
45. Paul A. Wolkin, ALI-ABA...XL! (1988); CLE and the Lawyer’s Responsibilities in an Evolving Profession (1998).
46. Sheran & Harmon, Minnesota Plan: Mandatory Continuing Legal Education for Lawyers and Judges as a Condition for the Maintaining of Professional Licensing, 44 Fordham L. Rev. 1081 (1976).
47. 22 N.Y.C.R.R. pt. 1500 (1999); ABA/BNA Lawyers’ Manual on Professional Conduct 21:3004-13.
48. Charles W. Wolfram, note 4 supra, at 80; American Bar Association, Survey on Lawyer Discipline Systems, 1995, at 5, 12 (1997).
49. E.g., In re Forrest, 730 A.2d 340 (N.J. 1999)(failure to disclose client’s death); In re Yarborough, 1999 S.C. Lexis 94 (S.C. 1999)(sexual overtures to client); note 50, infra.
50. Richard Abel, note 3 supra, at 143-50 (asserting little subsequent improvement); Mark & Cathcart, Discipline Within the Legal Profession: Is It Self-Regulation?, 1974 U. Ill. L. Forum 193; Hedvah L. Shuchman, Self-Regulation in the Professions: Accounting, Law, Medicine 41-50, 139-60, 229-34 (1981).
51. ABA Special Committee on Evaluation of Disciplinary Enforcement, Problems and Recommendations (1970).
52. American Bar Association, Survey on Lawyer Discipline Systems, 1995 (1997).
53. ABA Model Rules for Lawyer Disciplinary Enforcement (1989); ABA Standards for Imposing Lawyer Sanctions (1986); Report of the Commission on Evaluation of Disciplinary Enforcement, Lawyer Regulation for a New Century (1992).
54. Id at 33-34, 117-20.
55. E.g., In re Himmel, 533 N.E.2d 790 (Ill. 1988) (discipline for failing to report another lawyer’s misconduct); In re Fordham, 668 N.E.2d 816 (Mass. 1996), cert. den., 519 U.S. 1149 (1997) (discipline of hourly fee lawyer for devoting too many hours to criminal defense); Lisa G. Lerman, Blue-Chip Bilking: Regulation of Billing and Expense Fraud by Lawyers, 12 Georgetown J. Legal Ethics 205 (1999) (billing fraud by large firm lawyers).
56. E.g., In re Primus, 436 U.S. 412 (1978) (lawyer’s First Amendment right to solicit for unpaid public interest case); In re Ryder, 263 F. Supp. 360 (E.D. Va.), aff’d, 381 F.2d 713 (4th Cir. 1967) (lawyer may not place criminal suspect’s gun and stolen property in safe deposit box).
57. E.g., Kevin H. Michels, New Jersey Attorney Ethics 934-44 (1998).
58. E.g., ABA/BNA Lawyers’ Manual on Professional Conduct, Ethics Opinions 1991-1995; Charles Wolfram, note 4 supra, at 65-67; Ted Finman & Theodore Schneyer, The Role of Bar Association Ethics Opinions in Regulating Lawyer Conduct: A Critique of the Work of the ABA Committee on Ethics and Professional Responsibility, 29 U.C.L.A. L. Rev. 67 (1981).
59. E.g., Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (striking down minimum fee scales under Sherman Act); Chicago Council of Lawyers v. Bauer, 522 F.2d 242 (7th Cir. 1975), cert. denied, 427 U.S. 912 (1976)(holding violative of First Amendment rule limiting lawyers’ comments on pending cases).
60. Bruce A. Green, The Criminal Regulation of Lawyers, 67 Fordham L. Rev. 327 (1998).
61. Manuel R. Ramos, Legal Malpractice: The Profession’s Dirty Little Secret, 47 Vand. L. Rev. 1657 (1994); ABA Standing Committee on Lawyers’ Professional Liability, Characteristics of Legal Malpractice (1989).
62. E.g., Re v. Kornstein Veisz & Wexler, 958 F. Supp. 907 (S.D.N.Y. 1997) (conflict of interest; liability for breach of fiduciary duty); 2 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 15.18 (4th ed. 1996).
63. Id. at §§ 14.21-23.
64. E.g., Doucette v. Kwiat, 467 N.E.2d 1374 (Mass. 1984) (liability for overcharging); Lucas v. Nesbitt, 653 S.W.2d 883 (Tex. Civ. App. 1983)(liability for misrepresentation and failure to file proper pleading).
65. Restatement of the Law Governing Lawyers § 52; John Leubsdorf, note 22 supra.
66. E.g., A.B.A. Standing Committee on Lawyers’ Professional Liability, The Lawyer’s Desk Guide to Legal Malpractice (1992).
67. Restatement of the Law Governing Lawyers §§ 34-43. But see Stephen Gillers, Caveat Client: How the Proposed Final Draft of the Restatement of the Law Governing Lawyers Fails to Protect Unsophisticated Consumers in Fee Agreements with Lawyers, 10 Georgetown J. Legal Ethics 581 (1997).
68. Restatement of the Law Governing Lawyers § 37.
69. Id. § 42; Alan S. Rau, Resolving Disputes Over Attorneys’ Fees: The Role of ADR, 46 S.M.U.L. Rev. 2005 (1993).
70. E.g., National Savings Bank v. Ward, 100 U.S. 195 (1879).
71. Restatement of the Law Governing Lawyers § 51.
72. E.g., Heintz v. Jenkins, 514 U.S. 291 (1995) (Fair Debt Collection Practices Act); Rubin v. Schottenstein, Zox & Dunn, 143 F.3d 263 (6th Cir. 1998) (securities acts liability for misrepresentation); Board of Educ. v. Farmingdale Classroom Teachers Ass’n, 343 N.E.2d 278 (N.Y. 1975) (abuse of process).
73. Symposium, In the Matter of Kaye, Scholer, Fierman, Hays & Handler, 66 S. Cal. L. Rev. 985 (1993); The Attorney-Client Relationship After Kaye, Scholer (P.L.I. 1992).
74. E.g., T.C. Theatre Corp. v. Warner Brothers Pictures, Inc., 113 F. Supp. 265 (S.D.N.Y. 1953) (lawyer may not sue former client in matter substantially related to matters in which lawyer represented client).
75. E.g., Niesig v. Team I, 558 N.E.2d 1030 (1990) (application of rule to employees of corporate client).
76. E.g., Upjohn Co. v. United States, 449 U.S. 383 (1991) (communications by employees of corporate client).
77. E.g., 28 U.S.C. § 1927; Fed. R. Civ. P. 11, 37.
78. See David B. Wilkins, note 19 supra.
79. Restatement of the Law Governing Lawyers (Proposed Final Drafts No. 1 (1996) and 2 (1998); Tentative Draft No. 8 (1997); ALI Completes Restatement on Lawyers, Gives Final Approval to All Sections, 14 ABA/BNA Lawyers’ Manual on Professional Conduct 211 (1998).
80. See the Commission’s proposals at http://www.abanet.org/cpr/e2k/draftrules.html.
81. Richard H. Rovere, Howe & Hummel (1947) (describing turn-of-the-century New York firm known for blackmail and other misbehavior).
82. Robert Stevens, note 32 supra.
83. See 2 Robert T. Swaine, The Cravath Firm and Its Predecessors 1819-1948, at 1-8, 124-32 (1948); Theodore Voorhees, On Training Associates (1989).
84. E.g., Mass. Rules of Prof. Conduct, rule 1.6(c) (providing for confidentiality for lawyer assistance programs); Linda McDonald, Legal Education and the Practicing Bar: A Partnership of Reality, in MacCrate Report-Building the Educational Continuum (1993) (New Mexico mentor system).
85. Report of the Professionalism Committee, Teaching and Learning Professionalism 29, 33 (1996); Susan Saab Fortney, Am I My Partner’s Keeper? Peer Review in Law Firms, 66 U. Colo. L. Rev. 329 (1995).
86. E.g., Robert O’Malley, Preventing Legal Malpractice in Large Law Firms, 20 U. Tol. L. Rev. 325 (1989); John A. Edginton, Managing Lawyers’ Risks at the Millennium, 73 Tul. L. Rev. 1987 (1999).
87. E.g., The Law Firm and the Public Good (R.A. Katzmann ed. 1995).
88. E.g., Michael J. Powell, note 3 supra; Terence C. Halliday, Beyond Monopoly: Lawyers, State Crises, and Professional Empowerment 145-283 (1987); see generally the N.Y. State Bar Journal.
89. Lathrop v. Donohue, 367 U.S. 820 (1961) (upholding compulsory membership); Terry Radtke, The Last Stage In Reprofessionalizing the Bar: The Wisconsin Bar Integration Movement, 1934-1956, 81 Marq. L. Rev. 1001 (1998); Ted Schneyer, The Incoherence of the Unified Bar Concept, 1983 Am. Bar. Found. Res. J. 1.
90. Keller v. State Bar of California, 496 U.S. 1 (1990) (entitling dissenters to refund of part of integrated bar dues used for certain political activities); In the Matter of the State Bar of Wisconsin, 485 N.W.2d 225 (Wis. 1992) (discussing options for organizing bar activities); David Luban, The Disengagement of the Legal Profession: Keller v. State Bar of California, 1990 Sup. Ct. Rev. 163; Mike McKee, And Then There Were None, The Recorder, May 11, 1999, at 1 (describing struggle to restrict California State Bar).
91. ABA Model Rules of Professional Conduct, rules 5.1, 5.3.
92. Authorities cited note 30 supra; Ted Schneyer, Professional Discipline for Law Firms, 77 Cornell L. Rev. 1 (1999).
93. Restatement of the Law Governing Lawyers § 58.
94. Wieder v. Skala, 609 N.E.2d 105 (N.Y. 1992) (law firm associate); General Dynamics v. Superior Court, 876 P.2d 487 (Cal. 1994)(in-house counsel). But see Bohatch v. Butler & Binion, 977 S.W.2d 543 (Tex. 1998).
95. See Jerry Van Hoy, Franchise Law Firms and the Transformation of Personal Legal Services (1997) (describing pressure to mislead clients).
96. Douglas E. Rosenthal, Lawyer and Client: Who’s in Charge? (1974).
97. Restatement of the Law Governing Lawyers §§ 21-23.
98. Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (forbidding minimum price scale); see National Soc’y of Professional Engineers v. United States, 435 U.S. 679 (1978) (invalidating professional rule against price bidding).
99. E.g., Bates v. State Bar of Arizona, 433 U.S. 350 (1977) (price advertising); Shapero v. Kentucky Bar Assoc., 486 U.S. 466 (1988) (targeted mail); Peel v. Attorney Registration and Disciplinary Comm’n, 496 U.S. 91 (1990) (credentials advertising).
1. See generally Gary John Previts & Barbara Dubis Merino, A History of Accounting in America (John Wiley & Sons, Inc., 1979), John L. Carey, The Rise of the Accounting Profession: From Technician to Professional 1896-1936 (1969).
2. See Carey, supra; Alistair M. Preston, et al., Changes in the Code of Ethics of the U.S. Accounting Profession, 1917 and 1988: The Continual Quest for Legitimation, 20 Accounting, Organization, and Society 507 (1995).
3. See, e.g., In re Bercu, 273 App. Div. 524, 78 N.Y.S.2d 209 (1948), aff’d, 299 N.Y.728, 87 N.E.2d 451 (1949); Gardner v. Conway, 234 Minn. 468, 48 N.W.2d 788 (1951); Agran v. Shapiro, 127 Cal. App. 2d 807, 273 P.2d 619 (Super. Ct. 1954). The continued vitality of these cases is questionable in view of the Agency Practice Act, 5 U.S.C. §500(c), which allows CPAs to practice before the Internal Revenue Service.
4. Erwin N. Griswold, A Further Look: Lawyers and Accountants, 41 ABAJ 1113 (Dec. 1955).
5. See Ahmed Belkaoui, The Coming Crisis in Accounting (1989).
6. See generally Colin Boyd, The Transformation of the Accounting Profession: The History Behind the Big 5 Accounting Firms Diversifying into Law, A Report Prepared for the Canadian Bar Association International Practice of Law Committee on Multi-Disciplinary Practices and the Legal Profession, May 13, 1999, http://www.commerce.usask.ca/faculty/boyd/mpacc801/FinalCBAReport.htm. See also Michael Trebilcock, Lilla Csorgo, Charles River Associates, Multidisciplinary Practices: A Consumer Welfare Perspective, submitted to ABA Commission on Multidisciplinary Practice August 4, 1999, http://www. abanet.org/cpr/canada.html.
7. Wallace E. Olson, The Accounting Profession, Years of Trial: 1969-1980 (1982); Subcommittee on Reporting, Accounting and Management of the Senate Committee on Government Operations, The Accounting Establishment: A Staff Study (1976); Abraham J. Briloff, More Debits than Credits: The Burnt Investor’s Guide to Financial Statements (1976).
8. Bates v. Arizona State Bar, 433 U.S. 350 (1977) invalidated the rule against advertising by lawyers; the holding is clearly applicable to advertising by CPAs as well. See also Ibanez v. Florida Department of Business Regulation, 512 U.S. 136 (1994), confirming the right of an individual licensed as a lawyer, a CPA and a certified financial planner to list all credentials in the telephone yellow pages.
9. Edenfield v. Fane, 507 U.S. 761 (1993).
10. Ohralik v. Ohio State Bar, 436 U.S. 447 (1978); Falanga v. Georgia State Bar, 150 F.3d 1333 (11th Cir. 1998), cert. denied, 119 S. Ct. 1496 (1999).
11. Bowman’s Accounting Report, Vol. 13, No. 8, August, 1999 p. 4.
12. Jeffrey E. Garten in "Ethics be Damned, Let’s Merge" at page 26 of Business Week for August 30, 1999.
13. Jens Drolshammer, The Future Legal Structure of International Law Firms, Special Edition European Journal of Law Reform (2000), at 15-16.
14. Public Accounting Report, October 31, 1999, based on the records of the Nebraska Board of Public Accountancy as of May 1, 1999.
15. See Andersen Consulting Business Unit Member Firms v. Andersen Worldwide, 98 Civ. 1030 (U.S. SDNY 1998).
16. Andersen Worldwide, Hoover’s Online, The Business Network, April 5, 2000.
18. Id.. Drolshammer, fn. 13, supra, at 16.
19. Id.. fn. 14, supra.
20. Who’s News, Wall Street Journal, February 25, 2000, at 9.
21. Deloitte Touche Tohmatsu, Hoover’s Online, The Business Network, April 5, 2000.
22. Id.. Drolshammer, fn. 13, supra, 17-18.
23. Id.. Public Accounting Report fn. 14, supra.
24. Ernst & Young International, Hoover’s Online, The Business Network, April 5, 2000.
25. Ernst & Young May Sell Unit to Cap Gemini, Wall Street Journal, December 7, 1999, at A3.
26. Id.. Drolshammer, fn. 11, supra, at 18.
27. Id.. Drolshammer, fn. 13, supra at 16-17.
28. John T. Lanning: One-Stop-Shopping For Global Tax Advice, The Metropolitan Corporate Counsel, November 1999, at 32.
29. Id.. Drolshammer, fn. 13, supra at 17.
30. Id.. Public Accounting Report, fn. 14, supra.
31. U.S. Industry and Trade Outlook 1998: Professional Business Services, Table 49-1, at 49-3.
32. KPMG International, Hoover’s Online, The Business Network, April 5, 2000.
33. Id.. Lanning, fn. 28, supra, at 4.
34. Id.. KPMG International, fn. 32, supra.
35. Id.. Public Accounting Report, fn. 14, supra.
36. PricewaterhouseCoopers, Hoover’s Online, The Business Network, April 5, 2000.
37. PwC reorganizes global network of legal firms, Jean Eaglesham, Legal Correspondent, London Financial Times, London edition, October 11, 1999, at 4 (National News).
39. See Subcommittee, A Staff Study, fn. 7, supra.
40. Id.. Colin Boyd, fn. 6, supra, at 29.
41. Id; a Professor Boyd, in a similar vein, suggests that the phrase "one-stop shopping" erroneously implies passive selling, in contrast to the active marketing by the Big Five that lies behind the rapid rise in their sales during the 1990s. Id.. Boyd, fn. 6, supra, at 29-30. For a detailed comparison between lawyer rules and those applicable to accountants performing attest and nonattest functions, see Harold Levinson, Regulation of Multidisciplinary Practice, ch., 2 (forthcoming).
42. See Rules That Only an Accountant Could Fail to Understand, New York Times, January 8, 2000, at C1; Accounting firms admit compliance faults, Financial Times, January 24, 2000, at 2; Report by SEC Says Pricewaterhouse Violated Rules on Conflicts of Interest, January 7, 2000, at A3.
43. See U.S. Industry and Trades Outlook 1988: Professional Business Services, at 49-1.
44. Id. at 49.3 and Tables 49-2 and 49-3.
45. Id. at 49.4 and Tables 49-4 and 49-5.
46. Id. at 49.5 and Tables 49-7 and 49-8.
47. For an analysis, including the AICPA rules, see Harold Levinson, fn. 41, supra.
48. The current edition of the UAA is the 3d edition (1997), as revised November 1999 http//www.aicpa.org/states/uaaentry.htm.
49. See generally Background on the AICPA/NASBA Uniform Accountancy Act-Third Edition-Revised (UAA) What Does It Mean? http//www.aicpa.org/states/uaa/briefs/newuaa.htm.
50. But see special regulation of the compilation function, infra.
51. Hedvah L. Shuchman, Self-Regulation in the Professions: Accounting, Law, Medicine (1981); Briloff, fn. 7, supra, at 350-60.
52. But see special regulation of the compilation function, infra.
53. In summary: A CPA who prepares and issues compilations while working for a nonCPA firm must sign the compilation report as an individual. UAA §14(1); a CPA and a firm that prepare and issue compilations must undergo peer review every three years. UAA §§6(j), 7(h); a CPA who supervises and signs compilation reports must meet special competency requirements as defined in professional standards. UAA §7(h), 14(1); a CPA and a firm that prepare and issue compilation reports may not accept commissions or contingent fees for products or services they provide for compilation clients. UAA §14(n)(o).
54. On the concept of "affiliated entities," see discussion of alternative practice structures, infra.
55. U.S. General Accounting Office, The Accounting Profession — Major Issues (1996); Gary John Previts, The Scope of CPA Services: A Study in the Development of the Concept of Independence and the Profession’s Role in Society (1985); Paul R. Brown, et al., Administrative and Judicial Approaches to Auditor Independence, 30 Seton Hall L. Rev. 443 (2000).
56. See Chapter 9 , infra.
57. The DM sets forth the above SEC position in an excerpt from a Letter from Harvey J. Goldschmid, Chief Counsel, SEC. Lynn E. Turner, Chief Accountant, SEC. and Richard H. Walker, Director of Enforcement, SEC to Philip S. Anderson, Esq., President, ABA, July 12, 1999, quoting from Matter of Charles E. Falk, Exch. Act Rel. No. 41426, AAE Rel. No. 1136 (SEC, May 19, 1999).
58. See fn. 55, supra, Paul R. Brown, et al.
59. See Chapter 9, Germany, infra.
60. Supra, fn. 3.
61. Letters dated September 30, 1999 from Robert MacCrate to: James Wadia, Arthur Andersen; James E. Copeland, Deloitte & Touche; Philip A. Laskaway, Ernst & Young; Stephan G. Butler, KPMG; and James J. Schiro, PricewaterhouseCoopers, LLP.
62. Voicemail recording at 212-768-6747, October 27, 1999. On the other hand, various representatives of the Big Five firms cooperated in the preparation of Chapter 9, and references to this effect are found in that chapter.
63. Id.. Lanning, fn. 28, supra, at 42, 47.
67. See Legal Times, February 3, 1997.
68. Interview with Irene Dorschak, April 3, 2000.
69. Lawyer Statistical Report for 1995.
70. The National Association for Law Placement ("NALP"), in its surveys of graduates of the law school classes of 1997 and 1998, divided graduates taking positions in accounting firms into two categories: "accounting legal" (for which a law degree is required) and "accounting - other" (for which a law degree is not required). The surveys indicate that approximately 1,000 JD graduates nationwide found jobs with accounting firms split between the two categories.
71. Id.. Lanning, fn. 28, supra.
72. Id. at 32.
73. Id. at 32.
74. Id. at 32 and 47.
75. Journal of Accountancy, September 1999, at 15. (The Journal is published by the American Institute of Certified Public Accountants, Inc.)
76. "Taking a Look Inside the Big 5" by Anna Snider, New York Law Journal, September 7, 1999; "Rivals Call Law Firms to Account" by David Seigal The Washington Post, November 12, 1998, at F-1; Multi-Disciplinary Professional Practices: A Consumer Welfare Perspective, Michael Trebilcock and Lilla Csorgo, Charles River Associates, Toronto, Ontario. 1999.
77. Bowmans, Accounting Report, Vol. 13, No. 11, November 1999, at 8.
79. Letter dated March 7, 2000 of Louis F. Duffy to Robert MacCrate.
80. "Inside the Ernst & Young Deal," Siobhan Roth, The Recorder/Cal Law, November 10, 1999 on NETWORK.com.
1. See P.M. Hamlin, Legal Education in Colonial New York, (NYU 1939), Appendix VII.
2. A.H. Dean, William Nelson Cromwell (1854-1948), NY (1957) at 59-69.
3. Nat. L. Jour. (December 13, 1999) at C5-C20.
4. Carole Silver, Globalization and the U.S. Market in Legal Services—Shifting Identities (forthcoming publication in Georgetown Journal of International Business).
5. id. at 48.
6. id. at 58-59.
7. Y. Dezalay and B.G. Gartle, Dealing in Virtue, International Commercial Arbitration and the Construction of a Transnational Legal Order, (Univ. of Chicago 1996), at 179.
8. These rules in North America, Europe, East Asia and Australia are set forth and discussed in Cone, International Trade in Legal Services (Little, Brown 1996).
9. See the text at Chapter 9, note 21 below. These U.S. states have continued to license foreign lawyers as legal consultants, although France has ceased to license foreign lawyers as conseils juridiques.
10. The New York legal-consultant rules are Part 521 of the Rules of the N.Y. Court of Appeals.
11. These specific commitments are annexed to the GATS, country-by-country.
12. Under Annex 1210.5, Section B of the NAFTA, Canadian, Mexican and U.S. professional bodies of lawyers have proposed a model rule for adoption by local regulatory authorities in each country, entitled "Foreign Legal Consultants and Related Aspects of the Cross-Border Delivery of Legal Services." This model rule is just that, and it may be adopted, modified, rejected or ignored by local regulatory authorities.
1. See generally, American Bar Association Commission on Multidisciplinary Practice (hereinafter, "ABA Commission on MDP"), Report to the House of Delegates, Aug. 1999, at C7-C9.
2. See, e.g., Ader, Synopsis of notes on the question of the multidisciplinary partnership in France today, at 4, Paris, Aug. 4, 1999.
3. See "The Paris Laboratory," Commercial Lawyer, Feb. 1996, at 16.
4. The 18 are the 15 member states of the European Union—Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom—plus Iceland, Liechtenstein, Norway. CCBE is the acronym for Commission Consultative des Barreaux Européens, the former French name of the Council.
5. See, e.g., the CCBE Declaration on Multidisciplinary Partnerships adopted in Brussels on Nov. 29, 1996.
6. By way of footnote, the CCBE Position on MDP stated that it was not addressing the subject of in-house counsel, because in-house lawyers have a position that "is distinct from that of lawyers serving the public to such an extent, that the two cannot be considered within the same context."
7. This possibility was referred to, e.g., in the course of the litigation in The Netherlands (discussed below), and in the article in the Law Society Gazette referred to in the next footnote.
8. See the Gazette of The Law Society, Nov. 17, 1999, at 1.
9. The paper was prepared by Directorate General III of the Commission (no. 9, 7/9,. Sept. 21, 1992). The relevant section is "6. Mixed Practices" (at 22-24).
10. In France, multidisciplinarité refers to the practice by a firm of several disciplines; interprofessionalité refers to organized relationships between several professionals practicing in different disciplines; and pluridisciplinarité refers to multidisciplinary practice in general.
11. Collection des rapports officiels, La Documentation Française, ISBN 2-11-004360-1, Paris, 1999. It is summarized below at the end of this section on France. The legal profession in France is fragmented, which is why the French and the Nallet Report use "professions" in the plural.
12. These associated French law firms are Archibald Andersen; H.S.D.[hommes, stratégie, droit]-Ernst & Young; Deloitte & Touche Juridique et Fiscal; [Deloitte & Touche] Thomas & Associés; Fiduciaire Juridique et Fiscale de France-Fidal [KPMG] (hereinafter "Fidal"); Landwell & Associés (previously Coopers & Lybrand CLC Juridique et Fiscal and Price Waterhouse Juridique et Fiscal). For the term "associated law firms," see, e.g., "Accountants and lawyers," The Economist, March 6, 1999, at 68.
13. Contribution Intersyndicale à la mission parlementaire de Monsieur Henri Nallet: Guichet unique du droit, interprofessionalité règlementée: deux impératifs pour les clients et les justiciables (March 1999) (hereinafter "Contribution Intersyndicale"), at 29. See also the Nallet Report, at 30.
14. The Nallet Report, at 29-31, discusses the Big Five under the heading, "Les réseaux et le marché du droit: la France, un paradis pour les réseaux [MDPs and the legal market: France, a paradise for MDPs]?"
15. See generally, Contribution Intersyndicale, and Laurent Chambaz, Rapport à l’Assemblée Plénière du Conseil National des Barreaux, L’affiliation de cabinets d’avocats à des réseaux intégrés, non-exclusivement juridiques, August 1997 (hereinafter "Chambaz"), for discussions of the origin and the development of MDPs in France.
16. The avocats are officers of the court acting as attorneys and counselors; the avoués are officers before the courts of appeal; the huissiers de justice perform various functions including serving legal papers (like process servers), levying execution of court decisions, collecting minor debts; the notaires have jurisdiction over real estate transactions, wills, and various documentary matters.
17. A decree of November 30, 1956 authorized associations between avocats, but the Paris Bar’s Code of Professional Responsibility in 1961 limited to five the number of associated avocats in each structure. This limitation was finally abandoned later in the 1960s.
18. By 1971, only a few French firms had an international reputation (e.g., Gide Loyrette Nouel, Jeantet, Francis Lefebvre).
19. See Zimmerman in Contribution Intersyndicale, at 18-19. The vacuum was also filled in part by foreign law firms established in France, as well as by French legal and tax consultants with law degrees who were not members of a French Bar but were giving advice or preparing documents in matters related to business, commercial, corporate, and tax law.
20. The title is recognized by Law 71-1130 of December 31, 1971.
21. Several associations of conseils juridiques including the Association Nationale des Conseils Juridiques (ANCJ) were unified under regional commissions headed by a National Commission of Conseils Juridiques.
22. Contribution Intersyndicale, at 19-20.
23. See Cone, International Trade in Legal Services (Little, Brown 1996), §9.4.
24. Contribution Intersyndicale, at 29.
25. Rapport à Monsieur le Bâtonnier Philippe Lafarge de Monsieur Daniel Soulez Larivière, membre du Conseil de l’Ordre, sur la réforme des professions juridiques et judiciaires (June 1988) (hereinafter "Soulez Larivière").
26. Id., at 21 (where the report also criticized the Big Eight for using their financial strength to buy up firms of conseils juridiques in Paris and throughout France, and for allegedly boasting that they would buy up the avocats "building by building and room by room").
27. See Contribution Intersyndicale, at 24.
28. Association Nationale des Conseils Juridiques (ANCJ).
29. The legal name of Juri-Avenir is Association pour l’exercice en groupe de la nouvelle profession juridique et judiciaire. Although not exclusively composed of the Big Five, Juri-Avenir is viewed as having been sponsored by them to promote MDP in France.
30. Letter dated Sept. 1990. The letter claimed broad support from the professions of avocat and conseil juridique.
31. See note 42, infra, and accompanying text for a discussion of Article 67, paragraph 3.
32. See Soulez Larivière, §II-3 D a).
33. See the Nallet Report, at 30, and Contribution Intersyndicale, at 29. In 1997, the average annual increase in revenues for the legal practices of the Big Six (before the merger of Price Waterhouse and Coopers & Lybrand) was 21%. Nallet Report at. 31.
34. See Contribution Intersyndicale, at 31-32.
35. Fidal, Rapport de gestion du directoire, Accounting year ending Sept. 30, 1998 (hereinafter "Fidal 1998").
36. The profitability of Clifford Chance, France, was 9.66% in 1997. Contribution Intersyndicale, at 31.
37. Fidal 1998.
38. See Contribution Intersyndicale, at 32. Fidal had almost the same debt/gross revenues ratio in 1997 (37.94%), which was the lowest among the Big Five legal practices. In comparison, the same ratio for Clifford Chance in France was 2.17% in 1997. Id.
40. Partners’ remuneration in the Big Five law firms is not published. The amount, if any, of remuneration contributed by the non-legal practices, and any differences in remuneration between the regular French partners of a Big Five law practice and those partners who are also members of international entities grouping various practices (like Andersen Worldwide in Switzerland) are likewise not published. Gérard Nicolaÿ of Landwell & Associés (PricewaterhouseCoopers) says that the law firm's partners receive 70% of their income after a one-year delay and invest in the law firm a total of 40% of their income in order to finance its development.
41. In 1998, Fidal had a total of 1,960 employees, and total operating expenses in respect of salaries of 604,030,000 FF. Fidal 1998. If it had paid its associates and other non-partner employees at the lowest market rates (180,000 FF a year for a first-year associate was the base salary recommended by the relevant syndicate in Paris; the legal minimum wage in France in 1998 was approximately 90,000 FF a year), Fidal would have paid its partners on average a yearly salary of less than 1.2 million FF (approximately $200,000). These figures assume full-year employment. They may understate non-partner remuneration and overstate partner remuneration.
42. Chambaz, at 12-15, gives the following legislative history. Different versions of the text appeared during the parliamentary debates. There were several attempts by supporters of the Big Five to amend the wording of the text. The text ultimately adopted was in fact taken from an amendment submitted by a supporter of the Big Five, which were thus successful in imposing their views to a certain extent. Their wording not only gave them a five-year period of status quo, but also generated a debate on its interpretation on which the Big Five have been relying to prolong enforcement of the provision beyond the period of five years.
43. See Contribution Intersyndicale, at 25-26. Chambaz, at 11-13, quotes Dominique Saint-Pierre, in his report of June 1989, for the proposition that legal practices within MDPs would not be permitted to use the names of the MDPs; and quotes Michel Pezet, the Reporter of the Law Committee of the French National Assembly, as having stated that the purpose of Article 67 was to guarantee the independence of the avocat within an MDP. The syndicates referred to are the Association Française des Avocats Conseils d’Entreprises, Confédération Nationale des Avocats, Fédération Nationale des Unions des Jeunes Avocats, Union des Jeunes Avocats de Paris.
44. For this statement by Michel Pezet (preceding note) see Chambaz, at 13, Contribution Intersyndicale, at 25.
45. On Nov. 16, 1996 the National Bar Council issued the following statement: "Any firm affiliated with a national or international MDP that is not exclusively among legal practitioners must, from January 1, 1997 on: -stop making any reference whatsoever to such MDP, -modify its name so it no longer reproduces or includes in part or in whole the name of such MDP."
46. A decision by the Paris Bar Council dated May 7, 1996 indirectly required that the Big Five’s legal practices change their names but at the same time indicate their Big Five affiliations. This decision was a source of confusion that enabled the Big Five to maintain the status quo.
47. The decision to merge was reportedly taken at the global level by the accounting and counseling practices and imposed on the legal practices, which had to adapt to the situation created by a fait accompli.
48. The decision was made for all legal practices of PricewaterhouseCoopers in Europe and, according to Gérard Nicolaÿ, this rather short name was picked to sound Anglo-Saxon though allowing at the same time each country’s legal practice in the network to "customize" it easily. Accordingly it was Frenchified by adding the "& Associés" in France. For all practical purposes, the law firm PriceWaterhouse Juridique et Fiscal became Landwell & Partners and the law firm Coopers & Lybrand CLC Juridique et Fiscal became Landwell & Associés. Both are expected to become Landwell & Associés in the year 2000.
49. On the other hand, as regards Fidal, it should be noted that, in his report to the French Senate on Oct. 31, 1990, the Rapporteur de la Commission des Lois du Sénat, Luc Dejoie, gave a broad interpretation of the prohibition found in Article 67, paragraph 3: "This restriction means that past the five-year period, not only may the name of the firm no longer refer to the network to which it was affiliated, but also the name of the firm will have to be changed even if it did not mention the name of the network to which it was affiliated".
50. See Chambaz, at 15-16.
51. The relevant portion of the decision is found in Art. 16, Conseil National des Barreaux, Décision à caractère normatif no. 1999-001 (March 26-27, 1999), at 45-46.
52. Juri-Avenir, Répondre aux attentes du marché: un plan d’action qualité pour l’audit en Europe (hereinafter "1996 plan of action"). This document is found in Chambaz as Annex 12.
53. 1996 plan of action, at 12.
54. Recent data indicate that the legal practices of the Big Five in France generate 15% to 28% of total MDP revenues. See the Nallet Report, at 24.
55. 1996 plan of action, at 7, 43.
56. In this connection, see "Controverse sur l’entendue de l’exercice professionnel des avocats," Le Monde, Sept. 29, 1999, at 10.
57. PricewaterhouseCoopers is the only one under the jurisdiction of the Paris Bar.
58. Nallet Report, at 31-32.
59. See "Editorial" Bulletin du Bâtonnier (Paris) No. 12 March 26, 1996, No. 34 Oct. 15, 1996.
60. In France an attorney after being sworn in must work for a period of two years under the supervision of a more senior attorney, generally a partner in a law firm, in order to gain access to the Grand Tableau (the list of practicing attorneys who have completed their two years of stage).
61. Juri-Avenir, L’exercice de la profession d’Avocat en Réseau Pluridisciplinaire 1998 (hereinafter, "Juri-Avenir 1998"), at 12.
62. This decision was effectively ratified by the 1999 decision cited in note 51, supra.
63. The document was Juri-Avenir 1998 (note 61 supra).
64. Juri-Avenir 1998, at 5, calls MDPs the most efficient vehicle for the development of French law internationally, designed "to reinforce the status of French Business Law against the threat of Common Law hegemony." (The Big Five, of course, represent American and British traditions if not hegemony. They were founded in such places as London, Chicago, New York, and Cleveland.)
65. Juri-Avenir 1998, at 6. U.K. and U.S. firms are lumped together as "Anglo-Saxon."
66. Juri-Avenir 1998, at 11.
67. Id., at 9, 14 and at 13.
68. Id., at 5, 19.
69. Including that of Pierre Berger, President of Juri-Avenir.
70. The following enumeration and summary are not found as such in the Nallet Report.
71. Each of the following would be entitled to name one member of this new commission: the National Bar Council; the Conference of Bâtonniers; the Paris Bar; the National Society of Auditors; the Order of Accountants; the Stock Exchange Commission [the French Securities and Exchange Commission]; the Ministry of Finance; the Chancellery of the Ministry of Justice.
72. The Société Civile Professionnelle (SCP), the Société d’Exercice Libéral (SEL), the Association and the Société en Participation are among the most common.
73. Raymond Martin, La partie parallèle du rapport Nallet, JCP – La Semaine Juridique Edition Générale, No. 47, Nov. 24, 1999, at 2062.
74. See the Law Society Gazette, Nov. 17, 1999, at 1. For the views of a leading English barrister questioning the need or desirability of MDP from the point of view of the client and the ethics of the legal profession, see "Paper Supporting the Oral Submissions by Daniel Brennan, QC, Chairman of the General Council of The Bar of England and Wales, to the Commission of the American Bar Association on Multidisciplinary Practices," 8 August 1999 (the General Council of the Bar, London).
75. The Courts and Legal Services Act 1990.
76. Minutes of the meeting of the Law Society Council, Oct. 13-14, 1999 (hereinafter, "LSC Minutes"), at 21. Shortly thereafter the U.K. Chancellor of the Exchequer reportedly supported this observation: "Chancellor Gordon Brown was not specific and little guidance was being handed out by the Treasury, but he announced that the Government would look into whether the working codes of professionals impaired competition in any area. There was speculation last night that Mr. Brown was referring to the Law Society rules which prevent lawyers from forming partnerships with any other professions, for instance accountants." Birmingham (U.K.) Post, Nov. 10, 1999, at 19.
77. Consultation paper, at 4-5.
78. Id., at 7-10.
79. Id., at 12-23.
80. Id., at 24.
81. Id., at 29.
82. Law Society letter of 4 Feb. ’00. See Written Remarks of Alison Crawley to the ABA Commission on MDP (Law Society Center for Professional Responsibility); "Multi-Disciplinary Practices, Proposals for the way forward," Law Society staff preliminary report, Sept. 28, 1999 (hereinafter "Prelim. Rept.").
83. Prelim. Rept., §12.
84. As mentioned, there were only 272 responses to the questionnaire. By the time of the Working Party’s first two meetings, it was already clear that the ABA House of Delegates would not approve the report of the ABA Commission on MDP, and by the time of the Working Party’s third meeting the House of Delegates had resolved, by a 75+% vote, that no rule changes should be made to authorize MDP "unless and until additional study demonstrates that such changes will further the public interest without sacrificing or compromising lawyer independence and the legal profession’s tradition of loyalty to clients." The Prelim. Rept. described this resolution as one "to defer a decision on the Commission’s report until February or July next year ." Prelim. Rept. §16. Taking a different view, the Law Society Gazette reported that "the American Bar Association seems likely to reject a recommendation to allow them [MDPs]." Nov. 17, 1999, at 1.
85. Prelim Rept., §19.
86. Id., §21.
87. Id., §§22-23.
88. LSC Minutes, at 21-22, confirmed in part by Law Society letter of 4 Feb. 2000..
89. Kamlesh Bahl, Vice-President of the Law Society, and Paul Venton, Council Member and Chairman of the Working Party on MDPs, on Nov. 18, 1999.
90. The British legal press reported favorable reactions by members of the Big Five to the position taken by the Council of the Law Society on Oct. 13-14, 1999. E.g., "James Hodgson, partner at KLegal, the law firm associated with KPMG, says: ‘This is very good news. It’s certainly a step in the right direction.’ KPMG and KLegal are not under the same roof but Hodgson admits it is ‘likely they would all get together’ if the anti-MDP rules are lifted, providing a single point of contact for clients and what he sees as numerous benefits to lawyers. He says: ‘It has enormous implications for the profession. Lawyers will be getting involved at the strategic business stage. Our lawyers will be able to share profits and become partners in KPMG.’" The Lawyer, Oct. 18, 1999, at 52. Also, a former vice chairman of corporate finance at KPMG, now solicitor director-general of the Confederation of British Industry, has called on the Law Society to permit MDPs. Law Society Gazette, Jan. 8, 2000, at 1.
91. See, e.g., "Accountants and lawyers," The Economist, March 6, 1999, at 68-69 ("Now all the Big Five have soaring legal ambitions"). The principal law firms in the U.K. affiliated with the Big Five are: Arthur Andersen—Garretts (London, Reading, Birmingham, Leeds and Manchester in England) and Dundas & Wilson (in Scotland); PricewaterhouseCoopers—Arnheim & Co., and Tite & Lewis (London).
92. A series of articles have appeared in Commercial Lawyer to the effect that law firms sponsored by the Big Five in the U.K. have encountered significant difficulties in developing legal practices commensurate with their ambitions. See, e.g., "Accountants in the Legal Market, Has the strategy failed?", Commercial Lawyer Jan. 1998, at 40; "The turning point, Have the accountants lost the initiative?", Commercial Lawyer Oct. 1998, at 16. In its Oct. 1999 issue Commercial Lawyer published an article (at 23) to the effect that Arthur Andersen’s English affiliated firm, Garretts, was experiencing difficulties. In its Dec. 1999 issue (at 2), Commercial Lawyer questioned the overall profitability of Arthur Andersen’s legal practices worldwide. On Jan. 13, 2000, the press reported that a former managing partner of Clifford Chance in London was leaving that firm to join Garretts and Arthur Andersen’s worldwide legal practices. N.Y. Law Journal, Jan. 13, 2000, at 1; Financial Times, Jan. 13, 2000, at 8.
93. Possibly relevant in this connection (and in connection with the last sentence of the preceding note) is the following that appeared in The Lawyer article cited in note 90, supra: "Former Law Society President and Clifford Chance partner Michael Mathews, one of the driving forces behind MDPs, says: ‘Big City firms will have more to offer by differentiating themselves from the accountants, [rather than] going in with them. Judging by Slaughter and May’s current strategy, you wouldn’t expect them to think about it at all. I would be surprised if any of the others would immediately. I can tell you, I have not been put under any pressure from Clifford Chance partners to get [MDPs] through. . . . I have no particular desire to practice in an MDP but I believe there should be as many business opportunities open to lawyers as possible.’"
94. Algemene Raad van de Nederlandse Orde van Avocaten.
95. "KPMG and Ernst & Young opted for a less litigious route into the market by reaching a compromise agreement with the Dutch Bar, which allows its tax consultants to share profits with lawyers (provided that the accountants are not connected in any way to the lawyers)." "The Dutch experience", European Counsel, Oct. 1999, at 8.
96. Samenwerkingsverordening 1993 (Sept. 23, 1993).
97. Case Nos. 96/1283 and 96/2891 WET 29, decided Feb. 7, 1997.
98. Raad van State.
99. Decision by the Dutch Council of State on Aug. 10, 1999. The nine questions were published in the Official Journal of the European Communities on Oct. 16, 1999, Case C-309/99, pp. C 299/15-16.
100. "Samenwerkingsverband." The definition is among the definitions in Article 1.
101. Articles 3, 4 and 6 of the Regulation.
102. Article 9 of the Regulation.
103. In the Dutch court proceedings, the Council of European Bars and Law Societies (the CCBE) had attempted to intervene on behalf of the Order, but the Dutch court did not permit it to do so on the ground that the Order could adequately act on its own behalf. As mentioned above in the section on Europe, the CCBE is expected to intervene on behalf of the Order before the European Court.
104. Gebhard v. Consiglio dell’Ordine degli Avvocati di Milano, European Ct Justice C-55/94 (Nov. 30, 1995).
105. A news article has reported that one of the plaintiffs in the litigation before the European Court, Price Waterhouse (now PricewaterhouseCoopers), has announced that it will integrate its Dutch legal practitioners into its legal services division called Landwell on July 1, 2000, without waiting for the decision of the European Court. "PwC snubs ECJ by defying Dutch ban", The Lawyer, Nov. 15, 1999, at 9. The article is not altogether clear, however, as to whether Landwell in The Netherlands would be in a form inconsistent with the Regulation. If it is not consistent with the Regulation and the European Court supports the action taken by the Order, the latter presumably would then proceed to seek compliance with the Regulation.
106. Bundesgerichtshof (hereinafter "BGH"), the highest German court in civil and criminal matters.
107. Bundesverfassungsgericht (hereinafter "BVerfG"), which has jurisdiction over claims that basic constitutional rights have been infringed by public authority.
108. Arndt Raupach, Die Anwaltschaft auf dem Weg vom "Organ der Rechtspflege" zum "Anwalt 2000", in Freundesgabe für Franz Josef Haas, at 255, 263 (Georg Crezelius et al., 1996) (hereinafter "Raupach I").
109. Jürg Zutt, Unmodernes, Moderns, Postmodernes, in Festschrift für Heinz Rowedder, 604 (Gerd Pfeiffer et al. eds., 1994) (hereinafter "Zutt").
110. Bundesrechtsanwaltskammer (hereinafter "BRAK"), also called the "Federal Bar" because membership is mandatory.
111. Deutscher Anwaltverein (hereinafter "DAV"), also called the "German Bar Association."
112. Raupach I, at 263; Walter Oppenhoff, Anwaltsgemeinschaften, 17 ANWALTSBLATT (hereinafter "AnwBl") 267 (1967) (hereinafter "Oppenhoff"); Dr. Kurt Ehlers et al., Diskussion, 17 AnwBl 276 (Main Lecture at the Deutscher Anwaltstag about needed reforms of the legal profession, like specialization, American-type partnerships, cooperation with accountants and tax advisers. The lecture was followed by a controversial discussion which revealed divisions within the German legal profession between reform-minded business lawyers and other practitioners with smaller practices.).
113. Rechtsanwalt. Regulated by the German Lawyers’ Act, Bundesrechtsanwaltsordnung, v. 1. 8. 1959 (BGBl. I S. 565), as amended by Gesetz zur Änderung der Bundesrechtsanwaltsordnung, Patentanwaltsordnung und anderer Gesetze, v. 7. 8. 1998 (BGBl. I S. 2600) (hereinafter "BRAO").
114. Organ der Rechtspflege. §1 BRAO.
115. 2 Klaus Stern, Staatsrecht der Bundesrepublik Deutschland, at 900 (1980).
116. Koch, §1 BRAO, in Bundesrechtsanwaltsordnung, at 21 (Martin Henssler & Hanns Prütting eds., 1997) (citing the official reasoning regarding one of the predecessors of the BRAO).
117. BVerfG, 1974 NJW, at 103.
118. Raupach I, at 255; Kurt Ehlers, Diskussion, 1967 AnwBl, at 276.
119. Bericht der Bundesregierung über die Juristenausbildung in den Ländern, BT-Drucks. 7/3604, S. 2613 (7.5.1975).
120. E.g., §1 Bayerische Justizausbildungsordnung (v. 16. 4. 1993, BayGVBl. 1993, at 336.) (Bavarian ordinance regarding the education/training of lawyers).
121. More recently, several universities (e.g., Humboldt University Berlin, University of Cologne) opened institutes for lawyer-centered education.
123. Raupach I, at 256.
124. Raupach I, at 257; Oppenhoff, at 269 (also stressing the importance of tax law).
125. Zutt, at 607.
126. Werner Neuhäuser, Wider die Todsünde der Fachanwaltschaften, 1956 AnwBl, at 54.
127. In 1967 a nine-partner partnership was the largest, and only 26.5 % of all lawyers were members of partnerships, 1968 AnwBl 109. Even in 1987 only 40. 9% of all lawyers were practicing in partnerships and the average size was 2.79 lawyers/partnership. Rüdiger Zuck, Formen anwaltlicher Zusammenarbeit, 1988 AnwBl, at 19, 20 (hereinafter "Zuck").
128. Partnerships or Sozietäten were the only form of association for combinations of several lawyers to practice law jointly. A BGH decision in 1971 held the partners of such combinations to be jointly and severally liable. BGH, BGH Zivilsachen, at 56, 355 (357); see also §59a BRAO enacted in 1994.
129. Zuck, at 19 (§45 Nr. 4 BRAO).
130. Oppenhoff, at 268. Typically, such a partnership consisted of two lawyers who differed in age by 20 to 30 years. The younger one worked for several years as an employee, then as a partner "for" the older one. The younger partner was normally not entitled to the same share as the founder of the law firm. After the latter’s retirement the younger partner became entitled to all the profits.
131. Raupach I, at 260.
132. Zutt, at 606.
133. This rule, Verbot der überörtlichen Sozietät, declared unconstitutional by the BGH in 1989, was found in §28(1) Grundsätzte des anwaltlichen Standesrechts (1973), previously Richtlinien für die Ausübung des Anwaltberufs (1957). These Guidelines (hereinafter "RiLi") were adopted by the Federal Bar Association in cooperation with local bar associations under the old §177 BRAO to state the general opinion within the legal profession on the performance of legal services, especially regarding good practices.
134. §28 BRAO.
135. §§18(1), 23 BRAO (Lokalisierungsgebot: lawyers must be admitted to only one regional court and/or one local court in the same district); §27(1) BRAO (Kanzleipflicht: duty to have office in that district); §27(1) BRAO (Residenzpflicht: mandatory requirement to establish residence in that district). Only the residence requirement was abolished in 1994. The other provisions are still in force, but are interpreted in a way that allows for partnerships having offices in different cities and countries. BGH, 1989 NJW 2890, 2891 (Beschl. v. 18.9. 1989 – AnwZ (B) 30/89 – EGH Nordrhein-Westfalen).
136. Raupach I, at 260.
137. Gerhard Hartstang, Anwaltsrecht, at 9-10 (1991), providing the results of the PROGNOS/Infratest Studie, which was published in Sonderheft, Zukunft der Anwaltschaft, AnwBl 3/87.
138. Art. 1 Rechtsberatungsgesetz (hereinafter "RBerG"), enacted in 1935, abolished the freedom to handle legal matters on behalf of third persons.
139. Art.1 §5 RBerG.
140. §§2, 3, 33 Tax Advisory Act (Steuerberatungsgesetz) (hereinafter "StBerG"); Art.1 §4 RBerG.
141. Art.1 §6 RberG.
142. Schwedhelm & Kamps, Unerlaubte Rechtsbesorgung durch Steuerberater und Steuerbevollmächtigte und ihre Folgen, 48 AnwBl, at 245, 251 (1998) (hereinafter "Schwedhelm & Kamps").
143. Martin Henssler, in Kommentar zur Bundesrechtsanwaltsordnung, at 126-127 (Martin Henssler & Prütting eds., 1997) (hereinafter "Henssler I"); Kleine-Cosack, Kommentar Zur Bundesrechtsanwalts-ordnung, at 55 (1993). Neither commentary questions the compatibility of the three professions, which are classified as being "of a similar kind".
144. Werner Kalsbach, Standesrecht des Rechtsanwalts, at 74, 134 (1956) (written by a judge on the disciplinary court of the British Occupation Zone).
145. BGH, 1961 NJW 1723 (Beschl. v. 5.6.1961 – AnwZ (B) 16/60 - EGH für RAe beim OLG Hamm).
146. Wirtschaftsprüfer (accountants) and Steuerberater (tax advisers).
147. The legislative intent underlying §7 Nr. 8 BRAO is to safeguard the necessary trustworthiness of attorneys. Although this proscribes anything compromising their integrity in the eyes of the public, having a second profession was not deemed to interfere with their independence and objectivity. See Henssler I, at 117.
148. §70 RiLi (1957).
149. BGH, 1961 NJW, at 1723.
150. §43(4) Wirtschaftsprüfungsordnung (hereinafter "WPO"). See also the Federal Government (Bundesregierung) Official Reasoning on the Draft Accountants’ Act, BT-Drucks. 3/201, 1, 55 (1958) (stating that, under the then-applicable professional rules for "the liberal professions (e. g. attorney and tax adviser), an occupation at a scientific institution" would be compatible with the profession of accountant).
151. BGH, 1961 NJW, at 1724.
152. §22(3) Nr. 2 StBerG.
153. BGH, 1968 NJW 844, 845 (Beschl. v. 4. 1. 1968 AnwZ (B) 10/67 - EGH Celle).
154. §3 BRAO.
155. §3 Nr. 2 StBerG.
156. §§2, 113 BRAO; §§1(2), 4-5 StBerG.
157. The German profession of notary is highly regulated under the Bundesnotarordnung (hereinafter "BNotO" or "Notary Act"). Notaries are fully trained lawyers who have to pass strict entry requirements. There are two different regimes regarding notaries. In parts of southern and west Germany, the notaries are not allowed to be lawyers simultaneously. The rest of the country permits Anwaltsnotare, notaries who are simultaneously lawyers; they must follow certain rules to safeguard their independence. §3(2) BNotO.
158. BGH, 1970 NJW 425, 426 (Urt. v. 27.11. 1969 – X ZR 22/67 - Karlsruhe). Citing Art. 3 German Constitution, Grundgesetz (hereinafter "GG"), which provides for the right to equal treatment, the court ruled that it would constitute unjustified unequal treatment if a lawyer who was also a tax adviser could not become a notary, as other lawyers, even those specializing in tax law, were freely admitted to that profession.
159. §21(1) S. 2 RiLi.
160. BGH, 1961 NJW, at 1723.
161. §70 of the then applicable RiLi.
162. BGH, 1961 NJW, at 1723, 1724.
163. BGH, 1968 NJW, at 844. Regarding accountants that question was already touched upon in the 1961 BGH case where the contract included the possibility of the sharing of offices by lawyers and accountants. The court held that that possibility was not a sufficient ground not to admit the lawyer to the bar.
164. Id., at 846.
165. BGH, 1975 NJW, at 1414, 1415 (Beschl. v. 17.3.1975 – NotZ 9/75 – Frankfurt); Raupach I, at 258.
166. They had, however, been allowed to practice simultaneously as tax advisers, BGH, 1970 NJW, at 425.
167. BVerfG, 1989 NJW, at 2611 (stating also that if there had been a similar prohibition against combinations between lawyer/notaries and lawyer/tax advisers, all constitutional standards would have been met).
168. Id., at 2612 (citing BGH, 1970 NJW, at 425, and stating: "Both professions are defined as independent organs of the administration of (tax) justice. Lawyers and tax advisers are required to be members of their respective local professional organizations, bar associations and chambers of tax consultants, which enjoy self-regulatory powers and supervise compliance with professional rules. They are also subject to the disciplinary courts. The professional duties have been regulated in a parallel manner and are largely congruent, §§57 subsequent StBerG, §§43 subsequent BRAO").
169. BVerfG, 1980 NJW 2123; BVerfG 1989 NJW 2611; see also Stefan Kraus & Detlef Mäder, Die Verbindung von Anwaltsnotaren und Wirtschaftsprüfern, 1997 AnwBl, at 387-391.
170. BVerfG, 1998 NJW, at 2269. (The constitutional complaint was brought by two lawyer-dominated multidisciplinary partnerships, Oppenhoff & Rädler and Pünder, Volhard, Weber & Axster. See Alex Griffith & Frank Schornstheimer, Multidisziplinäre Partnerschaften – Sag niemals nie, JUVE Nachrichten, June 1998, at 1, 7 (hereinafter "Griffith & Schornstheimer").
171. BVerfG, 1998 NJW at 2270.
172. §59a BRAO; §9 BNotO.
173. Deutscher Anwaltstag.
174. Anwaltsblatt (AnwBl) is the monthly DAV publication and BRAK-Mitteilungen is its BRAK counterpart.
175. Fritz Schmitz, Diskussion, 1967 AnwBl, at 277 (chairman of that committee).
176. Oppenhoff, at 272, 274. The Oppenhoff paper was presented as the main speech at the Deutscher Anwaltstag. According to DAV General Manger Brangsch, 1968 AnwBl 201, the speech had great impact inside and outside Germany. It was cited in BGH, 1968 NJW 844, 846 to show that common opinion (§177(2) BRAO) on sharing offices and even partnerships might have changed. Oppenhoff was President of the DAV from 1959 to 1963, and Chairman of the Business Law Section of the International Bar Association. He was a founder of a law firm which became part of Oppenhoff & Rädler Linklaters & Alliance and, in Germany, is a lawyer-controlled MDP. In 1999, besides some 253 lawyers, 40 non-lawyer professionals (accountants, tax advisers) worked at this firm. Astrid Gerber et al., JUVE Handbuch 1999/2000, 473 (2d ed. 1999) (hereinafter "JUVE RANKING"). See also the web site <http://www.oppenhoff-raedler.com/english/index.html>; Maximilian von Gleichenstein, Anwaltschaft auf neuen Wegen, 1970 AnwBl, at 6, 7; Zutt, at 607; Raupach I, at 257.
177. Carl August Pauly, Diskussion, 1967 AnwBl, at 279.
178. Walter Oppenhoff, Schlußwort, 1967 AnwBl, at 280, 281.
179. Zutt, at 608 (stating that the successful modernization process of business law firms is also shown by the possibility of retaining the same name after the name partner left or died, and the possibility of having a firm with offices in more than one city). Oppenhoff had touched on those points in his speech in 1967.
180. BGH, 1961 NJW, at 1723; BGH, 1964 NJW, at 2063 (Beschl. v. 13. 7. 1964 AnwZ (B) 1/64 - EGH Stuttgart); BGH, 1968 NJW, at 844.
181. Heinz Brangsch, Tätigkeitsbericht 1967/68, 1968 AnwBl, at 201- 203 (Annual Report presented at the General Meeting on May 25, 1968 in Berlin) (hereinafter "Brangsch").
182. DAV, Sozietät zwischen Anwälten und Wirtschaftsprüfern, 20 AnwBl, at 346 (1970).
183. Institut der Wirtschaftsprüfer, which is a private voluntary association of accountants (Wirtschaftsprüfer) and accounting firms (Wirtschaftsprüfungsgesellschaften).
184. DAV, Sozietät zwischen Anwälten und Wirtschaftsprüfern, 1970 AnwBl, at 346. The seminar covered delimitation of tasks, firm name, profit-sharing, professional liability insurance, partnership agreements.
185. DAV-Vorstand, Sitzung des DAV-Vorstandes, 1972 AnwBl, at 376 (minutes of the board meeting).
186. §23(2) RiLi (effective Jan. 1, 1969).
187. §§23 RiLi (effective Jan. 1, 1970).
188. §30 RiLi (adopted June 21, 1973).
190. BVerfG, 1998 NJW, at 2269. The two notaries groups are the Bundesnotarkammer and the Notarverein.
191. Art. 1 §5 Nr. 2 RBerG. See Stephan Weth, Art. 1 §5 Nr. 2 RBerG, in Bundesrechtsanwaltsordnung, at 1273-1275 (Martin Henssler & Hanns Prütting eds., 1997).
192. BGH, 1963 NJW, at 2027 (Urt. v. 27.5.1963). Debate surrounding the impact of that decision was finally settled in 1998 when the legislature changed the wording of Art. 1 §5 Nr. 2 to include tax advisers, BGBl. 7.9.1998 I 2585, 2597.
193. Probably ever since the enactment of the RberG questions have been raised concerning the illegal rendition of legal advice by accounting firms, firms of tax advisers, and individual practitioners in those professions. Court decisions relating to the problem have been handed down every year since at least the early 1960s.
194. Schwedhelm & Kamps, at 247 (listing numerous decisions by different courts dating back to 1961).
195. BGH, 1967 NJW 1558 (Urt. V. 9. 5. 1967 –Ib ZR 59/65) (establishing the right of the DAV to sue on behalf of its members).
196. Brangsch, at 203-204; DAV, Aus der Arbeit des DAV, 1962 AnwBl, at 139, 140 (report on DAV Activities).
197. BVerfG, 1987 Zip 1559 (Beschl. v. 14.7.87 – BvR 537/81, BvR 195/87 (EG Hamm), §1(1) S. 1 RiLi, §§ 9,10 RiLi (duty to adhere to objectivity), BVerfG 1987 Zip 1606 (Beschl. v. 14.7.87–BvR 362/79 (EG Stuttgart), §2 RiLi) (restrictions on advertising) (handed down on the same day on the basis of similar reasoning).
198. §43 BRAO.
199. BVerfG, 1987 ZiP, at 1559, 1564.
200. Grundsatz vom Vorbehalt des Gesetzes.
201. BVerfG, 1987 ZiP, at 1559, 1563 (citing earlier decisions, BVerfGE 33, 125 and BVerfGE 71, 162).
202. BVerfG, 1987 ZiP, at 1559, 1563. The German Parliament, in deliberating the BRAO, had already indicated that the RiLi should not be deemed to have a normative character.
203. BVerfG, 1987 ZiP, at 1559, 1564.
204. §28 RiLi (Verbot der überörtlichen Sozietät).
205. BGH, 1989 NJW, at 2890-2891 (Beschl. v. 18. 9. 1989 – AnwZ (B) 30/89 - EGH Nordrhein-Westfalen). In this case the predecessor of Oppenhoff & Rädler was suing the Cologne Bar Association. Boden Oppenhoff & Schneider, Cologne, wanted to merge with Rasor & Schiedermair, Frankfurt.
206. In 1990 mergers resulted in, e.g., Bruckhaus Westrick Stegemann, and Hengeler Mueller Weitzel Wirtz, and Pünder, Volhard, Weber & Axster. Those firms or their successors as well as Oppenhoff & Rädler belong now to the top ten German law firms. See Astrid Gerber et al., JUVE Ranking, at 13.
207. See Raupach I, at 261.
208. Bayerisches Oberstes Landgericht (hereinafter "BayObLG") (Beschl. v. 24. 11. 1994–3 ZBR 115/94) 1995 NJW, at 199.
209. Rechtsanwaltsgesellschaften mbH. See also OLG Bamberg (Beschl. v. 1. 2. 1996) 1996 MDR, at 423 (the Higher Regional Court held that an attorney/tax adviser limited liability company was legal).
210. §§59b, 191a BRAO delegate the rulemaking power to an elected assembly of bar members (Satzungsversammlung) (hereinafter "Rulemaking Assembly"). §59b lists the subjects which may be included in the professional rules. §§191a-191e regulate the election procedure and the decision-making process of that assembly as well as the procedure for challenging adopted rules.
211. Interprofessionelle Sozietät. The partnership is the traditional form for joint professional activities by the legal, accounting and tax advisory professions.
212. §59a BRAO, Gesetz zur Neuordnung des Berufsrechts der Rechtsanwälte und der Patentanwälten v. 08.09.1994 (BGBl. I 2278).
213. Rechtsanwaltsgesellschaft mbH. Gesetz zur Änderung der Bundesrechtsanwaltsordnung, der Patentanwaltsordnung und anderer Gesetze v. 07.09.1998 (BGBl. I 2600).
214. Gesetz zur Änderung der Bundesnotarordnung und anderer Gesetze v. 07.09.1998 (BGBl. I 2585).
215. Berufsordnung Rechtsanwälte (hereinafter "BORA").
216. Article 12 GG, which establishes the Freedom of Profession and limits state interference therewith.
217. Bürogemeinschaft. §59a(4) BRAO; §44b WPO; §56 StBerG.
218. Sozietät. §59a(1) BRAO; §44b WPO; §56 StBerG.
219. Partnerschaftsgesellschaft (hereinafter "LLP"). §§1(2), 3 PartGG, Gesetz zur Schaffung von Partnerschaftsgesellschaften und zur Änderung anderer Gesetze (hereinafter "PartGG") v.30.07.1994 BGB1 I S. 1744, amended by Gesetz zur Änderung des Umwandlungsgesetzes, Partnernerschaftsgesellschaftsgesetzes und anderer Gesetze v. 29.07.1998 BGBl I S. 1878, 1881. The LLP, created especially to meet the needs of the liberal professions, combines elements of the partnership and the corporation. Liability is limited to the property of the LLP and those partners involved in a given assignment, §8(2) Part GG. Until 1998, only 392 LLPs involving lawyers had been formed. Reluctance to make use of the LLP is probably due to its tax treatment as a partnership and resulting limitations with regard to pension reserves. Arndt Raupach, "Globalisierung, Full Service-Concept und Multi-Disciplinary Practices" auf dem Beratungsmarkt, in Festschrift Fachanwalt für Steuerrecht 14, 42 (AG der Fachanwälte für Steuerrecht e. V. ed., 1999) (hereinafter "Raupach II").
220. The professional limited liability company (hereinafter "LLC") is a form of Gesellschaft mit beschränkter Haftung or GmbH, §59c(1) BRAO; §27 WPO; §49 StBerG.
221. Forms available to other professions but not to lawyers are the Aktiengesellschaft [AG] (corporation), Kommanditgesellschaft auf Aktien [KGaA] (combines limited partnership and company limited by shares and has at least one general partner), Offene Handelsgesellschaft [OHG] (general commercial partnership), and Kommanditgesellschaft [KG] (limited commercial partnership with at least one general partner).
222. §§59a, c-m BRAO, §1 Part GG. See Martin Henssler, Die interprofessionelle Zusammenarbeit in der Sozietät, 1999 WPK Mitt, at 2, 5, 6 (hereinafter "Henssler II"). The amendments to the BRAO do not provide for the corporation (Aktiengesellschaft), although the BayObLG had said that such a provision would be desirable. Martin Henssler, Die gesetzliche Regelung der Rechtsanwalts-GmbH, 1999 NJW, at 241, 246 (hereinafter "Henssler III") (stating that lawyers’ professional organizations had not asked for the right to form corporations, but reporting that a Lawyer LLC in Berlin had sought to transform itself into corporate form).
223. They include, besides German lawyers, Kammerrechtsbeistände (persons granted unlimited permission to perform legal services under Art. 1 §1 RBerG, old Version, and who are admitted to the bar pursuant to §209 BRAO), and foreign lawyers admitted to the Bar under §§206, 207 BRAO.
224. Vereidigte Buchprüfer (ranking below the accountant as to education and professional competence, and not required to have a university education). §§128-131b WPO.
225. Steuerbevollmächtigte (ranking below the tax adviser as to education and professional competence). Lawyers could not form partnerships with Steuerbevollmächtigte before the new §59a BRAO came into effect, BGH, BGH Zivilsachen 72, 322, 327. See Henssler I, at 621.
226. §59a(1) S. 1 BRAO. Although it only applies to partnerships, it is extended to LLC by §59e(1) S. 1 BRAO, which refers to §59a(1) S. 1 BRAO; to LLP by §1(3) PartGG, which refers to the acts and rules regulating the profession and thus to §59a(1) S. 1 BRAO; and also to shared offices by §59a(4) BRAO.
227. The lawyer/notary (Anwaltsnotare) is governed by §59a(1) S. 3, 4 BRAO. §9(3) BNotO clarifies that lawyer/notaries should not engage in any acts incompatible with their position as notaries. §8 BNotO affords them the right to work simultaneously in specified professions.
228. Thus, the list is limited to professionals subject to strict rules like those governing lawyers, and subject to supervision by professional bodies similar to bar associations. Henssler II 2 (citing a BVerfG decision for legislative intent, BVerfG, 1982 StB 219).
229. The Tax Advisory Act, §56 StBerG, lists the same professions as §59a BRAO. The Accountants Act, §44b(1) WPO, is less restrictive than §59a BRAO and the analogous provisions of the StBerG as it allows partnerships and simple liability companies to be formed with any (liberal) profession that is subject to the supervision of a disciplinary body (Berufskammer) and that also is afforded the privilege under §53(1) Nr. 3 Code of Criminal Procedure (Strafprozeßordnung) (hereinafter "StPO"). That provision would thus allow an integrated MDP that included physicians and pharmacists.
230. Wirtschaftsprüfungsgesellschaft. Only lawyers, tax agents, tax advisers and certified auditors can be members of such a firm, §28(4) WPO.
231. Steuerberatungsgesellschaft. §50a StBerG.
232. Certified firms of accountants or tax advisers may not include patent attorneys, however. They could only join such firms if they fulfilled certain requirements (exceptional permit, professional activity in the firm etc.) §§28(2), (4), 43a, 44b WPO; §§50(3), 50a(1) Nr. 1, 36 StBerG.
233. Partnerships: §59a BRAO; §56 StBerG (see Horst Gehre, Steuerberatungsgesetz 186 (3rd ed. 1995) (hereinafter "Gehre"); §44b WPO. LLP: §1(1) Part GG. LLC: §59e(1) S. 2 BRAO expressly states that in a lawyer LLC the shareholders must be active professionals. BT-Drucks. 13/9820, S. 14 (9.2.1998), states that the professional GmbH is not for investment but a special form for the performance of legal services. Non-active professionals are allowed to participate in certified accounting firms if they are qualified accountants, §28(4) Nr. 1 WPO (tax advisers, lawyers, certified bookkeepers and tax agents must be active–"tätig"). In certified firms of tax advisers, non-active attorneys, accountants, certified auditors, tax advisers and tax agents may be shareholders/partners, §50a(1) Nr. 1 StBerG (Gehre, at 169.). The StBerG requires active involvement only for those professionals who do not meet certain qualification standards.
234. Martin Henssler, Interprofessionelle Zusammenarbeit von Rechtsanwälten, Wirtschaftsprüfern und Steuerberatern, in Sozietäten und andere Zusammenschlüsse rechts- und steuerberatender Berufe, at 9, 13 (Michael Streck & Deutsches Steuerberaterinstitut eds., 1999) (hereinafter "Henssler IV"), Henssler II 2.
235. §59e(4) BRAO; §52e(4) PatAnwO; §28(4) Nr. 2 WPO; §50a(1) Nr. 2 StBerG. For partnerships the same follows from the requirement that that all partners engage in joint professional activity.
236. §44b WPO allows natural and artificial (legal) persons to be partners in a partnership.
237. Tax Advisory Act: §56(1) S. 2 StBerG; Henssler IV, at 14 (legal persons are restricted to office-sharing arrangements). German Lawyers’ Act: Wilhelm Feuerich & Anton Braun, Bundesrechts-anwalts-ordnung, at 593 (1999, hereinafter "Feuerich & Braun") (listing only natural persons); 2 Institut der Wirtschaftsprüfer, Handbuch der Wirtschaftsprüfer, at 42 (1998). For a contrary view of the German Lawyers’ Act in this respect see Henssler II at 3; Henssler IV at 15 (the wording of §59a(1) BRAO is not specific enough under the standards set by the BVerfG). See, however, with respect to the lawyer LLC, BT-Drucks. 13/9820, S. 11 (9.2.1998); BR-Drucks. 1002/97 S. 15.
238. §1(1) PartGG. Lawyer LLC: §59e(1) BRAO; Henssler III, at 243; Feuerich & Braun, at 628 (the personal professional activity of the GmbH shareholders is required). Tax adviser LLC: Gehre, at 170. For exceptions regarding a tax adviser LLC, see §50a(2) StBerG, allowing Gesellschaften bürgerlichen Rechts (civil law partnerships), Stiftungen (foundations) and eingetragenen Vereinen (registered associations) to own shares if they function as holding companies of natural persons.
239. §28(4) WPO (the majority requirement must be met by each of the Wirtschaftsprüfungsgesellschaften).
240. Henssler II, at 2-5.
241. Id., at 5-6; §44b(1) WPO.
242. Wirtschaftsprüfungsgesellschaft. §27 WPO.
243. Steuerberatungsgesellschaft. §49 StBerG.
244. §28(2) S. 3 WPO.
245. §50(4) StBerG.
246. §32(3) S. 2 StBerG: See Meurers, in Steuerberatungsgesetz, at 460-462 (Kuhls et al., 1995) (hereinafter "Meurers").
247. §§59c-59m (esp. 59e(3) and f(1)) BRAO.
248. §28(2) S. 3 and (4) Nr. 3 WPO.
249. Henssler II, at 5. Such double-qualified professionals are counted both as lawyers and as accountants. §§59e(3), 59f(1) BRAO; §28(2) (4) WPO.
250. §§32(3) S. 2, 50(4) StBerG. See Meurers, at 460-462.
251. §59a(3) Nr. 2 BRAO; Feuerich & Braun, at 595; Henssler I, at 624.
252. §59a(3) Nr. 1 BRAO. Multinational partnerships may include lawyers from European Union member states and from other countries that fulfill the requirements for establishing offices in Germany, §§ 206, 207 BRAO. As to non-lawyers §59a(3) Nr. 2 BRAO refers to the codes regulating other professions. They all allow multinational partnerships. In general foreign-qualified professionals should be afforded a privilege comparable to the privileges under the German codes of civil (§ 383 Zivilprozeßordnung [ZPO]) and criminal procedure (§53 StPO) and be comparable to their German counterparts as to education and authority. Their files must be protected against seizure, and their function must correspond to the German profession in question. Feuerich & Braun, at 595. §52a(3) Nr. 2 Patentanwaltsordnung (hereinafter "PatAnwO") (Patent Attorney Act), §56(2) StBerG, §44b(2) S. 2 WPO all use the same referral mechanism.
253. §§49-50a StBerG do not include any rule on multinational certified firms, in contrast to §56 StBerG.
254. §28(3), (4) WPO. Accountants can associate themselves in a certified firm only with foreign accountants. Their profession and appointment have to be regulated in a similar way and they have to be granted an exceptional permission by the competent authority.
255. Feuerich & Braun, at 588. The prohibition of fee-sharing is only directed at persons outside the professional entity. Partnership: §27 BORA. LLP: §1(1), (3) PartGG (referring to the regulation of the respective professions). LLC: §59e(4) BRAO; BT-Drucks. 13/9820, S. 31 (9.2.1998).
256. §31 BORA. Partnership: BGH, 1999 WM 1849, 1850 (Beschl. v. 21.6.1999 – AnwZ (B) 89/98 – EGH Nordrhein-Westfalen); Feuerich & Braun, at 591; Martin Henssler, Das Verbot der Sternsozietät gemäß §31 Berufsordnung der Rechtsanwälte – einreformbedürftige Norm, 1998 ZiP, at 2121, 2123-2124 (hereinafter "Henssler V"). LLC: §59e(2) BRAO; BR-Drucks. 1002/97; BGH 1999 WM, at 1849, 1850; Henssler V, at 2123.
257. Partnership: BT-Drucks. 12/4993, S. 33 (19.05.1993). LLC: BR-Drucks. 1007/97, S. 15; Feuerich & Braun, at 629-630. See also the wording of §59e(2) BRAO. The rules for patent attorneys are similar.
258. See Henssler V, at 2127.
259. §31 BORA; BGH, 1999 WM, at 1849. Citing the above-mentioned BVerfG decisions, the BGH concluded that the Rulemaking Assembly had overstepped its powers, that there was no delegating norm that would meet the constitutional requirements, and that §59a BRAO would not be applicable.
260. All three professions are regulated on two levels. First, the codes include professional duties. Second, the duties prescribed in a given code are spelled out by professional rules enacted by the rulemaking assembly of the respective professional organization.
261. §203(1) Nr. 3 StGB. See also §43(1) S. 1 WPO (accountants), §43a(2) BRAO (lawyers), §57(1) StBerG (tax advisers).
262. §53(1) StPO, §383 ZPO.
263. §43a BRAO, 43(1) S. 1 WPO, §57(1) StBerG.
264. Henssler IV, at 16, 17. Contrast §54a(1)WPO (accountants) and §67 StBerG (tax advisers) with the stricter rule for lawyers in §51(1) Nr. 2 BRAO (differing rules relating to limitation of liability).
265. §30 BORA; Volker Römermann, §30 BerufsO, in Anwaltliche Berufsordnung, at 756 (Wolfgang Hartung & Thomas Holl eds.; 1997), (hereinafter "Römermann"); Henssler IV, at 15; Peter Maxl, §56, in Steuerberatungsgesetz, at 532-533, 535 (Clemens Kuhls et. al., 1995) (hereinafter "Maxl").
267. Maxl, at 535. A lawyer is not allowed to act in the same legal matter for opposing interests, §43a(4), BRAO, implemented by §3 BORA. Legal matter is to be understood in a broader sense than just the claim at issue. Elapse of time and change of personnel do not always substantially change the legal matter. See Werner Hartung, §3 BORA, in Anwaltliche Berufsordnung, at 88 (Hartung & Holl eds., 1997) (hereinafter "Hartung").
268. Art. 3(2) BORA. That extension is valid, although it is not mentioned in §43a(4) BRAO. A regulation for GmbH, Sozietäten etc. was viewed by the legislature as superfluous. See Hartung, at 83. A special rule applies when a professional changes firm. The new firm is only subject to the extension of the prohibition if that professional was involved in the matter of conflicting interest. Hartung, at 101.
269. §3(3) BORA.
270. §356 StGB; Hartung, at 82. That provision is applicable to lawyers and patent attorneys who are entrusted with the legal matter. Members of the same entity who are not actually involved are treated as being entrusted. See Peter Cramer, §356, in Strafgesetzbuch, at 2355 (Adolf Schönke et al. eds., 1991).
271. BGH, BGH Strafsachen, at 15, 336; Hartung, at 86 (mentioning in particular the confidence of the public in the integrity and trustworthiness of the Bar).
272. §6(2) Satzung über die Rechte und Pflichten bei der Ausübung der Berufe der Steuerberater und der Steuerbevollmächtigten v. 18. 11. 1996 (hereinafter "BOStB"); §3(1) Beruftsordnung Wirschaftsprüfer (hereinafter "BOWP"). These regulations are not included in the codes, but only in the professional rules.
273. §45(1)(2) BRAO.
274. §45(3) BRAO.
275. Henssler IV, at 16.
276. Maxl, at 535. See §57(4) StBerG (tax advisers), §§43a(3) Nr. 1, 43a(4) Nr. 6 WPO (accountants). See also Henssler IV, at 16 (a lawyer may be a managing director of a consulting firm, but a tax adviser or accountant may not).
277. §51b WPO (accountants) and §50(1) BRAO (lawyers) cover both client files and internal memos. Contrast §66 StBerG (tax advisers).
278. For accountants, §54(1) WPO does not allow a yearly premium cap on professional liability insurance. §44b(4) WPO affirmatively requires accountants to ensure that all partners in an inter-professional partnership (Sozietät) are covered in accordance with insurance requirements for accountants.
279. §§31-36 BOWP (accountants) and §§10-23 BOStB (tax advisers) are much stricter than §§6-10 BORA (lawyers) and thus would have to be applied instead of the lawyers’ rules. See Römermann, at 757.
280. Art. 102(2) GG. Thus the criminal-code provision on conflicts of interest, §356 StGB, is only applicable to lawyers.
281. Lawyers: §§113(1), 114. BRAO. Accountants: §§67-68 WPO.
282. Wirtschaftsprüferkammer or Steuerberaterkammer.
283. §30 BORA; Römermann, at 756 (lawyers). §44b(5) WPO; Maxl, at 533, 535 (accountants).
284. Römermann, at 757 (on Freedom of Profession under Art. 12 GG).
285. On non-payment of fees and non-waivability, see §134 BGB; Horst Eylmann, Vorbemerkung §43, in Bundeserechtsanwaltsordnung, at 338-339 (Martin Henssler & Hanns Prütting eds., 1997).
286. Henssler IV, at 21.
287. §27 BORA. See Henssler IV, at 21.
288. §43b BRAO, §8 BORA. See Henssler II, at 6-7, Henssler IV, at 22.
289. Examples are five lawyers, two tax advisors (Pfeiffer Schneider Breski, <http://www.psb-taxlaw.de/>, visited 2/1/00); seven lawyers, one accountant/tax adviser (Fella Schäller & Redl, <http://www.die-kanzlei-fsr.de/>, visited 2/2/00); two lawyers, one tax adviser (Sakowski Sakowski, <http://www.sakowski.de/>, visited 2/2/00); four lawyers, two tax advisers, one tax adviser/certified bookkeeper (Schiffer Peters & Partner, <http://www.schiffer.de/>, visited 2/2/00); eleven lawyers, one tax adviser/accountant (Fries+Fries, <http://www.fries-fries.de/>, visited 2/2/00). A non-lawyer controlled integrated MDP--two tax advisers, one lawyer--is Kellermann & Partner GbR (<http://www.kellermann-und-partner.de/html/kanzlei.html>, visited 2/1/00). To find those MDPs the web-site www.yahoo.de (categories "Rechtsanwaltskanzleien", "Diensteistungen für Firmen") was used as a starting point. This method did not reveal all existing MDP web-sites; moreover, many small firms might not have web-sites.
290. JUVE Ranking, at 473. the ranking is by number of admitted lawyers as of summer 1999. Classification as multidisciplinary refers to whether the entities include non-lawyer professionals without regard to lawyers having dual or multiple qualifications. Control is measured in terms of number of professionals.
291. Arthur Andersen: since January 2000, Andersen Luther Rechtsanwaltsgesellschaft mbH (one of the ten largest German law firms by number of lawyers). Ernst & Young: Menold Herrlinger Rechtsanwälte. PricewaterhouseCoopers: PwC Veltins Rechtsanwaltsgesellschaft mbH. WEDIT Deloitte Touche (German member of Deloitte Touche Tohmatsu International): Raupach & Wollert-Elmendorff Rechtsanwaltsgesellschaft mbH. As regards KPMG, its affiliated German law firm, KPMG Treuhand & Goerdeler GmbH, was not among the 50 largest legal practices in Germany in the summer of 1999.
292. E.g., Bruckhaus Westrick Heller Löber (hereinafter "Bruckhaus"), the second largest law firm in Germany, has just one non-lawyer professional. According to its web-site the firm offers legal advice in all business-related fields including tax law. <http://www.bwhl.de/homepage2.html> (visited 2/7/00).
293. Juve ranking, at 13. The four are Bruckhaus (preceding note); Hengeler Müller Weitzel Wirtz (which has only lawyers) (hereinafter "Hengeler"); Deringer Tessin Herrmann & Tessin (since 1/1/00 Freshfields Deringer); and Gleiss Lutz Hootz and Hirsch. They have few non-lawyer professionals and do not engage in audit or compliance work. Bruckhaus and Hengeler in particular are listed as leading firms in a wide variety of business-law areas. See also Raupach II, at 33.
294. Raupach II, at 33 (audit and compliance services may be out-sourced to affiliated entities).
295. JUVE RANKING, at 473, provides the following data for these four MDPs: Oppenhoff & Rädler Linklaters & Alliance (hereinafter "O&R") has 253 lawyers and 40 non-lawyer professionals including Prof. Dr. Albert Rädler; Clifford Chance Pünder (hereinafter "CCP") has 205 lawyers, 18 non-lawyer professionals; Feddersen Laule Ewerwahn Scherzberg has 151 lawyers, 4 non-lawyers; Haarmann Hemmelrath & Partner (hereinafter "HHP") has 141 lawyers, 81 non-lawyers. Although these firms differ as to how many non-lawyer professionals are partners or associates, their web-sites and the characterization in JUVE suggest that they follow the MDP approach. Some also have affiliated firms which provide accounting and tax services, including compliance and audit. Data for CCP antedate the merger with Clifford Chance, which may entail a change in approach.
296. Three are Sozietäten. CCP was a Sozietät but after the merger with Clifford Chance may be a limited-liability partnership under New York law, <http://www.puender.com/uk/home/index.shtml> (visited 1/17/00).
297. Interview with HHP partners Drs. Markus Wenserski , Martin Dummler and Hans-Joachim Fritz, 12/20/99. See Raupach II, at 43.
298. O&R. <http://www.oppenhoff-raedler.com/english/index.html> (visited 1/17/00). O&R Oppenhoff & Rädler GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft provides accounting and tax advisory services in Munich, Frankfurt, Cologne and Hannover. O&R Advisa GmbH Steuerberatungsgesellschaft does business accountancy and payroll accounting, prepares annual accounts and tax returns, and performs similar services. Likewise, a CCP predecessor was affiliated with a certified firm of tax advisors, PVW Treuhand GmbH Steuerberatungsgesellschaft; following the merger with Clifford Chance, CCP seems to have severed ties with that firm.
299. Rädler Raupach & Partner.
301. Haarmann Hemmelrath Management Consultants, <http://www.hhmc.de/beratungsansatz.htm> (visited 1/31/00).
302. Interview with Dr. Martin Dummler, 1/31/00.
303. The Big Five and their respective affiliated law firms are listed supra in note 291.
305. Griffith & Schornstheimer, at 11 (describing the development of KPMG Treuhand & Goerdeler GmbH); telephone interview with Dr. Stefan Kraus of Andersen Luther, 12/9/99.
306. E.g., PricewaterhouseCoopers joined forces with Prof. Michael Veltins, member of the Wessing law firm and head of its Leipzig office; and WEDIT Deloitte Touche joined forces with Prof. Arndt Raupach, a tax lawyer from Oppenhoff & Rädler.
307. Raupach II, at 22.
308. Prof. Veltins (see two notes above). See also Griffith & Schornstheimer, at 10.
309. Interview with Veltins, 10/22/99; interview with Kraus, 12/9/99.
310. §59e(2) BRAO. Also, a majority of the managing directors must be lawyers. §59f BRAO.
311. PwC Veltins uses a list compiled by PricewaterhouseCoopers (interview with Veltins, 10/22/99). Andersen Luther does a check using databases (interview with Kraus, 12/15/99).
312. Raupach II, at 41.
313. Menold Herrlinger (Ernst & Young).
314. Raupach II, at 42. The four LLCs are Andersen Luther, KPMG Treuhand & Goerdeler, PwC Veltins, and Raupach Wollert-Elmendorff (Deloitte Touche Tohmatsu).
315. E.g., the Andersen Luther partner/associate ratio is 1 : 5, the PwC Veltins ratio is 1: 4, while traditional German law firms tend to be 1 : 2 (Hengeler aims for a 1 : 1 ratio). Raupach II, at 32.
316. Menold Herrlinger (Ernst & Young). See Griffith & Schornstheimer, at 9 (citing Rudolf Belzer (a partner), as saying that it wants to retain the image of an independent firm in order to acquire clients). According to JUVE RANKING, at 20, Menold Herrlinger has succeeded in being accepted as an independent firm.
317. Interview with Kraus, 12/15/99.
318. The exception is Raupach & Wollert-Elmendorff (Deloitte Touche Tohmatsu) which specializes in legal advice with a focus on tax matters. See JUVE Ranking, at 419, 427.
319. Griffith & Schornstheimer, at 10 (quoting Veltins: "We do not want to have any competition in the same house").
320. Andersen Luther.
321. PwC Veltins.
322. In 12 months (1998-99) PwC Veltins was involved in 28 M&A transactions involving US$ 2.75 billion. JUVE Ranking, at 313. See id., at 312 re Menold Herrlinger (Ernst & Young) and M&A.
323. E.g., Andersen Luther; PwC Veltins.
324. DAV, Stellungnahme zum Zusammenschluß Price Waterhouse/Coopers & Lybrand, at pp. 5-8 (April 1998).
325. Dr. Hans-Jürgen Hellwig, DAV Vice President, Presentation, American Bar Association Commission on Multidisciplinary Practice, Feb. 4, 1999 (unpublished paper) (hereinafter "Hellwig Presentation"), confirmed by interview 12/20/99.
326. Römermann, at 656-657 (quoting BRAK rulemaking-assembly minutes).
327. "Partnership under the civil code [GbR] of Accountants Tax Advisers Lawyers." The use of all three professional titles suggests that at least one partner has qualified in each profession. Rödl is also affiliated with a separate accounting/tax advisory firm, Dr. Rödl & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, and a separate consulting firm, Rödl & Partner Consulting GmbH, each in the form of an LLC. There is also an affiliated manager-training institution, Privatakademie für Managementtraining GmbH Nürnberg.
328. JUVE Ranking, at 473 (Germany: 86 lawyers, 180 non-lawyers; admitted outside Germany (Central and Eastern Europe): 31 lawyers, 61 non-lawyers). 13 managing partners supervise the partnership, Nicolaus Weber, unpublished conference paper, 6/28/99.
329. This feature of no majority requirement was criticized in Hellwig Presentation, at 7.
330. <http://www.roedl.de/frame.cgi> (visited 1/17/00). Nikolaus Weber, unpublished conference paper, 6/28/99 (it breaks down Rödl revenues as follows: accounting/auditing 31%, tax advice 28 %, legal advice 16%, business/IT consulting 25%). Bernd Rödl (founding partner), Branche im Umbruch, <http://www.roedl.de/(nologin)/dienstleist/wirtschaftsp/wp_thesen. html> (visited 1/17/00).
331. Bundesgesetz über die Wirtschaftstreuhandberufe §§70, 71 (April 9, 1999).
332. Bericht des Justizausschusses, 1681 Beilagen zu den stenographischen Protokollen des Nationalrates XX. GP (17.3.1999) (proposal by the judiciary committee of the lower house of the Austrian Parliament to initiate legislation which would allow international and multidisciplinary partnerships or other forms of MDP in order to improve the competitiveness of Austrian lawyers).
333. § 5 Richtlinien zur Berufsausübung der Rechtsanwälte (according to that professional rule a lawyer may have a second job as long as such activity does not compromise his or her integrity and independence).
335. Convention entre l’Ordre français des avocats du barreau de Bruxelles et l’Institut des Reviseurs d’Entreprises.
336. The requirements regarding a written contract including the prohibition on fee-sharing are in Article 3. The provisions that must be incorporated by reference are Articles 4 (professional ethics and independence), 5 (conflicts of interest), 6 (permitted and forbidden references on letterhead etc.), 9 (giving professional bodies access to relevant documents and materials), 10 (dispute resolution).
337. Also dated Jan. 6, 2000.
338. Danovi, Associazioni professionali multidisciplinari, Dottori Commercialisti, No. 46 (1997), at 8-10.
339. See The American Lawyer, June 1998, at 49. One commentator who is generally skeptical about successful legal practice by the Big Five seems to consider Garrigues-Andersen to be a success. See "Behind the Andersen Legal results," 36 Commercial Lawyer Dec. 1999, at 3.
340. There are very few independent law firms in Sweden with 25 or more lawyers, and only three with more than 200.
341. Bundesgesetz über die Freizügigkeit der Anwältinnen und Anwälte (Federal Act on Freedom of Movement of Lawyers), Deliberations at the Nationalrat, Amtliches Bulletin der Bundesversammlung (Official Bulletin of the Federal Assembly), 99027, at 1551 and ff. (Sept. 1, 1999). Much of the information herein has been taken from these deliberations.
342. E.g., in Geneva, the brevet d’avocat is awarded after legal studies at a university and a certain period of practical training at a law firm. Loi sur la profession d’avocat (hereinafter "Geneva") Arts. 5, 24.
343. E.g., Geneva, Arts. 2, 5.
344. Botschaft zum Bundesgesetz über die Freizügigkeit der Anwältinnen und Anwälte (Official reasoning of the Government on Draft Act of Law regulating the freedom of establishment), Bundesblatt 99. 027, at 6021.
345. Geneva, Art. 2.
346. Geneva, Arts. 11, 30.
347. Die Freizügikeit der Anwaltschaft, Neue Züricher Zeitung, Dec. 17, 1999, at 15.
348. §1 Gesetz über den Rechtsanwaltsberuf (Zurich Attorneys Act) (July 3, 1938 as amended Dec. 1999).
349. Züricher Anwaltsverband (Zurich Bar Association), Statuten § 2 Abs. 3 (Jan. 1999), which is also relied on elsewhere herein. (An example is Homburger Rechtsanwälte which includes non-lawyer eidgenössisch diplomierte Steuerexperten (certified tax experts) in the firm as partners and associates.)
350. Max Meyer, Kartellistische Zunftordnung der Anwälte und Notare, Neue Züricher Zeitung, April 28, 1992, at 39.
351. Information supplied by Urs Lichtsteiner, of Andersen Legal, Lichtsteiner & Sauber, Rechtsanwälte, Zurich.
352. See note 341 supra..
353. Art. 33 Abs. 2 Bundesverfassung [BV] (Federal Constitution).
354. E.g., Roach and Iacobucci, "Multi-Disciplinary Practices and Partnerships: Policy Options" (1998); Charles River Associates per Trebilcock and Csorgo, "Multi-Disciplinary Professional Practices: A Consumer Welfare Perspective" Aug. 4, 1999; Canadian Bar Ass’n ("CBA") per Buckley, "Multi-Disciplinary Practices: Towards a Policy Framework" Feb. 1998; CBA, "Multi-Disciplinary Practices: An Interim Report" Aug. 1998; CBA per Bogart, "Context—Approaching the Regulation of MDPs" June 1998, and "Developments since the Interim Report on Multi-Disciplinary Practices of August 1998" Dec. 1998; CBA per King, "Legal Issues Relating to Multi-Disciplinary Partnerships" Feb. 1999; CBA, "Striking a Balance" Aug. 1999; Federation of Law Societies of Canada per Earle, "Multi-Disciplinary Partnerships: Report to Delegates" Aug. 1999; Law Society of Upper Canada ("LSUC") Working Group on Multi-Disciplinary Partnerships, "Report to Convocation" Feb. 27, 1998, and "Report to Convocation" Sept. 25, 1998; LSUC Multidisciplinary Practice Task Force, "The Affiliated or ‘Captive’ Law Firm" Sept. 1999.
355. According to Robert P. Armstrong, Q.C., Treasurer of the LSUC.
356. See the two LSUC documents entitled "Report to Convocation" in note 354 supra.
357. By-Law 25 was adopted by the LSUC on April 30 and amended on May 28, 1999. The relevant rules are found in LSUC, "Guide to Application to Enter into a Multi-Discipline Partnership" June 30, 1999.
358. E.g., in "Striking a Balance", note 354, supra, a committee of the CBA, at 37, recommended that there be no distinctions drawn "between Captive Law Firms, and fully integrated partnerships"; that "there be no restriction on the kinds of services provided by MDPs"; and that there be "no requirement of control of MDPs by lawyers."
359. See Earle, note 354, supra, at 12.
360. By-Law 25 §2. In §1(2) the practice of law is defined to mean the giving of any legal advice on the laws of Canada or any subdivision of Canada "or the provision of any legal services."
361. By-Law 25 §3.
362. By-Law 25 §4(1).
363. By-Law 25 §§4(2)-5.
364. By-Law 25 §§6-ff. See also LSUC "Guide to Application ....", note 357, supra.
365. The Report and Recommendation resulted from a study undertaken pursuant to a letter request dated June 24, 1997 from the Attorney General of New South Wales.
366. Report and Recommendation, at 13, referring to rules 40.1.1 and 40.1.6.
367. Law Society Journal (NSW, Australia), Dec. 1999, at 86.
368. For a summary of the bill, see "Shackles removed for law firms," The Australian Financial Review, Sept. 3, 1999
1. See, e.g., Professor Robert C. Palmer’s descriptions of his book, English Law in the Age of the Black Death, 1348-1381, at http://vi.uh.edu/pages/bob/bib/BDCOV.HTM (also at BDTHES.HTM and BDOBS.HTM)
2. See Legal Advice Without the Lawyers, N.Y.L.J., Nov. 15, 1999, http://www.nylj.com/tech/111599t1.html.
3. The law firms that employ professionals from different disciplines are not always large. Personal Injury firms may employ health care workers to aid in the assessment of injury. Environmental law firms may employ engineers. Small "elder law" firms may employ social workers or health care workers, CPA’s and money managers. See footnote 48 to the Reporter’s Notes to the ABA Commission on Multidisciplinary Practice at p. C33. The website of Charles F. Robinson, whose "lament" is recorded in the footnote, has interesting and pertinent comments on the future of the practice of law at http://www.rclaw.com/future.html.
4. John Leubsdorf, Three Models of Professional Reform, 67 Cornell Law Rev. 1021 (1982).
5. Consumers Alliance of the Southeast, HALT, Inc., Consumers First, Americans for Competitive Telecommunications, Center for Consumer Affairs, Citizens Advocacy Center, Electric Consumers Alliance and the AARP Foundation
6. http://www.abanet.org/cpr/aarp.html The AARP operates its own Legal Services Network, a Yellow Pages advertising program, under which lawyers who meet certain criteria and who agree to fix some of their fees may appear under an AARP listing. Moore says that the AARP is not endorsing lawyers, but he says, "We go through the process of choosing a lawyer that you would do if you had the time." Lawyers pay an annual fee of $1200 or more to be listed by AARP. The Legal Intelligencer, June 2,1997.
7. Testimony of James C. Turner, an attorney and Executive Director of HALT, Inc.
8. E.g., Daniel R. Fischel, Dean, Univ. Chicago Law School, Multidisciplinary Practice, Seminar in Law and Economics, Harvard Law School, March 21, 2000 (such MDPs are desirable); Paul J. Sax, Chair, Section of Taxation, American Bar Association, presentation at Symposium on Multidisciplinary Practice Oct. 25, 1999, sponsored by Center for International Law, New York Law School (such MDPs are inevitable).
9. Fischel, note 1, supra, at 35.
11. Id., at 33.
12. These two forms correspond to Models 3 and 4 posted in March 1999 by the ABA Commission on MDP. <http://www.abnet.org/cpr/multicom.html>
13. In the jargon of the computer world, "Expert Systems" are software programs that mimic the decisions human beings would make given the same set of facts and rules.
15. Legal Advice Without the Lawyers, op. cit., supra.
16. Paul Nelson, the partner in charge of the project, estimates that the traditional cost of a one-time survey of the banking law in the hypothetical 20 jurisdictions would cost 125,000 pounds sterling. The same fee plus an annual maintenance fee of 40,000 pounds sterling would allow an unlimited number of surveys.
20. Id.. Compare this with the Private Letter Ruling Procedures of the Internal Revenue Service.
22. See http://www.willdrafter.com/docs/instructl.htm.
23. Note that enforceability of statutes against web-based companies is difficult. By locating a server in a "friendly" jurisdiction, individuals engaged in the unauthorized practice could maintain anonymity and be free from the jurisdiction of the United States. This is now the case for Internet gambling, a much more interesting pursuit for attorneys general.
24. But see http://www.cybersettle.com that bills itself as the world’s first online claim resolution system. See also An End to Endless Negotiation — Cybersettle.com Resolves Disputes Quickly With Enhanced, Seccure Web Site, PR Newswire Association, Inc. PR Newswire, November 16, 1999.
25. Even the Texas bar, with its aggressive unauthorized practice committee, would be required by statute to allow such programs so long as they displayed the required disclaimer and so long as they did not affect interests in real property. See the amendment to Section 81.101 of the Government Code, as amended June 19, 1999.
26. http://www.mortgage.com and http.//www.mycorpration.com/incorporatenow.htm See also Mortgage.com Unveils Strategy to Drive Internet Technology and Cost Savings to Point of Sale for Realtors, PR Newswire Association, Inc. PR Newswire, November 15, 1999.
27. http://www.das-inc.com/industry/realestate.html. The eOriginal website also says that legal contracts and wills are "industry applications under review."
28. It is not clear how these companies will fare in Texas. Chapter 83 of the Government Code prevents the unauthorized practice of law with respect to certain documents involving real property. The amendments to Section 81.101 specifically continue the prohibitions in Chapter 83.
29. The definition is based substantially on District of Columbia Rule 49.
30. Testimony of James C. Turner before the ABA Commission. (The principal drafter of this section of the report has been told by a former member of the New York Committee on Unauthorized Practice that the "unauthorized practice of law" means appearing in court and claiming you’re a lawyer when you’re not.)
31. House Bill 1507, 1999 Tex ALS 799, Gen. Laws 799, 1999 Tex Ch 799; Approved by the Governor June 19, 1999.
32. 179 F.3d 956 (5th Cir. 1999).
33. When the Texas Supreme Court Committee began its investigation of Arthur Andersen and Deloitte & Touche, the Arthur Andersen spokesman said, "We are not engaged in the unauthorized practice of law in Texas or any other jurisdiction. It’s flatly against our policies to do so." Deloitte issued a written statement that said, "Deloitte & Touche L.L.P. does not engage in the unauthorized practice of law in Dallas, Texas, or elsewhere." The Dallas Business Journal, Business Dateline, June 5, 1998.
34. Note the ability of Lawyers, CPA’s and enrolled agents to practice before the Tax Court. See also Section 7452 of the Internal Revenue Code.
35. Charles W. Wolfram, Modern Legal Ethics 831 (1986).
36. Milton S. Friedman, Capitalism and Freedom 144-49 (1962), reprinted in Hazard and Rhode, The Legal Profession: Responsibility and Regulation 410 (3d ed. 1994).
37. A Brief History of the Unauthorized Practice of Law, 1994 Survey and Related Materials on the Unauthorized Practice of Law/Nonlawyer Practice, American Bar Association (1996), pp. xvii-xviii; Wolfram, op. cit., § 15.1.2,at 828-34.
38. "Psst – Wanna Buy a Hot Stock," The American Lawyer, November 1987 as reported at http://www.lawnewsnetwork.com/stories/A3480-l999Jul16.html on July 1, 1999.
39. "Ruining the Profession," The American Lawyer, July/August 1996, reported at the web address cite above.
42. Including Urbach Kahn & Werlin, P.C. in Albany, NY.
43. Form S-1/A, October 14, 1999, as filed with the Securities and Exchange Commission.
44. TheStreet.com, November 10, 1999
45. Note 23, supra. Of course they are permitted to practice in some other countries.
46. Remarks of Professor Mary C. Daly at the New York State Bar Association Trusts and Estates Section Fall Meeting, October 9, 1999. Section 7525 of the Internal Revenue Code. This privilege is not available to nonlawyer practitioners "when they are doing other than lawyers’ work" United States v. Frederick, 182 F3d 496 (7th Cir., 1999). In the opinion of many tax practitioners this privilege is of very little, if any, value to the accounting profession.
1. ABA Model Rules of Professional Conduct [hereinafter "Model Rules"], Rule 1.6(a); N.Y. Code of Professional Responsibility, DR 4-101; Restatement of the Law Governing Lawyers [hereinafter "Restatement"] §§ 59, 60.
2. Communications to accountants, for example, are privileged only in a minority of states, and in limited ways relating to tax return preparation. 26 U.S.C. § 7525; Couch v. United States, 409 U.S. 322, 335 (1973); 23 Charles Alan Wright & Kenneth W. Graham, Jr., Federal Practice and Procedure § 5427 (1980); see United States v. Arthur Young & Co., 465 U.S. 805 (1994).
3. Compare Prink v. Rockefeller Center Inc., 398 N.E.2d 517 (N.Y. 1979) (wrongful death action waives psychiatrist-patient privilege of deceased who allegedly fell from window) with Swidler & Berlin v. United States, 118 S. Ct. 2081 (1998) (lawyer-client privilege survives client’s death).
4. Model Rules 1.6; N.Y. Code of Prof. Responsibility, DR 4-101; Thomas D. Morgan & Ronald D. Rotunda, 1999 Selected Standards on Professional Responsibility 133-42 (1999).
5. 15 U.S.C. § 78j-1 (§ 10A of the Securities Exchange Act of 1934, as inserted by Securities Litigation Reform Act of 1995, § 301(a)); American Institute of Certified Public Accountants, Code of Professional Conduct, rule 301, and Statement on Auditing Standards No. 82 (1997); U.S. General Accounting Office, The Accounting Profession: Major Issues: Progress and Concerns 60-80 (1996); Marc. J. Epstein & Albert D. Spalding, Jr., The Accountant’s Guide to Legal Liability and Ethics 67-71, 143-46, 158-59, 266-71 (1993).
6. Apparently, under the rules promulgated by the American Institute of Certified Public Accountants and cited in the previous note, an accountant may withdraw without completing the audit or disclosing the fraud if the client refuses to do so. The legislation cited in that note, however, requires disclosure even if the accountant withdraws.
7. E.g., American Institute of Architects, Code of Ethics and Professional Conduct, rules 2.105, 3.401 (disclosure required when breach of law will materially affect public safety).
8. See also Revised Uniform Partnership Act § 102(f) (1997) (each partner’s knowledge is imputed to the partnership).
9. E.g., Certified Financial Planner Board of Standards, Code of Ethics and Professional Responsibility, rules 401-04 (requiring disclosure of conflicts of interest, but not defining what they are); American Institute of Certified Public Accountants, Code of Professional Conduct, Rule 102 (accountant "shall be free of conflicts of interest") and Interpretation 102-2 (describing forbidden conflicts when accountant simultaneously provides services to clients in matters in which they are opposed, or in which duty to a client conflicts with accountant’s own interests or obligations); National Association of Social Workers, Code of Ethics 1.06 (describing certain conflicts, and requiring disclosure and efforts to resolve, including in some instances withdrawal); see Marc A. Rodwin, Medicine, Money, and Morals: Physicians’ Conflicts of Interest (1993) (contending that medical profession permits undesirable conflicts).
10. See Restatement, ch. 8.
11. Model Rules, rules 1.10, 1.11; N.Y. Code of Professional Responsibility, DR 5-102, DR 5-105(D), DR 5-108, DR 9-101(B); Kassis v. Teacher’s Ins. & Annuity Ass’n, 659 N.Y.S.2d 515 (N.Y. 1999); Restatement §§ 123-24.
12. Model Rules, rules 1.7, 1.9; N.Y. Code of Professional Responsibility, DR 5-105, 5-108; Restatement §§ 128-30, 132.
13. Model Rules, rule 3.7; N.Y. Code of Professional Responsibility, DR 5-102.
14. Compare Model Rules, rule 1.8(a); N.Y. Code of Professional Responsibility, DR 5-104 with 17 C.F.R. § 210.2-01; American Institute of Certified Public Accountants, Code of Professional Conduct, rule 101 and Interpretation 101-1; Gary John Previts, The Scope of CPA Services: A Study of the Development of Independence and the Profession’s Role on Society (1985); J. Gregory Jenkings, A Declaration of Independence, Journal of Accounting, May 1999, at 31.
15. In the Matter of Charles E. Falk, CPA, Securities Exchange Act of 1934 Release No. 41424, Accounting and Auditing Enforcement Release No. 1134, 1999 SEC Lexis 1013 (1999); see Independence Standards Board, Discussion Memorandum: Legal Services (Dec. 1999) (DM 99-4); U.S. General Accounting Office, The Accounting Profession: Major Issues: Progress and Concerns 49-52 (1996). But see American Institute of Certified Public Accountants, Code of Professional Conduct, Interpretation 101-14 (discussing the effect of alternative practice structures on independence rules).
16. This solution would fail only if there were a rule – we know of none – obliging members of a profession to accept a case that another profession’s rules forbid.
17. Model Rules, rules 1.8(f), 5.4; N.Y. Judiciary Law § 495; N.Y. Code of Professional Responsibility, DR 3-101 through 3-103, 5-107, 5-110; see Charles Wolfram, Modern Legal Ethics 898-917 (1986) (discussing group legal services). On lawyers employed by insurance companies, see chapter 12 below.
18. N.Y. Education Law § 7408 (all partners must be CPAs); American Institute of Certified Public Accountants and National Association of State Boards of Accountancy, Uniform Accountancy Act § 7(c) (1997 ed.) (accountants must constitute majority of ownership if the firm provides attest services).
19. Restatement §§ 16-24; Deborah DeMott, The Lawyer as Agent, 67 Fordham L. Rev. 301 (1998).
20. Model Rules, rules 1.2, 3.3-5, 4.1-4; N.Y. Code of Professional Responsibility, DR 7-101, 7-102; authorities in preceding note.
21. Model Rules, rule 1.1; N.Y. Code of Professional Responsibility, DR 6-101.
22. See Report of the Task Force on Law Schools and the Profession: Narrowing the Gap, Legal Education and Professional Development--An Educational Continuum (1992).
23. See Wallace E. Olson, The Accounting Profession: Years of Trial: 1969-1980, at 146-67 (1982); U.S. General Accounting Office, The Accounting Profession: Major Issues: Progress and Concerns 82-86 (1996).
24. See Law Practice Quality Evaluation: An Appraisal of Peer Review and Other Measures to Enhance Professional Performance (1988); Susan R. Martyn, Peer Review and Quality Assurance for Lawyers, 20 U. Tol. L. Rev. 295 (1989); Mass. Rules of Prof. Conduct, rule 1.6(c) (mandating confidentiality in lawyer assistance programs).
25. Restatement § 16.
26. Model Rules, rules 1.2(a), 1.3; N.Y. Code of Professional Responsibility, DR 7-101.
27. Model Rules, rules 3.1-9, 4.1-4; N.Y. Code of Professional Responsibility, DR 2-106, 2-110, 5-102, 5-109(A), 7-101, 7-102, 7-104, 7-105, 7-106, 7-107, 7-108, 7-109, 7-110.
28. E.g., Fed. R. Civ. P. 11 (duty of lawyer who signs court pleading); Petrillo v. Bachenberg, 655 A.2d 1354 (N.J. 1995) (duty of lawyer who provides information to opposing party in land sale).
29. E.g., American Medical Association, Code of Medical Ethics and Current Opinions, Current Opinions 5.06, 9.07 (expert witnesses); American Institute of Certified Public Accountants, Code of Professional Conduct, Interpretation 102-6 (accountant providing advocacy services must maintain integrity and objectivity).
30. Model Rules, rule 8.4(a); N.Y. Code of Professional Responsibility, DR 1-102(A)(2).
31. E.g., NAACP v. Button, 371 U.S. 415 (1963) (right to counsel as aspect of right to associate and petition for redress of grievances); Gideon v. Wainwright, 372 U.S. 335 (1963) (criminal defendant’s right to counsel).
32. See Chapter 3, part 3, above. IOLTA (Interest on Lawyer Trust Accounts) programs collect interest on client sums in the custody of lawyers that are too small for payment of interest to the clients to be practical, and use the interest to fund legal services for the indigent and other public programs. See ABA/BNA Lawyers’ Manual on Professional Conduct 45:201-05.
33. The Law Firm and the Public Good (R.A. Katzmann ed. 1995); Deborah L. Rhode, Cultures of Commitment: Pro Bono for Lawyers and Law Students, 67 Fordham L. Rev. 2415 (1999).
34. Model Rules, rule 1.5; N.Y. Code of Professional Responsibility, DR 2-106; Restatement §§ 34, 38-42.
35. E.g., Bates v. Arizona State Bar, 433 U.S. 350 (1977) (First Amendment right to lawyer price advertising); Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (antitrust bar on lawyer minimum price scales); National Soc’y of Professional Engineers v. United States, 435 U.S. 679 (1978) (antitrust bar on engineers’ rule prohibiting competitive bidding); Wallace E. Olson, The Accounting Profession: Years of Trial: 1969-1980, at 111-17 (1982) (FTC pressure resulting in repeal of accountants’ rules against competitive bidding and solicitation). Although the First Amendment applies only to governmentally imposed rules while the antitrust laws apply only to nongovernmental arrangements, the courts have construed both to promote similar procompetitive policies.
36. See Chapter 2, part 3 and Chapter 3, part 4, above.
37. Model Rules, rule 7.3; N.Y. Code of Professional Responsibility, DR 2-103; Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447 (1978); see Florida Bar v. Went for It, Inc., 515 U.S. 618 (1995) (relating to targeted direct mail solicitation).
38. Wallace B. Olson, supra, at 111-17; Edenfield v. Fane, 113 S. Ct. 1792 (1993); see American Institute of Certified Public Accountants, Code of Professional Conduct, rule 502 (prohibiting solicitation "by the use of coercion, over-reaching, or harassing conduct").
39. Compare id, rule 503 (accountant performing audit or similar services for client may not receive referral fee or commission; others may do so, with disclosure to client) with Model Rules, rule 1.5(e) and N.Y. Code of Professional Responsibility, DR 2-107 (lawyer may divide fee with lawyer outside his firm only if client consents and lawyers share work or responsibility). Unlike lawyers (see id, DR 2-103(B); Model Rules, rule 7.2(c)), accountants apparently have no rule prohibiting payment of referral fees.
40. Archibald Cox, Lawyer Independence, N.Y.S. Bar J. 10-11 (May 1990).
41. See Chapter 5, above.
42. See Chapter 1, above.
43. See Chapter 6, above.
1. See William E. Hornsby, Jr., Marketing and Legal Ethics 139-41 (3d ed. 2000) [hereinafter "Hornsby"]; ABA Formal Ethics Ops. 57 (1932) and 297 (1961); New York State Ethics Op. 557 (1984); Wisconsin Formal Ethics Op. E-84-21 (1984).
2. Law related businesses included such diverse fields as accounting, debt collecting, insurance brokering, claims adjusting, real estate management and sales, stock brokering or investment counseling, labor relations or management consulting, income tax preparation or operation of a refund bureau, marriage counseling, psychotherapy, artistic or athletic management and bail bonding. Hornsby at 140. The ownership and operation of shopping centers, retail stores and manufacturing plants, were considered not to be law related, nor was the practice of medicine. Id.
3. Hornsby at 140-41.
4. ABA Formal Ethics Op. 328 (1972).
5. See American Bar Foundation, Annotated Model Code of Professional Responsibility 51, 62-63 (1979) (DR 2-102(E) prohibited lawyers engaged in both the practice of law and another profession or business from so indicating on legal letterhead, office signs or business cards, or from "identify[ing] himself as a lawyer in any publication in connection with his other profession or business"); ABA/BNA Lawyers’ Manual on Professional Conduct 81:3012 (1999). DR 2-102(E) was quietly repealed by the ABA in 1980, after the Kutak Commission began its work. Id.
6. See Peter Grant, "Bottom Line Bar: The Law Isn’t Enough," Crain’s New York Business, Nov. 14, 1988, at 27; Terry Carter, "A New-Found Respectability for Lobbying," National Law Journal, Dec. 26, 1988/Jan. 2, 1989, at 1; Stephanie B. Goldberg, "More Than the Law: Ancillary Businesses Growth Continues," A.B.A. J. 54, 55 (Mar. 1992).
7. See Thomas F. Gibbons, "Branching Out," A.B.A. J. 70 (Nov. 1989).
8. ABA Commission on Professionalism, Report of Commission on Professionalism, 112 F.R.D. 243, 280-81 (1986).
9. See id.; see also ABA Section of Litigation, Recommendation and Report on Law Firms’ Ancillary Business Activities 4-31 (1990).
10. Justin A. Stanley, Lawyers In Business, 8 N. Ill. U.L. Rev. 17, 18-19, 21 (1987).
11. See Dennis J. Block, Irwin H. Warren and George F. Meierhofer, Jr., Model Rule of Professional Conduct 5.7: Its Origin and Interpretation, 5 Geo. J. Legal Ethics 739, 777-92 (1992) [hereinafter "Block"].
12. The 1991 version of Model Rule 5.7 is reprinted in Block, Appendix A, at 816. Model Rule 5.7(c) and (d) were directed at preventing circumvention of the rule, either by a law firm vesting ownership of a controlling interest in an ancillary business in one or more of a firm’s lawyers, or by vesting the controlling interest in the ancillary business in lawyers at two or more law firms, with the expectation that the non-legal entity would serve as a feeder operation for those firms.
13. See generally Ted Schneyer, Policymaking and the Perils of Professionalism: The ABA’s Ancillary Business Debate as a Case Study, 35 Ariz. L. Rev. 363 (1993) [hereinafter "Schneyer"]; American Bar Association, Annotated Model Rules of Professional Conduct 473-74 (4th ed. 1999) [hereinafter "Annotated MRPC"].
14. See Schneyer at 364-65; Annotated MRPC at 473-74;. James Podgers, "Ancillary Business Provision Added to Model Rules," A.B.A. J., at 117 (Apr. 1994).
15. Annotated MRPC at 474; James Podgers, "Ancillary Business Provision Added to Model Rules," A.B.A. J., at 117 (Apr. 1994).
16. Restatement (Third) of the Law Governing Lawyers, § 11, cmt. g (Prop. Final Draft No. 2, Apr. 6, 1998) [hereinafter "Restatement’]. (This provision will be renumbered as Section 10 of the final Restatement when it is released later this year.)
17. Indiana, Maine, Massachusetts, North Dakota, Pennsylvania and the Virgin Islands have adopted the provision. Annotated MRPC at 475. In contrast, by 1972, within two years of the promulgation of the Model Code of Professional Responsibility, most of the states had adopted it, often verbatim, to govern lawyers in their jurisdictions. Report of the ABA Special Commission to Secure Adoption of the Code of Professional Responsibility, 97 A.B.A. Rep. 268 (1972).
18. See, e.g., New York State Ethics Op. 636 (1992). The NYSBA Special Committee to Review the Code of Professional Responsibility, which reexamined the New York Code between 1992 and 1996, did not propose the adoption of Model Rule 5.7 in words or substance, and the matter was not considered by either the NYSBA House of Delegates or the Appellate Divisions during their respective reviews of the proposed Code amendments.
19. See Restatement, § 5, cmt. b; N.Y. State Ethics Ops. 633 (1992), 557 (1984).
20. See In re Pappas, 768 P.2d 1161 (Ariz. 1988); In re Leaf, 476 N.W.2d 13 (Wis. 1991); Florida Bar v. Slater, 512 So. 2d 191 (Fla. 1987); New York Lawyers’ Code of Professional Responsibility, Disciplinary Rule ("DR") 5-101(A).
21. Id.; see also Virginia Ethics & Unauthorized Practice Op. 1564 (1995); In re Opinion 682, 687 A.2d 1000 (N.J. 1997).
22. See DR 4-101(C).
23. New York State Ethics Ops. 709 (1998), 687 (1997), 636 (1992), 621 (1991), 619 (1991), 595 (1988); 557 (1984), 536 (1981); New York County Ethics Op. 693 (1992).
24. Pennsylvania Rules of Professional Conduct, Rule 5.7.
25. See generally Andrew M. Goldner, Minding Someone Else’s Businesses: Pennsylvania Rule of Professional Conduct 5.7 Leads the Way, 11 Geo. J. Legal Ethics 767 (1998); Laurel S. Terry, Pennsylvania Adopts Ancillary Business Rule, 8 Professional Lawyer (ABA) 10 (Nov. 1996). The rule is also more consistent with the law governing attorney client relationships, which generally views the relationship from the perspective of the client.
26. The ABA’s Commission on Evaluation of the Rules of Professional Conduct, also known as the "Ethics 2000" Commission, is in the process of reviewing the Model Rules and will be proposing substantial changes to many of the rules by 2001. Those changes would not take effect unless and until the ABA House of Delegates adopts them. The Ethics 2000 Commission has thus far expressed no interest in making any changes to Model Rule 5.7. See Minutes of October 15-17, 1999 Meeting of Ethics 2000 Commission, ¶ XI (suggesting that the issue might be revisited in conjunction with any revisions to Model Rule 5.4 regarding the involvement of nonlawyers in the practice of law).
27. Model Rule 5.4(a); New York DR 3-102(A).
28. Model Rule 5.4(b); New York DR 3-103(A).
29. Model Rule 5.4(c); New York DR 5-107(B).
30. Model Rule 5.4(d); New York DR 5-107(C).
31. The Committee has reviewed the District of Columbia version of Model Rule 5.4(b), which provides that:
A lawyer may practice law in a partnership or other form of organization in which a financial interest is held or managerial authority is exercised by an individual nonlawyer who performs professional services which assist the organization in providing legal services to clients, but only if[, among other things,] the partnership or organization has as its sole purpose providing legal services to clients . . . .
No other jurisdiction has adopted this formulation of Model Rule 5.4, and experience under it is limited even in the District of Columbia. Notwithstanding the large number of law firms operating ancillary businesses in that jurisdiction, as discussed above, few firms availed themselves of the provisions of D.C. Rule 5.4(b) and actually gave a financial interest or managerial authority to a nonlawyer ancillary service provider. Accordingly, we do not recommend adoption of this provision in New York State. We note in this regard that a 1999 amendment to DR 3-102(A)(3) of the New York Code of Professional Responsibility now allows nonlawyer employees of a lawyer or law firm to be compensated on a profit-sharing basis, as does Model Rule 5.4(a)(3). Thus, while a nonlawyer may not have a financial interest in a law firm, he or she may share in the overall profitability of the venture.
32. A summary of all of the amendments to the New York Code of Professional Responsibility proposed in this report can be found in Appendix A to this Chapter. For purposes of information and comparison, Appendix B contains a set of corresponding amendments that this Committee believes could be adopted by jurisdictions governed by the ABA Model Rules of Professional Conduct to implement the principles set forth in this report.
33. Additional amendments to these provisions are proposed in Section 2 below.
34. See generally Robert B. Cialdini, Influence: Science and Practice 21-57 (2d ed. 1988).
35. See Marjorie Meeks, Altering People’s Perceptions: The Challenge Facing Advocates of Ancillary Business Practices, 66 Ind. L.J. 1031, 1041 (1991).
36. See pages 103 to 106 above.
37. Model Rule 7.2(c); New York DR 2-103(B). Cf. In re VanCura, 504 N.W.2d 610 (Wis. 1993) (improper fee-splitting agreement with client as quid pro quo for client services).
38. Restatement, § 11 cmt. d.
39. See Annotated MRPC at 511-12 (collecting cases).
40. Id. at 513 (collecting cases); Nassau County Ethics Op. 98-10 (1998) (lawyer could not give discount coupons to real estate broker to distribute to its clients; potential benefit to broker of being able to offer discounted legal services was an impermissible quid pro quo for the recommendation implicit in the brokers giving the coupons to clients).
41. Indeed, a lawyer who fails to exercise the requisite standard of care in referring a client to another professional would be liable for malpractice, see, e.g., Tormo v. Yormark, 398 F. Supp. 1159, 1170 (D.N.J. 1975),.or charged with incompetence under Model Rule 1.1 or DR 6-101(A).
42. The fact that the lawyer has a financial interest in steering the client to a particular service provider may be sufficiently significant to require disclosure and consent. See, e.g., N.Y. State Ethics Op. 687 (1997) (lawyer who is also a licensed insurance broker may not sell insurance to a client without disclosure of the lawyer’s financial interest and consent of the client); Nassau County Ethics Op. 97-8 (1997) (lawyer may refer clients to medical group that provide free services, the cost of which the lawyer would otherwise be obligated to advance on the client’s behalf); ABA Informal Ethics Op. 1482 (1982) (lawyer may recommend services of one client to another as long as lawyer fully discloses financial relationship with client whose services lawyer recommends).
43. Michigan Ethics Op. RI-317 (2000).
44. New York has incorporated the substance of Model Rule 1.8(a) into DR 5-104(A).
45. Pennsylvania Bar Ass’n Comm. on Legal Ethics & Professional Responsibility and Philadelphia Bar Assn. Professional Guidance Comm., Joint Formal Op. 2000-100, discussed in 16 ABA/BNA Lawyers’ Manual on Professional Conduct, Current Reports 149-50 (Apr. 12, 2000). Accord, Utah Ethics Op. 99-07; Connecticut Inf. Ethics. Op. 94-25.
46. Ohio Sup. Ct. Ethics Op. 2000-1.
47. The Board also stated that the proposed arrangement implicated DR 5-101(A), DR 5-104(A) and DR 5-107(A), all of which provided for client consent.
48. Accord, Arizona Ethics. Op. 98-09; Michigan Inf. Ethics Op. RI-146 (1992).
49. N.Y. State Ethics Ops. 667 (1994), 626 (1992) and 576 (1986).
50. N.Y. State Ethics Op. 107a (1969).
51. N.Y. State Ethics Ops. 711 (1999), 682 (1996), 671 (1994) and 619 (1991).
52. N.Y. State Ethics Op. 619 (1991). This view is by no means universally held. California Formal Ethics Op. 1995-140 concluded that an estate planning lawyer may ethically advise a client to purchase life insurance and also accept a commission from the insurance agent provided the client waives the conflict (which California law requires be in writing) and the lawyer complies with the rule governing business transactions between lawyers and clients, which includes a requirement of substantive fairness.
53. Model Rule 1.7(b); DR 5-101(A); DR 5-107(B).
54. Technically, the client would be consenting to a conflict of interest. In reality, the client’s choice is a more practical one. The law firm recommends the allied consulting firm and discloses that a strategic alliance exists between them, e.g., a relationship involving a commitment to use best efforts in making cross-referrals to steer clients to each other absent good cause to do otherwise. If the client accepts the law firm’s recommendation, having been told the nature of the relationship that theoretically may have influenced the referral, the client has in effect consented to the law firm’s conflict of interest. However, the client may insist that a different consulting firm be retained. If the law firm complies, the matter has been resolved. If the law firm insists that its strategic ally be retained, the client has a choice: acquiesce in the law firm’s choice, reserving the right to take legal action against the law firm arising out of the "tainted" referral, or find a new law firm to represent it.
55. Because details of the relationship between Ernst & Young and the McKee Nelson law firm are not available to the public, we cannot and do not express any opinion as to the legitimacy of the co-venture under existing ethics rules.
56. See DR 2-102(A)(4).
57. N.Y. City Ethics Op. 81-3 (1982); see also N.Y. City Ethics Ops. 1996-8, 1995-8; ABA Formal Ethics Ops. 90-357, 330 (1974).
58. N.Y. City Ethics Op. 891 (1977); ABA Formal Ethics Ops. 90-357, 330 (1974).
59. N.Y. State Ethics Op. 262 (1972).
60. ABA Formal Ethics Op. 90-357.
61. If the two allies share office space, the nexus between them becomes even stronger in light of the increased risk that client confidential information will be shared. See N.Y. City Ethics Ops. 1995-8, 80-63; N.Y. County Ethics Ops. 692 (1993), 680 (1990).
62. N.Y. City Ethics Ops. 1996-8, 1995-8 (collecting authorities); see also Restatement, § 203, cmt. c(ii) (§ 203 is to be redesignated § 123 in the final version).
63. Because of the requirement that systems be maintained by lawyers and law firms to detect and deal with conflicts of interest, see DR 5-105(E), lawyers or law firms in relationships of the kind permitted by new DR 1-107 would have to include clients of the nonlawyer professional or nonlawyer professional service firm in any database or other system maintained by them for conflict checking. Further complications could arise if the nonlawyer professional or nonlawyer professional service firm maintains systematic and continuous relationships with more than one law firm, in which case multiple levels of imputation are possible from one firm to another. See N.Y. State Ethics Op. 715 (1999).
64. As discussed in Chapter 11 above, professions vary widely with respect to their rules of conduct.
65. See N.Y. State Ethics Ops. 658 (1994), 646 (1993).
66. See discussion in Section 1 above.
67. See proposed changes discussed at pages 340 to 342 above.
68. 1995 Lawyer Statistical Report at 24.
69. Another rationale sometimes offered is that fictional entities cannot be disciplined and cannot satisfy the educational and moral requirements of the profession, and cannot be subjected to professional discipline. See ABA/BNA Lawyers’ Manual on Professional Conduct 21:8021 (1999).
70. Roy Simon, Simon’s New York Code of Professional Responsibility Annotated (2000 Edition) 589 (1999) [hereinafter "Simon"].
71. New York Judiciary Law § 495(2), (3).
72. See ABA/BNA Lawyers’ Manual on Professional Conduct 21:8021 (1999); Charles Wolfram, Modern Legal Ethics § 15.1 (1986): Restatement, § 4, cmt. e.
73. See United Mine Workers v. Illinois Bar Association, 389 U.S. 217 (1967); Brotherhood of R.R. Trainmen v. Virginia ex rel. Virginia State Bar, 377 U.S. 1 (1964); NAACP v. Button, 371 U.S. 415 (1963).
74. See In re Education Law Center, Inc., 429 A.2d 1051 (N.J. 1981).
75. Cases permitting practice by in-house insurance company attorneys: Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151 (Ind. 1999); In re Youngblood, 895 S.W.2d 322 (Tenn. 1995); In re Rules Governing Conduct of Attorneys, 220 So. 2d 6 (Fla. 1969); ABA Informal Ethics Op. 1370 (1976). Cases prohibiting insurance company lawyers from providing legal services: Gardner v. North Carolina State Bar, 341 N.E.2d 517 (N.C. 1986); American Insurance Assn. v. Kentucky Bar Ass’n, 917 S.W.2d 568 (Ky. 1996); Ohio Board of Commissioners on Grievance & Discipline Op. 95-14 (1995).
76. Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151 (Ind. 1999).
77. In actuality, because of the overlay of federal and state labor and employment laws, the insurance company may have far greater control over the manner in which the "independent contractor" or captive law firm practices law than it does over lawyers its employs.
78. See, e.g., State Farm v. Armstrong Extinguisher Serv., 791 F. Supp. 799 (D.S.D. 1992); CHI of Alaska, Inc. v. Employers Reinsurance Corp., 844 P.2d 1113 (Alaska 1993); In re Allstate Ins. Co., 722 S.W.2d 947 (Mo. 1987).
79. See N.Y. State Ethics Ops. 726 (2000), 721 (1999), 716 (1999) and 519 (1980); Nassau County Ethics Op. 95-5.
80. We cannot predict whether the Supreme Court would conclude in the case of the insurance company lawyer, as it did in the cases of the lawyers furnished by labor unions and public interest groups, that the prohibition against corporate practice of law is unenforceable. Nothing in this report should be construed as an expression of opinion on the propriety of an insurer furnishing counsel to its insureds, as that issue is beyond the scope of this Committee’s charge.
81. Note that, as a technical matter, even the "furnishing" of counsel by a corporation is prohibited under New York Judiciary Law § 495(1).
82. Accounting firms have characterized their provision of tax law advice to clients as constituting only consulting services or the "practice of tax." See generally Matthew A. Melone, Income Tax Practice and Certified Public Accountants: The Case For a Status Based Exemption from State Unauthorized Practice of Law Rules, 11 Akron Tax J. 47 (1995).
83. New York Judiciary Law § 495.
84. New York Judiciary Law § 476-a(1)(a) (statute refers to provisions of the penal law that have been repealed, see New York Penal Law § 500.05; their substance has been transferred to sections of the New York Judiciary Law, including section 495, see Simon at 577).
85. ABA, Ohio State Bar Association Report With Recommendation to the House of Delegates, Agenda Item 8A, February 14, 2000 Meeting (co-sponsored by New York State Bar Association based on Resolution of House of Delegates on January 28, 2000).
86. See 5 U.S.C. § 500(c). Under Tax Court Rule 200, accountants and other non-lawyers may also represent taxpayers in Tax court if they qualify by passing an examination. See Kafka & Cavanagh, Litigation of Federal Civil Tax Controversies ¶ 2.07 (2000).
87. Unless the lawyer resigns from the bar, he or she would, of course, at all times remain subject to the full range of ethical and legal strictures governing lawyers.
88. The same analysis would apply to any other corporation or voluntary association performing a legally authorized service for clients, e.g., representing clients before certain administrative agencies. See Realty Appraisals Co. v. Astor-Broadway Holding Corp., 5 A.D.2d 36, 37 (1st Dep’t 1957) (non-lawyer could represent a taxpayer in an administrative proceeding before the New York City Tax Commission without running afoul of the statute governing the unauthorized practice of law); Matter of Board of Educ. v. New York State Pub. Empl. Rels. Bd., 233 A.D.2d 602, 603 (3d Dep’t 1996) (practice before an administrative agency did not constitute holding oneself out as an attorney in a "court of record" within the meaning of New York Judiciary Law § 478); Matter of Cipollone v. White Plains, 181 A.D.2d 887, 888 (2d Dep’t 1992) (representation by non-attorneys is permitted in Small Claims Assessment Review proceedings in view of the informal nature of the hearing and the specialized nature of the expertise required). See generally Association of the Bar of the City of New York Committee on Professional Responsibility, Prohibitions on Non-lawyer Practice: An Overview and Preliminary Assessment, 50 The Record 190 (1995); New York County Lawyers’ Association, Report of Committee on Legal Assistance (Oct. 14, 1993); 5 U.S.C. § 555(b). In this regard, recall that DR 3-103(A) prohibits lawyers and nonlawyers from forming partnerships if any of the activities of the partnership constitute the practice of law.
89. DR 3-101(A).
90. DR 5-107(B). With respect to confidentiality, problems may arise to the extent that the insurer employing counsel takes the position that the insured’s duty to cooperate (assuming, as is typical, that such a duty exists under the governing policy) carries with it an obligation to waive the attorney-client privilege. Where the protected information would reveal a lack of coverage, for example, a conflict of interest may be created between the lawyer’s duty to the client and the lawyer’s financial interest in continued employment. See Simon at 366. Disputes between insurers and lawyers concerning confidentiality have recently focused on the extent to which insurers can require, and lawyers can provide, detailed information (on computer printouts or otherwise) regarding billing to outside auditors. New York has joined a long list of states that prohibit the lawyer from submitting bills to an independent audit company employed by the insurance carrier without the consent of the client after full disclosure. N.Y. State Ethics Op. 716 (1999).
91. See Model Rule 5.5, Comment ("limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons").
92. In response to a 1994 ABA survey, some 35 states indicated that they have a definition of the unauthorized practice of law, while 13 (including New York) stated that they did not. Some states define the practice of law statutorily or by rule. In 28 states the definition is strictly a matter of case law. ABA Standing Committee on Lawyers’ Responsibility for Client Protection, 1994 Survey and Related Materials on the Unauthorized Practice of Law/Nonlawyer Practice 5, 15-22 (1996).
93. Regulation of the bar is generally a matter of state law, Sperry v. Florida ex rel. Florida Bar, 373 U.S. 379 (1963), and is viewed as the province of the state’s judiciary, see ABA/BNA Lawyers’ Manual on Professional Conduct 21:8003 (1999).
94. See ABA/BNA Lawyers’ Manual on Professional Conduct 21:8004-07 (1999) (collecting authorities); Restatement § 4, cmt. c. Prosecutions for the unauthorized practice of law are generally directed at unlicensed individuals who provide legal services routinely or for profit. We are not aware of any cases in which the nonlawyer provider of gratuitous legal advice, such as to a friend or relative, was charged under these laws.
95. See, e.g., Committee on Professional Ethics and Conduct v. Baker, 492 N.W.2d 695 (Iowa 1992); Somuah v. Flachs, 721 A.2d 680 (Md. 1998); Oregon State Bar v. Smith, 942 P.2d 793 (Or. 1997); State v. Buyers Service Co., 357 S.E.2d 15 (S.C. 1987); Green v. Unauthorized Practice of Law Committee, 883 S.W.2d 293 (Tex. Ct. App. 1994). In 1995, the ABA Commission on Nonlawyer Practice suggested that the determination of what constitutes the unauthorized practice of law be based on the risk of harm presented by a particular activity, an evaluation of the consumer’s ability to evaluate the provider’s qualifications, and a judgment of whether the net effect of regulation would be a public benefit. American Bar Association, Nonlawyer Activity in Law-Related Situations: A Report With Recommendations 136-42 (1995).
96. One current area of debate involves the extent to which nonlawyer mediators are engaged in the practice of law, particularly those who purport to give legal advice to the participants in the mediation or who draft settlement documents. See, e.g., David A. Hoffman & Natasha A. Affolder, "Mediation and UPL," Dispute Resolution Magazine 20 (1999).
97. See ABA/BNA Lawyers’ Manual on Attorney Conduct 21:8007-08 (1999) (collecting cases); State v. Winder, 42 A.D.2d 1039 (4th Dep’t 1973) (sale of divorce kit coupled with advice and counsel bylay seller to individual purchasers concerning specific legal needs constitutes practice of law); People v. Divorce Associated and Publishing Ltd., 95 Misc. 2d 340 (Sup. Ct. Queens Co. 1978) (same); cf. New York County Lawyers’ Ass’n v. Dacey, 21 N.Y.2d 694 (1967), rev’g on opinion below, 28 A.D.2d 161 (1st Dep’t) (Stevens, J., dissenting) (the publication of legal forms and texts, e.g., "How to Avoid Probate!," did not constitute the practice of law). See also N.Y. State Ethics Op. 636 (1992) (lawyer may operate "Will Store" to sell forms provided, among other things, any nonlawyer employee of the store refrains from advising individual members of the public as to the selection of the appropriate form or the adaptation of its language to their particular circumstances, because that would be the practice of law).
98. See ABA/BNA Lawyers’ Manual on Attorney Conduct 21:8008-09 (1999); Application of Duncan & Hill Realty, Inc. v. Department of State, 62 A.D.2d 690 (4th Dep’t 1978) (nonlawyer broker may complete preprinted form contract of sale by filling in blanks but not by adding new language to deal with customer’s specific legal problems); 1996 N.Y. Op. Atty. Gen. 46 (nonlawyer broker may prepare contract of sale if it expressly states that documents are subject to review by the parties’ attorneys, or if preprinted forms approved by bar and realtor associations are used and no material requiring legal expertise is inserted).
99. See id. at 21:8009-10. See generally Association of the Bar of the City of New York Committee on Professional Responsibility, Prohibitions on Non-lawyer Practice: An Overview and Preliminary Assessment, 50 The Record 190 (1995); New York County Lawyers’ Association, Report of Committee on Legal Assistance (Oct. 14, 1993); 5 U.S.C. § 555(b); Matter of Property Valuation Analysts, Inc. v. Williams, 164 A.D.2d 131, 134-35 (3d Dep’t 1990) (duly authorized non-lawyer corporation could represent a client before a Board of Assessment Review, but could not represent the client in any ensuing judicial proceedings); Realty Appraisals Co. v. Astor-Broadway Holding Corp., 5 A.D.2d 36, 37 (1st Dep’t 1957) (non-lawyer could represent a taxpayer in an administrative proceeding before the New York City Tax Commission without running afoul of the statute governing the unauthorized practice of law).
100. See 5 U.S.C. § 500.
101. See generally ABA/BNA Lawyers’ Manual on Attorney Conduct 80:8012 (1999).
102. In re Unauthorized Practice of Law Rules Proposed by the South Carolina Bar, 422 S.E.2d 123 (S.C. 1992).
103. See, e.g., In re Florida Bar Advisory Opinion, Nonlawyer Preparation of Living Trusts, 613 So. 2d 426 (Fla. 1992); In re Mid-America Living Trust Associates, Inc., 927 S.W.2d 855 (Mo. 1996); Committee on Professional Ethics and Conduct v. Baker, 492 N.W.2d 695 (Iowa 1992); Trumbull County Bar Assn. v. Hanna, 684 N.E.2d 329 (Ohio 1997); Oregon State Bar v. John H. Miller & Co., 385 P.2d 181 (Or. 1963).
104. See People v. Laden, 893 P.2d 771 (Colo. 1995); Committee on Professional Ethics and Conduct v. Baker, 492 N.W.2d 695 (Iowa 1992); Wayne County Bar Assn.v. Naumoff, 660 N.E.2d 1177 (Ohio 1996).
105. See, e.g., Unauthorized Practice of Law Committee v. Grimes, 654 P.2d 822 (Colo. 1982); In re Application of R.G.S., 541 A.2d 922 (Md. 1988); Hulse v. Criger, 247 S.W.2d 855 (Mo. 1952); Renaissance Enterprises Inc. v. Summit Teleservices Inc., 515 S.E.2d 257 (S.C. 1999).
106. Opinion No. 26 of the Committee on the Unauthorized Practice of Law, 654 A.2d 1344 (N.J. 1995).
107. It is not at all clear that New York actually has a definition of the "practice of law." In 1994, the ABA Standing Committee on Lawyers’ Responsibility for Client Protection developed a survey that would, among other things, document each jurisdiction’s definition of the practice of law and yield an overview of each jurisdiction’s activity or inactivity in the unauthorized practice of law arena. The survey was sent to the agency responsible for the regulation of the unauthorized practice of law, and each jurisdiction ultimately decided who should complete the survey. New York responded that it has no definition of the practice of law, but noted that enforcement was "active" and the responsibility of the Attorney General. ABA Standing Committee on Lawyers’ Responsibility for Client Protection, 1994 Survey and Related Materials on the Unauthorized Practice of Law/Nonlawyer Practice vii-viii, 20, 28 (1996).
108. New York Judiciary Law § 478.
109. New York Judiciary Law § 484.
110. New York Judiciary Law § 485.
111. New York Judiciary Law § 476-a, 476-b, 476-c. See generally People v. Romero, 91 N.Y.2d 750, 755-58 (1998) (confirming that the Attorney General lacks authority to mount a criminal prosecution for the unauthorized practice of law)..
112. New York Judiciary Law § 476-a(1).
113. New York Judiciary Law § 476-a(2).
114. Bar associations are generally subject to the federal antitrust laws, but may be immunized from antitrust liability for action that may have anti-competitive effects if it merely solicits governmental action instead of taking its own action. See, e.g., Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); Lawline v. American Bar Ass’n, 956 F.2d 1378 (7th Cir. 1992), cert. denied, 510 U.S. 992 (1993) (bar association that did not itself have the power to affect changes in law immune from antitrust liability for petitioning government for changes that may have the effect of hurting competition). An association that itself adopts rules that, directly or indirectly, limit advertising, price competition or the type of goods or services that competitors may offer engenders substantial antitrust risk. See National Society of Professional Engineers v. United States, 435 U.S. 679 (1978); Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20 (1912); American Medical Association, 94 F.T.C. 701 (1978), aff’d as modified, 638 F.2d 443 (2d Cir. 1980), aff’d by an equally divided Court, 455 U.S. 676 (1982). In light of these considerations, we urge extreme caution before any bar association in New York takes action that transcends lobbying for changes in applicable legal and ethical rules.
115. New York Judiciary Law §§ 460-99.
116. Washington State Bar Association, Committee to Define the Practice of Law, "Final Report," July 13, 1999, available on the Internet at www.wsba.org/c/cdpl/report.htm (hereinafter "Washington UPL Report").
117. Id. at 1.
118. Id., Part IV. The Committee continued:
The Committee had philosophical differences on the second part of the proposed rule. Whether nonlawyers should be authorized to engage in any practice of law is a controversial and complex issue, involving many important and sometimes conflicting factors, such as competence to practice, consumer protection, access to justice for the indigent, customer convenience, and others. Some members of the Committee believe that any definition of the practice of law ought to be limited to an aspirational statement defining what lawyers do. Others, the majority of Committee members, believe that the definition must reflect the reality that, in some areas, the practice of law by nonlawyers has been authorized by competent authority. . . . The Committee is unanimous that any exceptions to allow nonlawyers to engage in the practice of law must come from the Supreme Court, or must be grounded in well established historical practice which provides for protection of the public.
119. The definition represents a slight recasting of the Washington definition to take into account differences between the specific regulatory structure of the New York and Washington Bars.
120. To be distinguished is the growing trend toward the enforcement of unauthorized practice laws against lawyers representing clients in a state other than that of their admission. See, e.g., Office of Disciplinary Counsel v. Doan, 673 N.E.2d 1272 (Ohio 1997); In re Opinion 33 of the Committee of the Unauthorized Practice of Law, 733 A.2d 478 (N.J. 1999); Birbrower, Montalbano, Condon & Frank v. Superior Court, 949 P.2d 1 (Cal. 1998); Chandris v. Yanakakis, 668 So. 2d 180 (Fla. 1995). See generally Restatement § 3, cmt. e. While this issue is beyond the scope of this Committee’s charge, and a matter on which we express no opinion, we recommend that it be closely analyzed by the organized bar.
121. See the reference to McKee Nelson Ernst & Young in Ch. 4 § 5; and the references in Ch. 9 § 2, to French law firms affiliated with the Big Five, and to the Nallet Report. See generally Adams and Matheson, "Law Firms on the Big Board?: A Proposal for Nonlawyer Investment in Law Firms," 86 Calif. L. Rev. 1 (1998).
122. See also Florida Bar v. Hunt, 429 So. 2d 1201 (Fla. 1983) (lawyer disbarred for designating nonlawyers as corporate officers and directors of professional corporation); South Carolina Ethics Op. 98-35 (law firm may not permit company lending it money for start-up costs to own an interest in the firm, to have any control over professional services, or to share in legal fees generated by the lawyer).
123. DR 5-107(C). EC 5-24 elaborates:
To assist a lawyer in preserving professional independence, a number of courses are available. For example, a lawyer should not practice with or in the form of a professional legal corporation, even though the corporate form is permitted by law, if any of its directors, officers, or shareholders is a non-lawyer. . . . Although other innovations in the means of supplying legal counsel may develop, the responsibility of the lawyer to maintain professional independence remains constant, and the legal profession must insure that changing circumstances do not result in loss of the professional independence of the lawyer.
124. For a contrary view, advocating outside equity investment in legal practice, see, e.g., Edward Adams & John Matheson, note 121, supra. See also the last section of the Nallet Report, summarized beginning at note 72 of Chapter 9 supra. For the cancellation of a proposed initial public offering of shares in the amount of approximately $130 million by a professional services firm called Centerpiece Advisors, see "Market Roundup," TheStreet.com, Nov. 10, 1999.
125. The financing terms available to smaller firms and solo practitioners may vary significantly and be dependent in large part on the identity of the lawyers and their business and personal relationships.
126. In theory, a law firm with substantial annual profits that has experienced a period of steady growth could sell 20% of its equity to outside investors at a price-earnings ratio of, for example, 10:1, and receive an amount equal to 200% of its annual profits. Because the outside investors would expect — and insist on — a future return on their investment, that investment would involve a future sharing of economic rent between the firm’s partners and the outside investors. The investment could thus represent more of a benefit to the current generation of partners near retirement than to aspiring or junior partners. It could on a larger scale replicate the generational tensions in French or German law firms where junior partners buy out their seniors to finance their retirement, a phenomenon decried in those countries. See Chapter 9 above at pages 215 (France) and 235 (Germany). It could also leave to future partners the potential problem of dealing with outside shareholders dissatisfied with firm management. When creditworthy New York firms experience cash-flow problems, they typically borrow from commercial banks which, in recent decades, have been willing to lend to such firms on terms favorable to the borrowers, and the burden of repaying the loan tends to fall mainly on the partners benefitting therefrom. Anecdotal evidence suggests that large U.S. law firms want to assure the loyalty and professional efforts of junior partners and to attract business-generating lateral partners through the prospect of the firms’ future economic rent, and do not want to have to deal with outside shareholders.
127. Small financings, however, may appeal to law firms seeking to fund the start-up costs associated with entities providing nonlegal services to clients. (See Section 1 above.)
128. See the first sentence of note 121, supra.
129. See, e.g., Ch. 9 §§ 2, 3, 4 ,7 (France, United Kingdom, Netherlands, Ontario).
130. See Jerry Van Hoy, Franchise Law Firms and the Transformation of Personal Legal Services (1997); Lisa G. Lerman, Blue-Chip Bilking: Regulation of Billing and Expense Fraud by Lawyers, 12 Geo. J. Legal Ethics 205 (1999).
131. Not dissimilar is the concept that a lender may be liable for acquiring and exercising excessive control over the business operations of a borrower. See generally Melvyn L. Cantor, John J. Kerr, Jr. & Thomas C. Rice, "Lender Liability Litigation 1990: Recent Developments," Lender Liability 285 (Practicing Law Institute 1990).
132. We have proposed the addition of two new disciplinary rules and 10 new ethical considerations, and have proposed amendments to several other provisions of the New York Lawyers’ Code of Professional Responsibility.
133. In contrast, it is the view of this Committee that lawyers who work for corporations or voluntary associations that provide — in addition to consulting, financial and other services — legal services to the public, could be viewed as assisting their employers in violating the New York statutes that bar such entities from carrying on a legal practice. These laws, along with the unauthorized practice statutes, cry out for prompt clarification, renewed attention and vigorous enforcement. The public should continue to be protected against those who would purport to advise them on issues of law — or to direct the conduct of lawyers providing legal services to clients — without the demanding training, judicial supervision and ethical inculcation that only duly licensed lawyers possess.
134. Cf. DR 1-104(C) (requiring a law firm as such to "make reasonable efforts to ensure that all lawyers in the firm conform to the disciplinary rules," and to supervise the work of all lawyers and nonlawyer in the firm adequately).
135. Others contend that lawyers and nonlawyers are already creating multidisciplinary partnerships, in form or substance, and that the trend toward such affiliations, even if driven by nonlawyers who seek to convert the legal profession into another profit center in their organization, is inevitable and must be accepted by the legal profession. We reject this argument on the theory that a profession should not retrofit its rules to permit past violations absent a firm belief that the rules should be changed as a matter of principle in any event.
136. See generally John C. Coffee, Jr., "Privatization and Corporate Governance: The Lessons from Securities Market Failure," 25 Journal of Corporation Law 1 (1999).
137. In limited circumstances and subject to strict prerequisites, clients are permitted to waive certain rules, but still cannot decide unilaterally whether the rules themselves are inapplicable to lawyers.
138. See generally Lawline v. American Bar Association, 956 F.2d 1378, 1385 (7th Cir. 1992) (upholding disciplinary rules forbidding lawyers from assisting laypersons in unauthorized practice of law and from entering into partnerships with nonlawyers as having been "designed to safeguard the public, maintain the integrity of the profession, and protect the administration of justice from reproach").
139. See Chapter 10 above.
140. Nonlawyer employees of a law firm can even be compensated on a profit sharing basis under DR 3-102(A)(3).
141. See, e.g., Jerold S. Auerbach, Unequal Justice 40-53, 62-101 (1976); Kermit Hall, The Magic Mirror: Law in American History 211-25 (1989); Susan D. Carle, Lawyers’ Duty to Do Justice: A New Look at the History of the 1908 Canons, 24 Law & Social Inquiry 1 (1999); Thomas R. Andrews, Nonlawyers in the Business of Law: Does the One Who Has the Gold Really Make the Rules?, 40 Hastings L.J. 577, 600-16 (1989).