Coming Soon To New York–Lawyers In ‘Our’ Business?
As of November 1, New York will become the first state in the nation to permit attorneys to form Multi-Disciplinary Practices.
A MDP is a professional entity providing legal as well as other services, such as accounting, technology consulting, or financial planning. Currently MDPs, though common throughout much of the rest of the world, are limited only to the District of Columbia in the United States. Now, because of New Yorks tremendous influence on the rest of the country, this could change rapidly.
In Europe, MDPs have tended to provide accounting, business consulting and legal services under one roof. Today KPMG and other “Big 5″ global accounting/consulting firms are Europes largest employers of attorneys.
This same model should be a hit in this country as well. In fact, the “Big 5″ are also Americas largest employers of attorneys, but, for the moment, these attorneys technically do not provide clients legal advice, but rather “tax” advice. Doubtless this could change overnight.
When MDPs take hold in this country, financial services will certainly be part of the mix. The repeal of Glass-Steagall, and the regulatory changes allowing CPAs to offer financial services already have banks, insurers, brokers, and CPAs jockeying for position as their clients financial “quarterback.”
Attorneys are entering the fray directly in the few states where they are permitted to accept commissions, but a broad movement towards MDPs would strengthen their hand. Therefore, since many states appear certain to follow New Yorks lead, it is important to study this MDP rule for insights into just how this seemingly momentous change will occur.
Key Features Of New York’s MDP Rule
American attorneys have long resisted MDPs because they fear losing control over the business of providing legal advice. The New York rule eliminates this fear by expressly prohibiting non-attorneys from owning any stake in a MDP or exercising any control over legal activities.
A MDPs attorneys cannot share legal fees with the non-attorneys and the non-attorneys cannot share their fees, commissions or any tangible benefit with the attorneys for mutual referrals. The attorney and non-attorney partners can (within certain guidelines) jointly market their services and they can share in expenses.