Law: Mixing partners and principles: Common sense or the end of civilisation as we know it? Sharon Wallach reports on the divide over different disciplines under one roof

WOULD lifting the ban on multi-disciplinary partnerships (MDPs) make sound market sense or lead to cataclysm? Both views were expressed when the arguments were revived at last week's Law Society conference.

According to John James, a partner with Edge & Ellison of Birmingham, over the past 20 years the high ground in the world of business, formerly occupied by solicitors, has been seized by accountants. 'We have only ourselves to blame,' says Mr James. Removing the ban on MDPs would allow solicitors to regain their traditional position as men and women of affairs, to whom clients would turn first for commercial advice.

But Sir John Wickerson, a partner in the Croydon firm Ormerod Wilkinson who is a former president of the Law Society and a vehement opponent of MDPs, points to a number of unresolvable conflicts of principle that, in his view, bar the way to mixed partnerships.

'Almost all of them have to do with control,' he says. 'Who would control the mixed partnership?' It is unrealistic to suggest that MDPs should be allowed only if the majority of partners were solicitors, he says. This condition would breach the rules of some professionals, such as insurance brokers, and be unacceptable to others.

'If insurance brokers believe that integrity requires that a majority of those running such a business should be registered insurance brokers, this would not be an unreasonable line for solicitors, or indeed any other discipline, to take,' he says. 'Such rules would of course be mutually exclusive.'

Another major hurdle is the question of legal privilege. Confidentiality is a common strand in professional relationships, but privilege is reserved for the legal profession, Sir John says. Unless it were extended to all within a mixed partnership, the problem would be unresolvable. 'The client would not know whether he or she was protected, and members of the firm would not know whether they could be forced against the wishes of the client to divulge information given to them,' he says.

The various disciplines have different rules regarding conflict of interest, most of them less stringent than those relating to solicitors, Sir John says.

'Chinese walls would not be sufficient to protect a situation where solicitors will not act for more than one party, whereas other professions would feel possibly at liberty to

do so.'

In 1983, the American Bar Association considered proposals for MDPs, but instead adopted a rule banning non-lawyer partners in firms providing legal services. 'I do not believe that any other rule is appropriate for the legal profession in this country,' Sir John says. If MDPs were permitted here 'lawyers would lose their identity and clients would lose their choice'.

Putting the case for the other side equally strongly, John James argues in favour of choice for lawyers. 'The essence of the arguments in favour of MDPs is that they do not compel any solicitor to enter into a multi-disciplinary partnership unless he or she wishes to,' he says.

He criticises the profession at large for choosing a 'negative or protectionist stance' on the issue, rather than a progressive commercial response. This inertia has, he says, put solicitors behind the game in dealing with a trend that has already gathered momentum on the Continent, and is rapidly gaining adherents in the UK.

Some law firms are already operating as MDPs, Mr James says, citing Dibb Lupton Broomhead, which employs patent agents. Many of the large firms of accountants employ lawyers and dispense advice as a legal and accounting package. The market decides on the quality of that advice, Mr James says. 'This is healthy commercial competition and none of the professional bodies, in my view, should intervene in order to restrict the delivery of professional services in this way.'

He accuses the professional bodies of arrogance in assuming that only they can effectively police their members. The Law Society, he says, takes matters further by appearing to believe that its standards are higher than anybody else's.

'While this may be true in theory, pounds 50m worth of claims against the legal profession in the past year perhaps undermines the validity of such alleged superiority,' Mr James comments.

The way out of the impasse would be for separate regulation by the professional bodies of individuals on the one hand and firms on the other. He also argues for a regulatory framework that permits non-solicitors to have the status of a partner and obliges them to uphold the same rules of conduct as solicitors.

It is 'ludicrous', Mr James says, that senior, professionally qualified, employees of law firms should be denied access to partnership. 'It is not only commercially damaging but incomprehensible to clients who receive good advice and good service from such non-solicitor employees.' Such artificial limiting of status also puts lawyers at a disadvantage in the recruitment market, Mr James believes.

Opponents of MDPs need not fear the end of civilisation as they know it, because it is the market that will dictate the outcome. 'MDPs are likely to emerge only to meet specific needs and the traditional professional divisions will continue to be dominant overall,' Mr James says.

The practical arguments against MDPs can be countered, first, by a system of regulation that bites on the firm, supported by a register of those permitted to enter into partnerships with solicitors, from which a non-solicitor could be struck for misconduct. A regulatory framework to provide safeguards to deal with conflicts could be put in place, and the difficult issue of privilege could be put beyond doubt by legislation. And, says Mr James, 'it is not beyond the wit of intelligent professionals to devise rules to provide a proper level of insurance and client compensation safeguards'.

MDPs are here, and here to stay, Mr James believes. He calls on the Law Society to work closely with other professions to draw up new business rules that would ensure clients are 'as fully protected as commercially possible in the changed business environment of the Nineties'.

Brian Woods-Scawen, a partner at Coopers & Lybrand, who also addressed the conference, says that the legal profession must work out what will differentiate the winners from the losers in the next five to ten years. 'This means doing what the client wants,' he says. 'Increasingly, a key feature of any successful business will be the international dimension. But it will also mean offering a wide range of advice skills. Clients don't want a one-stop shop, they want choice.'

Many firms will decide that MDPs would give them the strategic advantage. 'The key question is not whether mixed partnerships should be encouraged, but why they should be prohibited,' says Mr Woods-Scawen. 'At the moment, the stance of many lawyers, and maybe the Law Society, is to put their heads in their hands and say it's too difficult to do anything. I recognise that there are issues to be resolved, but they should ask whether it is in the interest of lawyers to allow MDPs. If the answer is yes, then the details can be dealt with.'

The future of the legal profession is at stake, so it must find a solution, Mr Woods-Scawen believes. 'The profession can go one of two ways,' he says. 'If it does allow multi-disciplinary partnerships, that would enable them to return to where they used to be, at the centre of business affairs. If the profession seeks to maintain the prohibition, it has to accept it will no longer be central to business decision-making.'

(Photograph omitted)