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Lawyers and Accountants 2019 -
conflicts are confined to the participating entities.156 On the other hand, there are some issues that are similar
to those found in in-house controlled MDPs. For example, location is largely irrelevant; professionals will be
even more tempted to advise in jurisdictions where they are not licensed.
§ 14.05 Rules and Enforcement — Interests of the Parties
In the introductory part of this chapter, two hypothetical WSG, were described. How do they measure
ethically?
The traditional rules that govern lawyers, accountants and other professionals are based upon concepts
grounded in relationships between clients and professionals. They are not generally based upon the
relationship between the client and a law157 relationship with a directory. Using communications tools like
the Internet, without separate organizations like WSG and PSI, does not create issues that have not been
dealt with in other chapters.158
The standard issues raised in Chapter One and throughout this treatise can easily be dealt with because of
the independent nature of the participating professionals, firms and companies in the MDO. MDOs, absent
fee splitting, are consistent with the both the ABA and AICPA rules that regulate the individual professional
since there are p changes in the professional relationships with clients. Confidentiality is maintained when
there is an attorney/accountant/client relationship established because actual cases are handled separate
and apart from the MDO. The MDO is consistent with the conflicts of interest rules since the entities retain
their independence from each other. Fee sharing, prohibited by the ABA rules, is not an issue even if there is
a central billing system because the function would be bookkeeping rather than fee sharing.
However, WSG and PSI may create other ethical concerns, such as the unlicensed practice of a profession,
multi-jurisdictional practice, professional referral fees, advertising and others.
[1]—Unauthorized Practice of Law by an Association
As was set out in the opening example, John pays a fee to PSI each year in order to have access not only to
the resources but also to receive referrals from other members with whom he works on cases. He also knows
that 30% of the fee goes to marketing the organization to consumers and small businesses. WSG’s principal
purpose is to allow Judy and leading professional firms to gain access to resources and network with other
professionals, but also to market WSG as an alternative to the Big 5 MDPs. Over 50% of WSG’s budget is
dedicated to internal and external marketing. Is PSI or WSG practicing law?
The purpose of the attorney prohibition on assisting others in the unauthorized practice of law is to protect
the public from the consequences of incompetent legal services. Because the definition of the practice of law
is unclear and varies from state to state and country-to-country, one must look to specifics to determine
whether promotional activities by an entity come within the scope of law practice.
156 Provided that the members are independent organizations with no obligation to refer business to each other, there is no confidential information
shared among all of the members. Though transactions are individual in nature, there is no reason why members could not represent all clients and
even clients with interests in the same matter.
157 Under ABA Model Rule 1.7, the confidences of each attorney in a law firm are imputed to the other attorneys. This does not mean that the firm
is regulated; it is simply the conduit for the imputation of conflicts.
158 For a general discussion of the traditional rules as applied to the Internet, see Fishkin and Thomason, The Wild West Frontier (No Ethics Immunity
for Use of the Internet), 26 San Fran. Att. 14 (4) (April/May 2000).
59
conflicts are confined to the participating entities.156 On the other hand, there are some issues that are similar
to those found in in-house controlled MDPs. For example, location is largely irrelevant; professionals will be
even more tempted to advise in jurisdictions where they are not licensed.
§ 14.05 Rules and Enforcement — Interests of the Parties
In the introductory part of this chapter, two hypothetical WSG, were described. How do they measure
ethically?
The traditional rules that govern lawyers, accountants and other professionals are based upon concepts
grounded in relationships between clients and professionals. They are not generally based upon the
relationship between the client and a law157 relationship with a directory. Using communications tools like
the Internet, without separate organizations like WSG and PSI, does not create issues that have not been
dealt with in other chapters.158
The standard issues raised in Chapter One and throughout this treatise can easily be dealt with because of
the independent nature of the participating professionals, firms and companies in the MDO. MDOs, absent
fee splitting, are consistent with the both the ABA and AICPA rules that regulate the individual professional
since there are p changes in the professional relationships with clients. Confidentiality is maintained when
there is an attorney/accountant/client relationship established because actual cases are handled separate
and apart from the MDO. The MDO is consistent with the conflicts of interest rules since the entities retain
their independence from each other. Fee sharing, prohibited by the ABA rules, is not an issue even if there is
a central billing system because the function would be bookkeeping rather than fee sharing.
However, WSG and PSI may create other ethical concerns, such as the unlicensed practice of a profession,
multi-jurisdictional practice, professional referral fees, advertising and others.
[1]—Unauthorized Practice of Law by an Association
As was set out in the opening example, John pays a fee to PSI each year in order to have access not only to
the resources but also to receive referrals from other members with whom he works on cases. He also knows
that 30% of the fee goes to marketing the organization to consumers and small businesses. WSG’s principal
purpose is to allow Judy and leading professional firms to gain access to resources and network with other
professionals, but also to market WSG as an alternative to the Big 5 MDPs. Over 50% of WSG’s budget is
dedicated to internal and external marketing. Is PSI or WSG practicing law?
The purpose of the attorney prohibition on assisting others in the unauthorized practice of law is to protect
the public from the consequences of incompetent legal services. Because the definition of the practice of law
is unclear and varies from state to state and country-to-country, one must look to specifics to determine
whether promotional activities by an entity come within the scope of law practice.
156 Provided that the members are independent organizations with no obligation to refer business to each other, there is no confidential information
shared among all of the members. Though transactions are individual in nature, there is no reason why members could not represent all clients and
even clients with interests in the same matter.
157 Under ABA Model Rule 1.7, the confidences of each attorney in a law firm are imputed to the other attorneys. This does not mean that the firm
is regulated; it is simply the conduit for the imputation of conflicts.
158 For a general discussion of the traditional rules as applied to the Internet, see Fishkin and Thomason, The Wild West Frontier (No Ethics Immunity
for Use of the Internet), 26 San Fran. Att. 14 (4) (April/May 2000).
59
