Speakers:

Martha W. Barnett
President-Elect, American Bar Association.

Alison Crawley
Head of Professional Ethics, The Law Society of England and Wales.

David Gordon-Krief
Member, Paris Bar Council in Charge of International Affairs.

L. Harold Levinson
Professor Emeritus, Vanderbilt Law School.

Paul J. Sax
Partner, Orrick, Herrington & Sutcliffe, LLP, San Francisco.

Deborah H. Schenk
Marilynn & Ronald Grossman Professor of Taxation, NYU School of Law<.br> 

Jerome J. Shestack
Partner, Wolf, Block, Schorr and Solis-Cohen LLP, Philadelphia.

Bernard Wolfman
Fessenden Professor of Law, Harvard Law School.

Moderator:

Sydney M. Cone, III
C.V. Starr Professor of the Law and Director,
Center for International Law

MR. CONE: I want to thank everybody for coming. I am very grateful to you for coming here, particularly since the air conditioning is on and therefore, we are going to be on our own to warm up the room, and I hope we can get that done fairly promptly so you're not uncomfortable. We have a very good group of people here today to talk about multidisciplinary practice. We are quite pleased that this group came and is willing to be with us this afternoon. Before I introduce them, let me mention that Michael Cooper, the president of the Association of the Bar of the City of New York, is standing in the back, and we are indebted to the Association for the facilities and thank the Association very much. I also am happy to see in the front row Otto Walter, who is a major benefactor of New York Law School, and I'm very pleased that Dr. Walter came here, and I am flattered that he is here.

I'm going from my left to right: Professor Harold Levinson of Vanderbilt, Professor Deborah Schenk of New York University Law School, Professor Bernard Wolfman, Fessenden Professor at Harvard Law School. We have with us the president elect of the American Bar Association, Martha W. Barnett. She came up today from Tallahassee, Florida, which is where she's from, and we are, of course, delighted that she is here, particularly since the title of the symposium is "Should the ABA approve MDP?" and who better than the president elect of the ABA to share with us her views on that question.

We also have, and are quite honored to have, a past president of the American Bar Association, Jerry Shestack. Jerry Shestack, who is came from Philadelphia to be with us today and has been following the issue of multidisciplinary practice. To his right is Alison Crawley, who flew in yesterday from London. She is in charge of Professional Ethics of the Law Society of England and Wales. To her right is David Gordon-Krief, who has a name that pronounces perfectly in either English or French. David is he came in over the weekend as well from Paris. He is on the governing body of the Paris bar, and he is the member of the governing body of the Paris bar in charge of international relations. France has had considerable experience with MDP, and we're happy that he is here to share his knowledge and views. Paul Sax of the Orrick, Herrington firm in San Francisco came in from San Francisco for this. We are quite pleased that he took the time to do this. He is the head of the tax section of the American Bar Association, which has taken a very strong position in favor of MDP, and so we are quite happy to have Paul here to share those views with us and any other views that he may want to share.

I think there could be no better way to start than to ask Martha Barnett if she would introduce the subject, tell us about the work that has been done within the American Bar Association quite recently on multidisciplinary practice and get the discussion started. Generally, what we hope to have here is a discussion of issues. We hope that issues will come out, will be analyzed, will be discussed, and that the members of the panel will speak back and forth among themselves. We also hope that you, who have taken the time to come here, will speak, if you want to, ask questions. Please make them short but please ask them. With that, I would like to ask Martha Barnett to get us started.

MS. BARNETT: Thank you very much. It's a pleasure to be here, and I am very glad to see such a large turnout. I suspect if you all can't tell, there is people out in the hall. You might want to come in and move to the sides; there's at least some standing room or sitting in the window room up here in the front, so please feel free to come in. I think you will be able to hear better. This gathering reminds me of something what occurred at my law firm. I'm a partner in a firm of about nine hundred lawyers, and we have an annual meeting, and two years ago, on our Sunday morning of our meeting, we leave that up to people to have substantive programs or groups get together and they talk about client development and business development and cutting-edge issues. And my area of expertise is in state and local tax, and so I've been paying attention to some of these issues from a professional standpoint for a long time. So I thought, "Well, I'll have a meeting on multidisciplinary practice." And I set it up, and I had it in our little printed agenda and got some materials together and got up for an eight o'clock breakfast meeting, and five people showed up. Five people showed up. I couldn't even fill up one table.

But I never give up on things that I think are important so this past year in August, we did the same thing, and I set up another meeting within the firm, and this time, even though, again, it was eight o'clock on Sunday morning, about people 150 showed up. And I think that that indicates the growing awareness in the legal profession and certainly in law firms about this whole question of multidisciplinary practice. I'm not sure three, four years ago we had even heard the word "multidisciplinary practice." I mean, some had but it's certainly not with the commonality that we now hear of MDP. I mean, it's even gone to just an acronym now.

So I think that your showing up also indicates the importance of this, and I want to complement Terry and commend to you the materials that you have. They are very good materials; they reflect a cross-section of a lot of opinions that on this particular subject. They include the full report of the ABA Commission on Multidisciplinary Practice. So I commend them to you, and I thank Terry for putting them together. Even though MDP seems to be new to some people, in truth, the whole question that is integral to this subject has been around for a long time. When the cannons of ethics were when we first began dealing with this, that I could tell, was in the s, when we first adopted some cannons that dealt with fees sharing and dealt with things like non-lawyer partners and the concept of independence. And in, it first showed up in the model rules as a particular as a model rule and as a guide for lawyers. Interestingly, in the mid-s and I can't remember the exact date, although I'm sure some people in the room probably will remember we had the the A.D.A. had another commission to look at overview of the model rules to recommend changes to them; it was called the Queue Tack Commission (phonetic).

We have a similar activity ongoing now within the ABA; we've titled it "Ethics," where we're looking at the totality of the model rules, including this subject. But the Queue Tack Report looked at the whole of sharing fees, non-lawyer partners and some of the issues that are integral to this discussion, and actually made recommendations to the House of Delegates of the ABA. So it is not a new subject. It is also not a subject that relates just to the tax arena, although I think that that is where people first felt the sensitivity more, particularly from the accounting firms, because of their audit function and their natural ability to move into other fiscal areas that related to tax. We now know that this issue has a broad impact on many areas of the law, whether it be employee benefits to family law, to litigation, certainly litigation consulting and even more recently, we see a lot of involvement by non-lawyers in alternative dispute resolution.

There is a sense of urgency, I believe, in certainly in the American Bar Association and perhaps a growing sense of interest, if not urgency, within the legal profession in general. Some of that is in is engendered by the activities of the ABA in the commission that was created by former president Phil Andersen. Many people believe that this issue, that the Bar, particularly the American Bar, the American lawyer, is getting involved in this issue too late to really have much impact. Others believe that the American legal system is the core and is the key and without changing the way American lawyers approach some of these issues, that it will never proliferate in the way that non-lawyer professional corporate entities or professional entities would like to have it proliferate. So there's there is a tension within the Bar, both internationally and nationally, on this particular subject and particularly as to whether we should do anything and if so, what should we do?

To respond to that, the ABA decided to set up a special commission. That commission met for a year, took testimony from numerous professionals, both in this country and internationally, including non-lawyer professionals who are interested in the multidisciplinary practice and came up with a recommendation to the House of Delegates of the ABA. The House of Delegates, as I'm sure you know, is the policy-making body of the American Bar Association. That is the body that would recommend changes to the model rules and if adopted, those changes would then be recommended to the various states for the state's individual action on any of the proposed recommendations.

The commission recommendations basically and there is a very good summary in your materials the commission recommendation basically endorsed the concept of multidisciplinary practice, both lawyer-controlled and non-lawyer-controlled MDPs. It defines MDPs very specifically, lawyers, non-lawyers providing integrated services, both legal and non-legal, and the particular corporate structure. It recommends changes to Model Rule 5.4. And then a new rule I can't remember the name, Number 8. What is the number, Hal? Anyway, a new rule I'm sorry, I cannot remember the number that allows, among other things, lawyers and non-lawyers to split fees, allows lawyers to be partners with non-lawyers and allows lawyers to be in an organization or entity that is controlled by non-lawyers. With regard to the non-lawyer-controlled multidisciplinary practice, a set of requirements are recommended to try to impose on the lawyers working in that environment, essentially the code of standards in the model rules and the code of professional responsibility and requires the non-lawyer MDP to to submit, basically, to the jurisdiction of the highest court or entity that has authority over lawyers with regard to the standards in the model rules. That was presented in August.

There was it engendered prior to the ABA annual meeting in August, it had engendered a lot of debate and discussion among numerous bar associations, New York included in that, as well as my home state bar, the state bar the Florida bar. And after considerable debate, before the House met and at the House of Delegates on this particular subject, the House adopted a resolution, which is in your materials, and I want to take a moment because I think this is something we can use to discuss today, take a moment just to read it to you. There has been some misunderstanding within the the legal community as to what the House actually did. Some people say the House of Delegates, and therefore the American Bar Association, rejected multidisciplinary practices; others say that they simply postponed it.

What the resolution that was adopted does, and this resolution was offered by the Florida bar, is to put the ABA on record as saying that there will be no change to the model rules 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. I wanted to quote that to you because those core values and the core principles that underline, for the American lawyer, the unique role that we have in society as a part of the judicial branch of government, as officers of the court and our obligations to our clients and to the public, before our obligations to ourselves, I think makes this debate far more complicated than simply an economic issue and make a resolution of it ultimately far more difficult to reach but perhaps, not impossible to reach.

I think I'll stop there and that's oh, one last thing I will say. The House of Delegates expects to take this issue up again in August of of actually, July of, at our annual meeting, which will be held in New York City. So you can all come back and participate then in this debate and discussion. Right now, the commission and other members of the profession are working with the state bars as they get fully engaged in in the issues that this presents to the profession and to the public. And so I don't have any real crystal ball on what might happen or what might be recommended but I believe that you will we will see changes that differ in some measure from the recommendations of the commission, and those recommendations are in full, are in your materials. Particularly, particular concern focuses on non-lawyer-controlled multidisciplinary practices on the role of the Securities and Exchange Commission and on the important but sometimes elusive concept of independence of the lawyer and the independence of the profession.

MR. CONE: Martha, many, many thanks. To get and we're going I'm sure we are going to have a lively discussion. We had a very lively discussion over lunch before we came in here, and if we can simply replicate that, it will be, I think, extremely worthwhile. I very much appreciate Martha's calling our attention to tab two, which is the resolution. It's just words long but it is what the House of Delegates said, and I think it's a very good point of departure because that's where we are, what the House of Delegates said in early August. I would like, if I may, to ask Paul Sax if he would give us some views on these issues and if he's willing to do so, to get our discussion started.

MR. SAX: Well, the tax section's views are set forth in my letter of a week or so ago; it's the last document behind tab five. Multidisciplinary practice is already here. The most succinct comment was in the Washington Lawyer Magazine it was last issue when they referred to what Groucho Marx had to say when asked what he thought about sex, and he said, "I think it's definitely here to stay." We have multidisciplinary practice, and the Bar hasn't been a player in the development of that multidisciplinary practice.

The model rules are antiquated. Facetiously put, they were designed for a handful of ethnically-compatible gentlemen practicing in the small town not within a hundred miles of an ocean and with a view of the river. They don't work. Today, consumers dictate choice, and consumers have dictated what's gone on in multidisciplinary practice. There was a day when Henry Ford sold black Model A's, and we bought black Model A's. Now, if we want orange IMAX, we get orange IMAX. We don't go to the doctor and do as we're told; we go to the doctor and say, I want a prescription for such-and-such.

Consumers don't want to be told where they can get their legal and financial and accounting services, unless there's a very good reason for it that they understand. In consequence of that, they have accepted multidisciplinary practice. Pricewaterhouse is the third largest law firm in the United States. Arthur Andersen has acquired the largest law firm in Spain. It goes on and on. People tell me and I believe them that each and every of the Big Five has a business plan that has them thoroughly engaged in corporate law, real estate, environmental law, employment law, litigation management, even at this date, and many of them are already in those practice areas fully. They are ferocious competitors.

When I came out of school, the accounting firms were the employer of last resort. Now, they are the ferocious competitor for the very best people, and they're buying the very best talent from the law firms. When you talked about and foreseeing an unauthorized practice of the law statutes, you can read all you want. If what happened when if you if you credit the press accounts, what happened in Texas was that Arthur Andersen was practicing law. The Texas bar decided to do something about it. We are so thoroughly out-resourced by what's is rumored to have been a $10 million war chest from the accounting firms that not only did the Texas bar surrender but they did everything short of hold a press conference and apologize for suggesting such a thing. This is about money and power, and those folks know how to use money and know how to use power, and right now, they have it.

What the Bar has to stand on right now is the prohibition on fee-splitting in Model Rule 5.4., which is perceived as a turf protection major in consequence of which it is utterly unenforceable. Not only do we now have multidisciplinary practice, but the next stage is beginning to evolve, in which they are going to set the rules for how multidisciplinary practice firms operate, the rules of confidentiality and client loyalty. Only last week, Irving (unintelligible) of the AICPA was out explaining to the world how they have rules of confidentiality just like us, and they are very confidential people, and they can be trusted. It is that dialogue that leads them to setting the rules. Our view is this that if the Bar does not get out in front fast with something that is a consumer protection major that the public can understand and embrace, that captures the values of confidentiality and client loyalty of the Bar. If we do not get out in front soon, such as by adoption of the recommendations of the Simmons Commission, the Commission on Multidisciplinary Practice or something very close to it, we will continue to be ignored, and they will set the rules for the future practice of the law. Is that provocative enough for you, Terry?

MR. CONE: I do not think that the purpose of this meeting is to provoke me but I am delighted to have you try. I was going to take the liberty Paul, first, I want to thank you for making that effort to provoke me and also for really, seriously, for laying it out. It is a great deal of substance for us to chew on, and I was wondering if Jerry Shestack would be willing to give us some views of his own.

MR. SHESTACK: Yes, thank you. Paul said that the MDP is already here, and the argument has been made, at least by some members of the ABA commission, that there are a lot of people out there practicing law disclaiming it or whatever, and that we've got it to bring them into the tent of the law. It reminds me of a story of the time that Sherlock Holmes and Dr. Watson went out camping. They put up a very nice tent, and they went hiking, and then they prepared dinner by the campfire, and then they retired and went to retire on their sleeping mattresses. Holmes turned to Watson and said, "Watson, as you look up at the sky and those beautiful stars, what do you think?" And Watson says, "Well, Holmes, I think of the Majesty in the heavens and the glory of the Creator. What do you think of, Holmes?" And Holmes said, "I look up at the stars, and it occurs to me that someone stole our tent." I think it's a little bit like that here.

We talk about core values but let me ask you, is this going to enhance core values? In what way will MDP do more than be of benefit to business partners rather than the clients? Aren't we really cloaking a (unintelligible) plan by the Big Five and perhaps some others in the guise of some vague core values and client development? Let us look at our core values. Core values is the reason I became a lawyer, and I suspect that most of you became lawyers. And they are ethics, competence with independence, obligations to a justice system, pro bono service.

How are those core values going to be helped if we form a partnership sharing fees with accountants, become controlled by accountants or become MDPs? Ethics, we struggle with ethics. Every lawyer struggles with ethics within the law firm. We have a commission in the ABA to review our ethics rules, to make more appropriate rules for consumers, for arbitrators. Ethics is something you don't read like you read the general accounting principles or Internal Revenue's regulations. You look at it with a view to abiding by it, not just to push the envelope. How is that going to be improved by MDP? Or take independence. It is a simple adage that a person who controlled the money controls you. And if accountants or others are going to control the money rather than lawyers, your independence is going to be compromised. Elliot Rood (phonetic) said percent of the practice of law is being able to say no to a client. How are you going to be able to say no when you are reporting to accounting managers with MDP governors? Or you take obligations to the justice system; is that really going to be important to an MDP?

We're all officers of the court; we have to deal with a limping legal structure, trying to make it straight and walk upright with respect to overburdening and underfunding and other aspects of it. Are we going to be seriously concerned about the justice system when we are a part of some MDP organization or pro bono service? I took a look not long ago a friend of mine took a look at the brochures of the Big Five accounting firms. Not one of them even mentioned pro bono service. You look at the brochure of any law firm in this city or any major city or the recruitment officers for the law firm, and they certainly mention pro bono service. The whole culture of the law is at odds with MDP. We have a culture where we deal with practical wisdom with civility, with human rights, with obligations to justice, remembering why we wanted to be a lawyer. That's all going to go that will all be slighted under an MDP system.

The core values, who is going to maintain them? The justices of the Supreme Court are not going to undertake that burden; disciplinary commissions can't do it, and the accountant firms frankly admit that what they want to do is not abide by our rules but change the rules for the sake of one-stop shopping. What is the magic in this one-stop shopping? The fact of the matter is, I can't get my clients to do one-stop shopping. If I get them in for litigation, I try and get them to our state's department or to our labor department or corporate department. They have their own lawyers in different areas. Is one-stop shopping going to save time and money, as it is alleged? I guess my family spends more when they go into Bloomingdale's then when they go into five different boutiques. That's just chivalrous; it isn't a real value, in any event, as far as lawyers are concerned. We have done very well. We can affiliate with real estate people when we need to. We can use environmentalists, we can get experts. We know how to do it, to provide good service for a lawyer, and I think we diminish our profession by entering into this MDP.

MR. WOLFMAN: If I may just interject a couple of points at this stage. First, let me just say that I very much endorse what Jerry Shestack has just said as to why we are lawyers, why our profession is important and why it is entrusted with molding the legal system, which benefits all of society. The only datum I want to introduce at this point, however, relates to this notion of what clients want, what they are asking for, this notion of one-stop shopping. I testified before the ABA commission last March. The witness who preceded me was a representative of Arthur Andersen. The commission asked him directly after he had said that clients, the companies out there, are demanding one-stop shopping, he was asked if there's any data or any survey, any statistic, to support that and he said, "No, there is none." He said there is none, and I'm sure he thought there was none, and he said that he did not think you could really get one.

Well, the fact is that in England, there had been a survey undertaken, a good one. It was undertaken in by the leading London journal called the "Commercial Lawyer." They surveyed the largest English corporations. They posed the question to these corporations of whether they preferred MDPs to separately organize and control law firms and accounting firms. And they posed the question to two different independently to two different officers of these corporations. They posed the question to the head of the legal department of the corporation but then, fearing that there could be a bias one way or the other, they also posed the question independently to the CFOs of these corporations. The results are remarkable. Twenty-five percent of the corporations responded, which statisticians say is a very good response from . Eighty-eight percent of the legal heads said they do not want MDP; they do not want so-called one-stop shopping, and precisely the same percentage of the CFOs said that they want to pick and choose from independent law firms and independent accounting firms. They do not want MDP. So there is a survey; there are statistics out there, and I think that at least it would be appropriate for a debate that's going to be objectively examined and studied for people not to say at least not to say so definitely that the clients are demanding one-stop shopping. The only survey that exists says exactly the opposite.

MS. SCHENK: I'd like to take a different take on the core values argument and to be, just as Paul was, provocative. I have a very hard time crediting the core values argument for this reason. There are already several thousand lawyers practicing in accounting firms, and if I can believe the recruiters that come to our campus who are telling our students that, "You are going to do exactly what you have done in a law firm, just don't use the magic words 'I'm practicing law'." We are all aware that they are, in fact, practicing law in these law firms without conflict checks, without confidentiality requirements, without the pro bono requirements that our code has. If these really are our core values, why haven't we been concerned about this?

There are outstanding opinions of both the ABA, the New York State Bar Association, the Illinois Bar Association that this constitutes either the unauthorized practice of law or that there are other ethics violations, such as sharing fees or confidence problems. And yet, to the best of my knowledge, only the Texas case is a case in which any state has taken any action whatsoever to enforce these rules. My understanding as well is that the Texas matter did not go forward for lack of funds, that there was a huge war chest on the part of the accounting firms. If the law firms and the law practice, the Bar, is so concerned about this, we could have found the will and the funds to back up the Texas bar if we wanted to. I have no information that anybody stepped forward to do that. I have no reason to believe that these rules are going to be enforced now. The result is we have lots of lawyers, lawyers who are leaving law firms, particularly in tax practice, to go to accounting firms, who are admittedly, by their own admission, not following these core values.

If this is so important to us as a bar, why are we ignoring what these lawyers are doing? I personally do not think that we will ever enforce these rules. I do not think we have the will to enforce these rules, and as more of our friends and associates cross the lines, I think we will be unwilling to take them on. Therefore, my own view is that we should think of a way to work together, as opposed to sticking our heads in the stand. My view of the action of the ABA is (unintelligible) what we did exactly that, that the resolution essentially says, "There is no problem, and until we are convinced there is a problem, we will do nothing." Well, I'm here to tell you that if you really believe in core values, there already is a problem. There are several thousand lawyers in the United States who are doing exactly what you object to when you say you object to MDPs not upholding our core values.

MR. CONE: Harold?

MR. LEVINSON: Thank you. I think we do have a problem. I think that the ABA or the state bars or somebody should do something, whether that something is to play a kind of a gambit, like Paul Sax proposed, offer deals that you expect people to really accept or reject, whether we should just sit by and tolerate disobedience to our rules. I think there are other approaches to be considered. One is if our rules are not enforceable in the present form, clarify our rules and then start enforcing them and possibly give lawyers an opportunity, within a few months, to conform to the rules as clarified. Another possibility is to allow lawyers to put their law license in inactive status if they persist in engaging in activity which violates the lawyers' rules. Inactive status means they cannot promise clients privileged status. It means they cannot participate in governments of the legal profession. It means that they can go out and work for accounting firms, if that's what they'd rather do.

Other possibilities are for the legal profession to welcome the competition implied in the growth of accounting consulting slash law practices and attempt to ready ourselves as lawyers to compete with the challenge in the marketplace and in the forum of public opinion and in the political forums and wherever else the challenge may lead. Other possibilities may be to create a small firm exceptions allowing MDPs only, let us say, for a firm which after the joinder will have, let us say, lawyers or lawyers and other professionals combined, making sure, however, that that small-firm exception is not undermined by large firms spinning off small affiliates and then trying to get around the corner in that fashion.

I agree with Paul Sax that we should do something; we, as lawyers should do something but I don't think the thing to do is to accept the Simmons Commission report as it was written. I think lot of more work needs to be done. One of the things we need to do, I believe, is to take a good look at the accounting profession and probe its points of weakness. There are many factions; there are many schisms in the accounting profession itself. I happen to be a member of it, and I am proud to be but I am concerned about some things they are doing. I don't think the Big Five are in the accounting profession. I think the Big Five have their own concerns. They did not become the Big Five by being nice to the small accounting firms. And I think accounting regulators around the country have become increasingly concerned with some of the things which the Big Five are attempting to do. I also think that the consolidators play another significant role.

Consolidators like American Express and H&R Block are buying up small accounting firms, splitting off the order function and then arranging some kind of a contractual relationship between the holding company and the other firm, which has been severely criticized by county regulators as elevating form over substance. I think the time may come where there may be confrontations, either in Congress or in state legislatures, or even in state constitutional (unintelligible) between the Bar and the accounting professions. I think the Bar needs to be ready for that, both with its research, both with its public relations and the quality of service that we can demonstrate to society. I think the core values are there and we need to emphasize more; we need to understand them, to be able to get on the Larry King Live show and explain them to the world. I think we can be proud of them but first we have to recognize them, talk about them and accept them.

MR. CONE: Harold, thank you. As usual, you are provocative in the best way, that is, intellectually provocative, and I thank you very much for that. I want to start getting some input from the audience but first, this, so far, has been an all-American show, and I don't think that's correct. We have two people from Europe here. I was wondering, particularly, since France has had so much direct experience with the Big Five accounting firms they started off as eight and then consolidated down to five France has had an enormous amount of experience with those firms practicing law in France, and I was wondering if we might call on David Gordon-Krief to talk to us a little bit on the basis of that experience.

MR. GORDON-KRIEF: Thank you, Terry. I'll try to be provocative too, just to tell a little bit what happened in France and let you know how much France and Europe and say a few words about England is really concerned about what's going on in the States, in North America, and how important what decision you are going to take are for us. In about early, we decided to merge in France the profession of lawyers (unintelligible) and what we call "conseils juridiques," which we are legal advisers, people that could give legal opinions, especially in tax and corporate law, without being lawyers and, of course, mainly for accounting firms and offer corporate structure. And we merged the two professions, and within seven years, we have seen the Big Eight becoming Big Five. Starting from no lawyers, now they have almost ten percent of the entire lawyers' population in France. Probably almost, lawyers among we have a little bit over, lawyers in France, so the biggest growth rate in the lawyers profession. It is absolutely amazing the way they have expanded and what they have been doing for the past few years.

No large law firm in France has more than five or six offices in different cities and these five law firms have probably offices in France. So we have a huge network. We don't only excel and work in tax and corporate; they do also litigation and property and family and divorce and environmental and absolutely everything a regular law firm does. The problem we have now is not how should we approve MDPs but can we regulate MDPs now. We have this big concern, and we have been working a lot to try to see how the core values can be respected, and we have been really trying to analyze what has been going on for the past seven years that actually, the big problem is that they have totally lowered the standards of our core values. We have now huge problems that you might be facing down the road in five or six years, for example, with criminal judges.

We have, in France, problems with judges thinking that lawyers are accomplices with laundering money and now they are saying, these judges, now that you are sharing secrets, you are lowering the standards of the client-attorney standards privilege by sharing these secrets with other professional, with other professionals that are not from regulated professions, like people working in the same network and the same Big Five, like PricewaterhouseCoopers. How do you pretend that you're going to be able to oppose that to the judge and not tell us the truth about what happened with your clients? So now they are encouraging forcing lawyers to disclose privileged information because they say, "Now you are sharing with absolutely everybody else, and there is no way you can protect these core values."

So we have this very big problem that you might be facing. You can now I'm not saying stop the possibility of working with other professionals, but it is a very, very big concern of sharing. I mean, we are not into this now, Terry, but this control or not control MDPs and this fee-sharing agreement, this is now we are contemplating this, and we are really trying to do things about let me give you an example of independence. In France, the Big Five law firms are saying that they are absolutely independent from the network, from the rest of the accounting firms, from the auditors. Couple of years I mean, months ago, you all learned that Pricewaterhouse merged with Coopers. There were two law firms in France; one was about lawyers, and the other or something. None of the partners of these two law firms were consulted to decide whether these two law firms merged, and somewhere in the States, the merger was decided worldwide for what? accounting, auditing, whatever, all the rest. And suddenly, two French law firms merged without knowing they had merged and became just one law firm with about lawyers in France. They didn't make that decision. So if they don't have the power to decide with whom we are going to be partners and associated, how can we consider that one of the main core values, which is independence, can be protected?

So this is just what we might go on and give you more input on the French and European experience. But of course, MDPs are here but you can still regulate and decide whether you want certain core values not to be diluted, and you have to decide whether you want these values to remain for the next century or not. When we address just one last thing from the experience we have, who needs the MDPs? You say clients need MDPs, et cetera. I don't think clients need MDPs; I think MDPs need MDPs. I think that the Big Five, having this worldwide expansion in accounting, in computer consulting or whatever, need now law, legal services, to be more efficient and to be able to expand and have a huge, now complete, service. We've all seen the legal services expanding, the demand for legal services expanding worldwide. So we need legal input to strengthen the services all around the world.

I'm not sure clients need that but when the client is working in France, all the Big Five if you have this information will tell you that percent of the clients come from the auditing firm, from the accounting, from the software consulting thing, percent. And the clients are no longer free to choose the lawyer that will do the merger, the acquisition, the litigation, whatever. And we can see that this is not speculation; we've seen that for the past seven years. So I think I will stop now on this subject.

MR. CONE: Thank you. Alison, just one minute. I want to make certain that it is clear how this problem or how problem is not the word I want how this situation occurred in France. David explained it but I am not sure that it is necessarily clear to everyone here. Before January,, there was a profession of avocat in France that did not include the profession of legal consulting. The Big Eight had built up their legal departments by hiring legal consultants who were in the members of the profession of avocat. On January,, by operation of law, all of the legal consultants became avocat. They went to bed December 31st "conseils juridiques;" they woke up the next morning avocat. This meant that those who were working for the Big Eight, I guess they then were, as "conseils juridiques" were now members of the Bar, and the Big Eight therefore found that they had avocat within their network, as the French called it. And I'm sorry to have taken precious time to make this point but I thought it important that everyone understand what had happened. Alison, please. Alison Crawley will now talk to us from an English perspective.

MS. CRAWLEY: I'd just like to pick up on one of the last things that David said about the fact that clients in France no longer have the right to choose, and if they go to the big accountant's firm for software advice, they end up going to the in-house associated legal practice. I just wonder whether that is because they are not getting better service and they like the service they are getting; that's what the Big Five would say. In England, this debate started at least years ago, really, and it had nothing to do with the Big Five, and I think a lot of the talk here today has been to do with the Big Five but there are lots of opportunities for lawyers in relation to multidisciplinary practice and for clients in developing services and technologies in ways that we haven't yet begun to think about. That isn't only related to the Big Five, and I think that (unintelligible).

In England, the debate started when our government, which was then anti anything that looked vaguely anti-competitive, decided it would be rather a good idea if banks and building societies who lent money to people to buy houses should be able to provide the legal work as well. Now that's an MDP controlled by somebody with a conflicting interest to the to the client, and that was where we started from. And I'm not convinced that, even though we have got new governments now, that there is very much more concern in the U.K., in the government, in our office of fair trading, who really see our restrictions as being just restrictions and protections. And so the Law Society spent the last years looking at the problem.

We don't allow MDP officially but we've restructured some of our ancillary practice rules and associated practice rules to allow certain developments to keep so far, and the U.K. government is not quite so far back. But they haven't actually forced anything upon us yet. And that is the concern in the U.K., that we will have a solution presented to us that we haven't developed ourselves. And as I said, the Big Five are putting some pressure on but for years and years and years, people liked the the the surveyors, your states' agency in England, will be right into the government saying, "Can't you do something about the Law Society's restricted practice?" So I just want to sort of put that into the background of the Law Society's thinking on this. Very recently, just three weeks ago, the Law Society Council had the report from its working party on MDPs, which said, essentially, MDPs are here.

We come from a point of view of perhaps France and what Paul was talking about. MDPs are here; we have got to find a way of regulating them properly in a way to protect the core values of the profession. There was discussion at the counsel meeting that we needed proof, we needed evidence, we needed to go out and ask clients, "Why do you want them?" The Sony Walkman analogy always comes out; we knew we wanted a Sony Walkman before it was there. And the general view of the Law Society Council when it debated this three weeks ago was that presumptively, this looks like a restrictive practice. We must see if we can get rid of the restrictive practice and put in place by regulation other ways of protecting the core values and core duties of lawyers.

In a way, this allows them to fee share with other people and develop their own practices with non-lawyers to find solutions for clients that we haven't thought of yet. So the ultimate goal, they decided, was that solicitors who wanted to do so we are not forcing this upon anybody should be able to provide legal services to any medium, to anyone, provided that there was still the necessary safeguards there to protect the public interest. Now, that's a tall order, which I think every MDP working party or commission finds difficulty with, and I suspect that in England, it will need legislation. So we are putting that as our long-term goal at present, and we're looking to develop two interim solutions. And the interim solutions do not involve non-lawyer controlled well, in principle, they don't include non-lawyer controlled solicitors' practices. We are looking at developing one model that is similar to the Washington model or what they are developing up in Canada at the moment, which is lawyer-controlled MDPs, allowing law firms to take on some non-lawyer partners. And we think that, in a way, puts a little bit of the opportunity back in the hands of the professionals or solicitor's firms to allow them to prove what they can do with that ability. The other thing that we are looking at is to, if you like, regularize the position without the (unintelligible) ancillary practices that exist, which is the Garretson, Co., Andersen's link. We have allowed . . .

MR. CONE: Excuse me, tell the people; not everyone here, I don't think, knows about Garretson and Andersen.

MS. CRAWLEY: All right. What's developed on the continents and France were the forerunners of this is that you have an independent law firm that has an association with the Big Five firms so it's associated practice. But the law firm still maintains its independence; it's a partnership only of lawyers. They are regulated by the Law Society, and they comply with the Law Society rules, which prevent them from fee sharing. They can provide joint services to clients, if clients know that they are getting joint services, and they can provide services to the clients of Garretson (unintelligible) Arthur Andersen's or to clients who come through the door.

But essentially, it is a solicitor's practice run independently, although some people doubt they're true independents. These are the sort of issues that David was taking about. What these law firms are saying to us is that the fee-sharing rule isn't it. That's not about control. That's not about anything; it's just rather annoying. There are other issued about branding as well that they get annoyed about. And the Law Society Council decided that we would look at regulating properly these linked partnerships that allows a sort of model to develop and in the same way that David was saying in Paris. These happened de facto; they exist but they weren't shaped by the regulation. They have just developed. So we are going to have a lot of that as well, and I would imagine those would be the first two steps that you're going to see happen in the U.K., not MDPs controlled by non-lawyers of this stage.

MR. CONE: Thank you very much, Alison. Anyone here who wants to amplify? Yes?

MR. LEVINSON: I would like to ask David, please, to comment on the following question: Do you think, given what you have seen in France in the past ten years, is it already too late for the United States to reassert its existing standards or is there still time if we act soon? 

MR. GORDON-KRIEF: From what we have seen, not at all; it is the time to do it. In France now, most of the deciders, the COs of the Big Five, are waiting for the Americans to decide because they still realize that being just a continental I mean, talking European being just a large French law firm or European law firm does not permit to be involved in large corporate deals or large mergers and acquisitions, transnational deals. Now you can read papers from Deloitte & Touche or other people saying Okay, we're big; we're huge but until we merge, we buy, we open whatever you want to call it law firms in the States, the size of your large law firms, White and Case or Sherman Sterling, we are nothing on the world basis.

But you must realize that in Europe, we have also a European directive named the Free Establishment of Lawyers Directive. Within two or three or four years, the Big Five are going to be able to have thousands of lawyers in Europe. Still, the thing that they need the United States, and we need to have law firms here to be internationally recognized and accepted and be able to be hired. Now in France, they are expanding a lot but we don't see them this is important we still don't see them in the very big, major deals. They are not involved in the major takeovers or privatization or stock litigation. The major cases, they are still not involved. And what are we waiting for? United States, England, maybe for Europe. I mean, England is major thing for Europe. But United States is vital for them so not only you can, but you have to.

MR. CONE: Bernie, this gentleman here, then Jerry.

MR. WOLFMAN: Just two points. One, a distinction between a lawyer-controlled and a non-lawyer-controlled MDP. Under the current model rules, theoretically, neither is permissible because of the anti-fee-sharing rule. The Big Five are, in fact the lawyers who are with them are, in fact, violating the rule. The small law firm, many of them, I believe I'm told feel disadvantaged, and some of them want to be able to be bought out, to be captured by the Big Five because they don't have the capital that the Big Five have to enable them to compete. Moreover, they are more focused on the applicability of the rules, which say they can't bring into their firms, into their law firms, their middle-sized law firms, accountants to help them with financial services. They can't bring in, as partners, accountants to help them with their financial services. They can't bring in social workers, family counselors in connection with their domestic relations activity and so on.

It seems to me that one can, with safety as to our core values, modify the anti-fee-sharing rules to permit MDPs where the lawyers own, manage and control the institution, where they, from the day of their education forward, have had the core values instilled in them, and they can be expected to enforce them far more than the Big Five will do or can do. Moreover, one has to recognize the fact that the ABA commission report, which wants to authorize MDPs, whether lawyer controlled or not, nevertheless says that all MDPs will be subject to the confidentiality and loyalty rule, and with imputation firm-wide to the non-lawyers and the lawyers. The accounting firms who have spoken out saying they reject that, they make clear they don't believe in those values and say that the ABA's approval of this will do nothing for them because they don't want to abide by those rules. Now, let's suppose the ABA were to authorize what the commission had suggested.

What would that accomplish if the Big Five assuming there's already a fait accompli does not abide by the requirement of the confidentiality and loyalty and independence rules? We are told that the reason we need a change is the States have not been enforcing the law. So why should we assume that if we go through the process of enacting something like the commission's report that would say, "You may do what you're doing if you subject yourself to these rules," and they say, "We are not going to subject ourselves to these rules," why should we assume that that will trigger enforcement of the rules, when they have not been triggered before?

It seems to me we have to recognize that the Big Five do not want the rules and that what's needed is a rejection by the ABA and by the States of non-lawyer-controlled MDPs, and we should hope and seek to achieve a degree of enforcement of the rules that would say to these lawyers who are now there that "You must cease practice law with those firms, return to law firms or you'll be enjoined." That would have to be the outcome if the commission's report were enacted or not, and it seemed to me we can work towards that goal. And it may be that the discussion of MDP in groups like this and elsewhere throughout the country will heighten the concern, heighten the interest and, perhaps, bring us to a greater degree of giving more than lip service to the core values.

AUDIENCE MEMBER: I was wondering if there was any legal research that's been undertaken with respect to antitrust and trade regulation, laws of state, federal government and states, on the restrictive practices appearing in England, the tying of services and the almost monopoly positions these multidisciplinary practice firms will represent in certain markets.

MR. CONE: As I understand the question, it is whether there have been antitrust investigations into the restrictive practices of multidisciplinary firms.

AUDIENCE MEMBER: Right, and tying of services and . . .

MR. CONE: Tying of services. I think that that's a wonderful question because we so frequently hear the other issues raised, which is that the legal profession is itself a perambulating antitrust violation. Who would like to comment on that?

MR. SHESTACK: Not on the antitrust but on the other aspects.

MS. CRAWLEY: Not necessarily in relation to legal services but when the PricewaterhouseCoopers merger was planned, it was an issue that was considered by the European commission because it was put to them that this was so narrow in the market, the big major international firms, it was anti-competitive. They allowed that one to go through but more or less said, as I understand it but I am sort of being rather glib here is that that was it. There's going to be at least five but we were not going down to four. So that when KPMG sort of did discuss whether or not another merger was on that, the indication was it would get nowhere. I must say that (unintelligible) wrote to the European commission when they were looking at the Price CoopersWaterhouse merger and said that given not only the narrowing of ability are fewer and fewer large firms able to do big international audit work, the more these firms got linked with lawyers, the more anti-competitive that was going to get as well. So it is a concern that has definitely been flagged with the European.

MR. CONE: Anything else on that point before we go to Jerry Shestack on a different point? Anybody have any comments or questions on the antitrust problems inherent that the suggestion that there possibly are antitrust problems inherent in the operation of MDP? Sir?

AUDIENCE MEMBER: I'd like to go back to your original point which is, I can see this developing as the accounting firms clearly as they merged are going to make the argument that the Bar itself is restraining trade and has a (unintelligible). Probably, you have already seen that in Europe extensively, and Professor Levinson has suggested that as well as Mr. Shestack has suggesting that the horse is out of the barn and this is already happening. As a practical matter for the Bar, it seems to me we only have two choices; we may end up with kind of a blend of both. One is either we put together the political will and the resources to to assert ourselves and be in a position where we can influence the policy and perhaps raise a war chest as necessary, and it's very disheartening to hear that Texas was routed so soundly. That's like a report from the front that we have lost a major battle, which I didn't even know about, frankly. But either the Bar does that or we go to the table and we cut a deal with them, if they're even disposed to negotiate. Those are only two choices, and what as a practical matter, whether we have the will to do that is, in my mind, an open question from what I'm hearing.

MR. LEVINSON: Just on the question as to whether the American Bar violates the antitrust laws. There was a seventh circuit decision around called "The Law Line Verses ABA," (unintelligible) denied by the U.S. Supreme Court, which upheld (intelligible) favor of the Bar regulation against the (unintelligible) on antitrust and constitutional grounds. As far as I know, that's the most recent authority on that subject.

MR. CONE: Thanks.

MS. SCHENK: If I can just comment on one thing you just said, you know, your two points are related. The Bar does have leverage; it is just not willing to use that leverage. If we were to say that all lawyers practicing with the accounting firms were engaged in unauthorized practice of law and were subject to discipline, I have no doubt they would all turn and run the other directions. That is leverage they are apparently not willing to use.

AUDIENCE MEMBER: That's my point about political will.

MR. CONE: Martha Barnett.

MS. BARNETT: To date, we have not been willing to use that leverage. I'm not so sure that the rank-and-file lawyer really has ever focused on this issue in the way that it has now come to the forefront as a result of the global economy and what the Big Five accounting firms are doing and American Express and the consolidators are doing. I think you may well see the lawyers in American revisit the question of whether they need to strongly enforce the U.P.L. statutes, put together some type of war chest, stand shoulder to shoulder to protect values that go beyond just of the business of the practice of law and that go into the professional nature of what has historically set lawyers apart as a profession.

MS. CRAWLEY: Can I just make one comment there? The war chest there will be needed, I suspect, to pay for one of your country's best marketing consultants, to try and put your view across to the public because that's what the Big Five I try not to get into the Big Five debate but that is what the Big Five do. We, as lawyers, understand core values and what we need is the public out there who are given the paint box of choice by the pro-MDP argument people, they need to understand we have said this before in ways that they can understand what the dangers are, and you've got to get that I believe you have got to get that public debate there because if it is simply power-housing between lawyers and the Big Five accountants in government, then I think it is going to be very difficult to get the public on your side.

MS. BARNETT: Ultimately, I think the question of sharing fees will be the most difficult for the public to understand and perhaps non-lawyer partners. I think that seems to be much more of a guild business issue than we as lawyers might characterize it in terms of the independent judgment of the lawyer in referencing the client. But there are issues that the public should understand, and I think could understand, including those with education, and those go to conflicts of interest. There is a very distinct difference between lawyers and accountants or others in terms of the conflict of interest, in terms of imputation of knowledge, in terms of solicitation and marketing to clients, in terms of confidentiality, although the accounting profession now does have confidentiality in some areas.

There are some things that I think the public can more readily understand than these concepts that got us, such as independence. But I don't think we should give up on that one either. I think that is something that certainly in a democracy what I have seen is the role of the lawyers in a democracy is critical, at least the lawyers as we have functioned in the American system as part of the system of justice, and it goes beyond just our profession and how we make our living. It goes with our obligation to the public and to the courts and to the constitution, which I think is a very important distinction that, hopefully, we can educate people on if, indeed, the will arises.

MR. CONE: Jerry?

MR. SHESTACK: One of the things that has puzzled me is this stampede, get on the bandwagon, MDP is here, it's all over Europe and the like. The statistics don't show that. It's true, Arthur Andersen acquired a big Spanish law firm; that doesn't mean that all the Spanish law firms are being acquired by accountants. If you look up the statistics as to the non-tax lawyer or take all of the lawyers in the Big Five, it comes out to people; that was the last statistic. Now, if all of those lawyers are even unauthorized practice of law, that really isn't too much. Let us think of that statistic in terms of the bandwagon or stampede argument. We have about a million lawyers in the United States. Between India and Brazil, you have over another half-million lawyers. You must have over two million lawyers around the world, and the Big Five have, lawyers so what? The argument that we're not enforcing unauthorized practice of law seems to me a shallow argument.

Maybe we should but if a lot of people exceed the -mile speed limit, should we then raise the speed limit to so as to legitimize all those who are exceeding the speed limit? It doesn't make a lot of sense to me. So the demand argument ought to be put into perspective. It suddenly hit a crescendo, partially because the A.D.A. established a committee and other bar associations are addressing it. As to the point of how to address it, I think you address it through the local bar associations. The ABA may persuade people through its models but basically, every state has to adopt its own code. Fully forty-two states now have adopted the ABA-model code of professional responsibility, and that's taken a long time to persuade states to adopt that.

In Pennsylvania, for example, our Pennsylvania Bar Association right now is opposed by a large multidisciplinary practice. My prediction is that the Supreme Court of Pennsylvania, knowing its professional standards and its responsibility and its adherence to our values, is not going allow MDP. And if Pennsylvania doesn't allow it, and doesn't change Rule 5.4 of Pennsylvania (unintelligible), then it is not going to happen in Pennsylvania. And the approach is through the various states and through the Bar associations. Lawyers in New York and a state bar in New York have taken strong positions on it, and if those positions are maintained, I don't think the state Supreme Court is going deal with it in any different way.

MR. SAX: As I look at the situation and ask, "Where is it going, and what do we do?" I always harken back to the notion that whatever we choose to do has to be readily understood by the public in terms of benefit to them, not turf protection or pocketbook protection for us, and that we have to be able to get out a clear and well-understood message in order to make a change that the public will accept. For that reason, I think it is absolutely necessary to jettison the prohibition on fee sharing because you simply can't convert the prohibition on fee sharing into an exercise of independent lawyers' judgment argument that the public will understand. It just doesn't make sense to them. At the other end of the spectrum, I think, given will, given the interest in marching shoulder to shoulder to accomplish the goal of preserving core values, we probably could make those arguments with respect to both the absolute duty of client loyalty and our concept of client confidentiality.

We have done, I think, an awful job of getting through to the public their interest in our maintaining those values. In between those two extreme of what I think we can't do and what we can do, we confront what Professor Wolfman was talking about with lawyer-controlled MDPs. Can we convince the public that there is a public interest in only lawyers owning the firms that engage in multidisciplinary practice? And I think not. And the reason I think we can't sell that proposition is that we have already bought the opposite one in the model rules. The model rules now contemplate in the model rule paragraph that follows the prohibition on fee sharing. In 5.4C, we say that where a non-client pays a lawyer to serve a client, the lawyer should nonetheless continue to exercise the lawyer's independent legal judgment. Implicit in that is the notion that we trust the lawyers individually to exercise that independent legal judgment. I mean, when you think about it, this idea of independence, what happened with the first in-house lawyer?

If the purse controls the independence of the lawyer, how do you have in-house lawyers serving if not just the company, the joint ventures, the affiliates? How do you have public interest law firms and property law firms with salaried lawyers serving individual clients? I mean, of course, the lawyer is capable of exercising independent legal judgment on his or her own, even though compensated by another. And even though we may feel to the contrary and think it ought to be the contrary, I don't think we can sell that distinction to the public and therefore, that one has to go to and therefore, we are remitted to professionally-owned MDPs and maybe financial-service-firm-owned MDPs. And we out to make our battleground the one in which we attempt to convert Martha Barnett to Joan of Arc, leading us shoulder to shoulder marching forward, is client loyalty and client confidence.

MR. CONE: As Martha had just pointed out and I, as the self-appointed historian of this group, want to point out that I don't wish her that fate. Is there anyone who would like to comment on the point that we have in-house counsel; we have public interest groups that employ lawyers and therefore I am truncating what you said, Paul that therefore, MDP is, as a matter of logic, already with us? Is there somebody?

AUDIENCE MEMBER: Yes.

MR. CONE: Sir? What is your name, sir?

AUDIENCE MEMBER: Ken Sax; I am a partner in a mid-sized Manhattan law firm, and before that, I was a CPA with then the Big Eight, now the Big Five. I worked for two of them back in the 's, and back then, we were drafting legal documents. As an accountant, we would draft pension plans and submit them to clients. I think you know my own view of this quote debate; I have a somewhat stilted view of it because I don't think there is any debate. I think the MDP is here, and in my world, when I look at what's going on, the accounting firms are the least of our problems. Now it's the brokerage houses with their canned plans, and they have paralegals answering the operational problems. So I think the accountants are minor competitors compared to where the some the bigger ones that loom on the horizon. I don't think there is any debate anymore; it's just a matter of time.

MR. CONE: Okay, well, thank you. Even though we are going through the motions of having a debate here, we will . . . 

AUDIENCE MEMBER: I said my view is stilted.

MR. WOLFMAN: Was that a motion to adjourn?

MR. SHESTACK: In terms of Paul's point that the public won't understand the prohibition against fee sharing, well, I don't know why. Most of the public won't even think about it very directly but why they can't understand the prohibition against fee sharing suppose you say, "Do you want to share fees with an ambulance chaser? Do you want to share fees with an investigator? You want to merge fees of an accountant who is lower and yours are higher, and then the accountant will be paying your fees?" All sorts of ways to explain it. I do not think that is any problem. While we are at it, let's explain to the firm why Wall Street partners get a million-and-a-half dollars on an average or why lawyers in tobacco cases get billions of dollars. Lots of explanations that come ahead of this one that are more difficult to explain. As far as public-interest law firms, they are controlled by lawyers. They are doing the public good. I've never had anybody complain about the meager salary the public interest firms get or feeling that they are not independent in the public interest.

Corporations are a more difficult problem. But any corporate general counsel that is worth his or her name will try and control the members of that department with ethical obligations. The CEO will understand that the lawyer within the corporation has those obligations. The budget will be fixed by the general counsel. It does cause some problems if you look at it as a matter of logical extension. But we are living with that, and it's working out all right. But that doesn't mean you go into fee sharing with (unintelligible), real estate people, environmental people, negligence experts, accountants and the like.

MR. CONE: I might add on that, if I may, there is the distinction that in-house counsel are not held out to the public, and the that would differentiate from the MDP. Yes, sir, your name?

AUDIENCE MEMBER: My name is Tom Heights, and I'm from Canada, and I'm the chair of our committee on this issue for the (unintelligible) bar association so I thought I'd just give you a little perspective from north of your border. I think this issue in Canada is going to turn, at least within the legal profession, on one issue and that is, can regulators in Canada, law societies, can they actually and effectively regulate MDPs? If the perception in the legal profession is that they can regulate MDPs, I think MDPs will be allowed. If the perception is that they can't and we have heard from David at our meeting in Edmonton that they can't then I think the thing is going to go the other way. Our committee has recommended that MDPs be allowed with a huge caveat provided that MDPs are regulated by the law societies.

The law societies have said, We reject MDPs, other than lawyer-controlled ones because we cannot regulate MDPs. They are just too large; they will carry on business in Ontario or wherever, irrespective of whether they're practicing law, so they're here whether they're practicing law or not. So, ironically, the CBA said they should be allowed, subject to specific regulation, and the regulators are saying, "We can't regulate them so they should not be allowed, unless they are lawyer controlled or primarily legal service organizations." So it seems to me what I'm hearing at this table is somewhat the same. Are we either fooling ourselves in thinking that the legal profession can regulate MDPs or are we not? Those who think we're fooling ourselves say, "Well, let's just enjoy it and get on with it." Those of us who say or those who say we can regulate are saying, "Let's do so." That seems to me to be the debate.

MR. CONE: Thank you, and welcome here. I am delighted you came, and thank you very much. Any other comment that relates to what our friend from Ontario has just told us? Yes, go ahead.

MS. BARNETT: Based on some of the comments I think you've heard now, we're not able to regulate the unauthorized practice in the current set-up. I think that is one of the concerns that I've heard in the debate among American lawyers is either the lack of the will or the lack of the ability to regulate what is currently unauthorized practice of law in the United States, and how then, particularly in a non-lawyer-controlled MDP, how then, regardless of what documents they may or may not file with the highest regulatory authority or court, how we would be able to impose those standards on a non-lawyer-controlled MDP. 

MS. SCHENK: If I could point out, there are really two models of MDP here, and we have been focusing on only one. The lawyer-controlled MDP is not the Big Five accounting firm but at least, for example, in New York and particularly upstate, it will be a small law firm who wants to take on a broker or title insurance company or a family counselor or something of that sort. And that, I think, is relatively easy to regulate, particularly in New York because we have a rule that the ethics concerns run to the law firm as well as the lawyers. So I don't think that's a big step at all. That just involves the (unintelligible) of .. The other model we are talking about would not be covered at all. I mean, the real issue here is if we take the position that we'll regulate what we can regulate, which is the first model of MDP, and we won't regulate what we cannot regulate, which is the Big Five, we have essentially left the status quo with that and brought in the small-firm MDP.

MR. CONE: Thank you. That was Professor Deborah Schenk, and I'm glad to have the two different models mentioned because as you pointed out, we've not been making a differentiation and at least analytically, it can be very helpful to make that distinction. Yes, sir, you had your hand up.

AUDIENCE MEMBER: Robert Fisher. I'm a solo practitioner from New Jersey but I get back and forth to the city and around the country a lot. It seems to me that you have an enormous problem here of conflicts and who is going to make decisions as to what to do for which clients. And I think that, if you have in mind just the small practice, adding a little bit to its technical efficiency, that's one thing. But once you get into the other type of situation, with a mammoth-sized accounting firm or worse yet, a management consulting firm, then the problems start to arise. We've already started to see problems at the corporate level with management consultants who come right in and tell the company how to structure their law department. They fired the general counsel because he did something wrong? No. They fired him because he did a good job.

They said, "This institution doesn't need you anymore; you did a very good job. It's not myself but someone else." What is to prevent them from then trying to advise the clients as to how to use the accounting firm or a non-lawyer-controlled firm as their primary source of legal activity because look how efficient it's going to be. We are, after all, the masters of efficiency. You pay us $, a day per person to work for you. I think it's a very, very dangerous situation which requires a lot of thought. And if you limit it to the smaller practices with particular kinds of expert help, that's fine. But beyond that, I think you run into a lot of problems that people touch on but nobody seems to get down into the details of in order to analyze it. And the only way you can get into the details of it is to bring together people who have dealt with these characters for years back and forth who keep doing this, who can dredge out what really is happening.

There's also this, too: A lot of lawyers fees are based upon referrals from accounting firms. I was in a practice with another person for two years. Most of our business came from accountants. Were we about to turn on them? It's very difficult. It's very difficult to get a state to do it. The States of New Jersey, where I'm from, and Illinois caved in completely on the issue of when an accountant issues a certified statement, who can rely on it? The answer in those two states nobody, unless it's fraud. Nobody can rely on it unless the client asks the accounting firm, "Will you let my bank rely on this?" And the accounting firm responds, "Yes." How many accounting firms respond yes? Very few. We tried some of the Big Five; we got letters back saying, "Shame on you. You should know more about your client than we do." Well, the only reason that the client is getting an audited statement for $, a year from a Big Five accounting firm is in order to satisfy the bank. But if the bank can't rely on it, what's the joke? What's the point? And I think these types of issues really have to be flushed out before we jump into anything. Thank you.

MR. CONE: In the back there.

AUDIENCE MEMBER: My name is Max (unintelligible) and I am chair of the labor and employment section of the ABA.

MR. CONE: Hi, Max.

AUDIENCE MEMBER: And it seems to me that we're getting, essentially, two points of view here, both of which seem to be pronouncing the public interest. One is the commission's point of view, tax section; Paul Sax supports it. Essentially, it seems to me that's based upon the fact that it's here, and we ought to enforce core values or at least do the best we can to try to enforce core values. And those who feel that that is unsatisfactory and that non-lawyer-controlled MDPs simply can't do that kind of thing seem to be pronouncing the public interest as based upon essentially the code of professional responsibility that we now have synonymous with the phrase "core values." But it seems to me one of the things we are overlooking and I think it is a very serious omission is how the public feels about our views of the public interest. At the present time, I think the public's view of lawyers serving the public interest is a very dubious one, that unless the ABA and the various states do a lot more about enforcing the public interest in terms of the code of professional responsibility and everything it means, our view of what the public interest is and how the public will feel about the public interest as we pronounce it will simply not be credible.

MR. CONE: Thanks, Max. You, I believe, are head of the section of the ABA?

AUDIENCE MEMBER: Yes, labor and employment.

MR. CONE: Labor and employment, and we're flattered that you came to join us and thank you. Yes, Jerry? 

MR. SHESTACK: I'd like to pose a question this way: Lawyers now, I think we can all agree, are looked down upon because of a perception that they are casual with ethics, greedy pocketbook minded and put bottom line ahead of fiduciary duties or independence. That's part of the public perception that we wrestle with. Will MDP improve that perception or make it worse? The gentleman, who just commented, I'd like to . . .

AUDIENCE MEMBER: Oh, I'd I think MDP will certainly not improve it. That's my own personal point of view; it's not the point of view of the section that I represent. But what I'm concerned about is that our view of the professional responsibilities and the public interest served by it may not be a view that the public concurs in unless we do a lot more about enforcing the public interest and the code of profession responsibility. It seems to me now and I think that Jerry agrees with me the lawyers's view and the public's view is a decidedly poor one. They distinguish it, if they distinguish it at all, from the non-lawyers' behavior in a very dubious way. And so we have a very difficult burden, a very heavy burden, a burden so far not properly discharged of persuading the public that the code of professional responsibility will be enforced, is enforceable, and that their interests are best served by such renewed vigorous enforcement. That's the point I'm trying to make.

MR. CONE: Any other points? Yes?

AUDIENCE MEMBER: Very briefly, I completely agree, and I guess it's even more important that the clients be persuaded that these values are important because without our clients, of course, there's nothing for us to do. It seems an obvious point but a really important one, and I'm not sure that unless the clients are persuaded initially and the public in general, that we will have any leverage. I think the Bar, we have served our clients well for the most part, and I'm proud of the job we've done for our clients but this is a point that clients really haven't been well educated to, and I can guarantee you that the competition will be out there saying they can do a better job, a more efficient job, that we are restraining trade, that we want our monopoly in this area and that we're not being reasonable. And those are points, I guess, Mr. Sax has already made. It will be a very tough sell for that reason.

MR. CONE: I neglected to ask you your name.

AUDIENCE MEMBER: Harry Louis; I'm general counsel here in New York, formerly of the law firm of (unintelligible) where I met Martha, and I am pleased to be here.

MR. LEVINSON: First of all, I am not convinced that the public image of lawyers is that bad. If you look on television, for example, almost every lawyer program is very sympathetic to all lawyers. Think about "Jag," think about "Law and Order," think about "Judge Judy." You don't see any great TV programs about accountants, by the way, or business consultants. And I think that's important. I think that there is a reservoir of goodwill out there to all lawyers, admiration, yes, sometimes negative feelings as well. But I think the best way to build our reputation is to improve ourselves, and I think we have a lot of work to do internally in the law schools, in the law firms, in the Bar associations in making sure that we redouble our efforts to serve the public interest (unintelligible).

On the question of independence, and this gets back a little further back, noted that in-house counsel are not completely independent and so on and so forth. I agree; I think the independent law firm itself has to be the touchstone of independence, and if the independent law firm is independent, that independence will spill over to government lawyers to, in-house counsel and so on because it broadens their career opportunities and independent-minded lawyers will have someplace to go if they want to be really independent; namely, independent law firms. So I think the independence of the independent law firms spills over and, in a sense, protects lawyers in other branches of practice.

Finally, independence has more to do than the microrepresentation of a client. Independence, I think, (unintelligible) is a macro matter as well, macro as our role in society. The preamble to the (unintelligible) responsibility refers to us as public citizens with a special concern for the administration of justice. You read the preamble to the Americans of the CVA Code, you won't find that there. It says: "We're information experts." Nothing wrong with that at all; we need that. But they don't perceive themselves the way that lawyers perceive ourselves. I think we have to understand it, to redouble it, to live up to it and to be unashamed about saying to protect lawyers up to a point (unintelligible) in order to protect the courts and the public.

MS. BARNETT: I wanted to when I first asked if I could respond, I was going to make the point that Professor Levinson just made, and I should give you full disclosure here. Thirty years ago or almost years ago, Professor Levinson taught me the course on independence of lawyers. So it is not surprising that I agree with him. I think he is brilliant. 

MR. LEVINSON: That is my greatest claim to fame, and I am honored.

MS. BARNETT: But we talk about the whole question of the independence of a lawyer with regard to service to the client, service to the public is one that we have talked a lot about, that is a core value of the profession. In the last several years, an issue that the American Bar Association and I think most state bars and indeed, I believe many lawyers have focused their attention on has been the independence of the judiciary and a tax on the independence so the judge and all of the ramifications that come with that, and frankly, I don't see how you can have one without the other. I believe they go hand in hand and that it is an important part of the third branch of government in this country.

Now, if somebody can find a way to accomplish that and still preserve those values, I think we need to think about it, and we certainly are thinking about it. As I think through this issue and there's going to come a time fairly soon on behalf of the Bar I'm probably going to have to take a position on it, and it makes me nervous because it's very difficult to come to an absolute position on a subject that is so complex and so complicated and that touches on so much values. And I finally decided that what is bothering me is that I don't know the full ramifications of what will happen if, indeed, we allow non-lawyers to control the practice of law. Nothing bad might happen but it's also possible that it will forever change the nature of the practice of law and that the consequences will be consequences that go to the independence not just of the professional, of the lawyer, but of the profession and of the judiciary, and I think with consequences for clients that maybe they don't understand now but certainly they will when those when that occurs.

So my concern is really a lack of understanding as to what is actually going to happen if we make those changes, and I think that the debate that's taking place in the States now it critical as people think about not just the theoretical MDP independence core value argument but say, "Okay, now how is this going to affect what I do, how I serve clients, how I serve the public, how I live up to the constitutional oath that I have?"

MR. WOLFMAN: I agree completely with Martha's perspective on this and where fundamental tension lies. To look back at what people have done, lawyers and non-lawyers, the tax law area is one where tax lawyers, bar association, the tax section, over the years has been very much in the forefront of law reform, of improvement of the law and of saying when the law has been unduly distorted and interpreted to favor people that the legislation never intended to have such interpretation, for the benefit of such people. The AICPA either doesn't participate or drags its heels long after the Bar has acted and long after the reforms are, essentially, in effect.

Lawyers who have spoken out when they have been in law firms for law reform, for law improvement, as the model rules suggest we should, when they have gone into the accounting firms, suddenly turn silent on these subjects. That can't just be accidental; that has to be attributable to the notion that the accounting firms that the non-lawyers running the accounting firms don't want them to do that. I think we should also observe that although it may sound like turf protection to say that MDPs might be okay if lawyer controlled but not if non-lawyer controlled, we should observe the fact that the AICPA rules require CPA control of accounting firms that perform the certification (unintelligible) function. They're not even beginning to think about changing that. Of course, they're going to be in control; they say their rules require it. Right now, so do our rules require that we be in control, and it's just being assumed that if there is to be a change, it will be a change by the lawyers because, of course, the accountants are going to keep CPAs in control of the accounting firms. They can bring in partners but the partners will never be able to be the controlling partners if they're not the CPAs.

MR. SHESTACK: You know, at the beginning of the centennial, it is often a time to look back, as well as look ahead, and if you look at the legal profession that emerged in the century, there are three professions: There was the clerical profession, which was designed to deal with the health of the soul, the medical profession dealing with the health of the body, and the legal profession dealing with the health of the body politic and the justice system. How would it look years from now where there is no legal profession; there is a legal accounting profession? So you are all members of LAP, legal accounting profession, LAPs, lapping up the profits, perhaps.

And what about our obligation to the courts? We're officers of the courts, as Martha mentioned. That obligation to the courts and to the justice system even rises above an obligation to a client. We have obligations as a result of that. Our legal system has defended the rule of law, the system of liberty, the checks and balances. There is so much that's part of the legal profession that we can be proud of (unintelligible) to a lawyer, to be lawyers. So are we going to merge all that for the dubious privilege of maybe making more money for the Big Five obviously, that's what they think is going to happen or they wouldn't be so avid to have this take place going to give up some independence not known as the defenders of the rule of law? I don't see the benefits of it as against the losses that come from it.

When you're talking about what the public wants, sure we want to know what the public wants; the public wants probably people who will draft wills for no cost and handle divorces without fees and a lot of and we would have a lot of unauthorized practice of the law if we just took what the public wants. It's not their best protection, though. In that sense, we have developed a profession that we think protects the clients and also helps protect our system of justice, which is behind everything that we do. So that's really looking at it even on a personal level as a lawyer who has practiced law all of his life, who loves the profession, I don't want to give that up. I don't want to give up that independence. I don't see the benefits of it to either clients or service or the courts or the people or the public interest or to me as a lawyer. 

MS. SCHENK: I wanted to pick up on that. I agree with what both Jerry and Martha have said but I question whether there is a uniform view within the Bar. I encourage you to look at the statement of Steff Tucker, who at the time was the chairman of the ABA tax section, in which he basically trashes a number of the core values and suggests that the code ought to be amended to change things. It says such things as you can't enforce conflicts rules. That may be right; maybe that is the uniform view. But my point is that I'm not sure we even have unanimity among the Bar as to what these core values are and what our code should look like.

To pick up on the comment of the gentleman in the back from the labor law section about public interest, it's also not clear to me that we're to the extent to which our code actually carries out what the public sees in its own interest. There are many people that see the conflicts many clients see the conflicts rules as a way to put two lawyers on every transaction or that there are many of our provisions that are viewed as turf (unintelligible) in that respect. Another way to look at this, I think, that we have to think about is that many of our rules already have waiver or percent provisions in them, and there's a real tension within the Bar the extent to which we ought to let a client consent to anything. Why should a sophisticated client ever be in the position of not being able to consent to whatever it is the lawyer he or she wants the lawyer to do. And there are others within the profession who believe that there are certain values that a client couldn't possibly consent to.

One way of thinking about MDP is that some clients have decided that they wish to consent to having certain things done without the protections that the code provides. I mean, you can think of going to an accounting firm as understanding, if you're a sophisticated client, that there will be no conflicts checks and that there will not be confidences and secrets in the way that the legal profession views them, that the even if the firm says to you, "We will keep your confidences," that that might not and probably would not be enforced by a court, and that the client has consented to that. If those client have consented to that and believe that that's in their best interest, whether financial or otherwise, I think the Bar has a hard road to hoe to convince those clients that, in fact, we know better. That is not in your best interest, and you should not be able to consent to that kind of practice.

MR. CONE: Yes, sir.

AUDIENCE MEMBER: I am Arthur Field; I'm a lawyer here in New York. It seems to me we have looked at one side of the coin; we've looked at MDP. I feel that perhaps we ought to look at the other side of the coin, the other side of the coin which is a legal profession as it stands officially and (unintelligible) so that we're prepared to defend its turf. In the time that the ABA appointed a commission to look at unauthorized practice of law, which has been a backwater for the past years, we haven't looked at these questions, and as you talk on the panel, there's enormous disagreement about what can or can't be done. The real question is what should be done. And it seems to me, the ABA having led the way on MDP, ought to at the same time lead the way on unlawful practice. As I read it, many of the leaders of ABA have adopted as an article of faith that this is unenforceable or unworthy. If you come to that answer, of course you're going to get to MDP. But why do you come to that answer? 

MR. CONE: Thank you. Thank you, Arthur. I might mention Arthur is head of the MDP Committee of the New York County Lawyers' Association.

MR. SHESTACK: Let me just answer the question, and Martha can comment on it maybe even more knowledgeably. At one time, the ABA had a commission look at non-authorized practice of law, and they came out with a long report which really enlarged the ability of non-lawyers to practice in various areas, legal assistants, paralegals, others, and they kind of relaxed some of the strict rules of unauthorized practice of the law. The reaction from bar associations all over the country was so negative to the preliminary draft of that report that the ABA didn't issue it; it circulated among some people, but it received a tremendous negative reaction. The Bar association didn't want a relaxation of the rules against unauthorized practice of law, even though they may not be that diligent in enforcing it for a lot of reasons, but they wanted the rules the way they are. Martha, you can bring up debate on that.

MS. BARNETT: I don't have anything to add.

MR. CONE: Anyone else? If you don't mind, I was going to say something, and maybe this is a bit frivolous but it's not intended to be. I can tell you that there were many times, as a practicing lawyer, when I was very, very happy that there were rules on conflicts of interest, and the suggestion, to me and this is just one person talking that one could say to a client, "This is what's going to happen. Do you understand that?" and you can rely on the client's reaction to that is not, I don't think, a very realistic suggestion in many situations. Clients change their minds as their perceptions of their interests change. And so, I suppose I'm not completely out of order here but I have personally found it not easy because the rules are not easy to deal with but I have found it most welcome that there were rules and that one was not at the mercy of the rule of a client which could change from moment to moment. And if you want to reply to that 

MS. SCHENK: I agree with you. I was suggesting that Steff's comment was really didn't represent the attorney, although it appears to represent the tax section.

MR. CONE: Okay, good.

MR. WOLFMAN: It represents the view of a majority of the counsel of the tax section. The tax section, as a section, has never been consulted.

MR. CONE: I am terribly sorry, sir.

AUDIENCE MEMBER: If I may, and I'm probably at an advantage because I'm not an attorney. Let me just outline some of the issues.

MR. CONE: Are you a client?

AUDIENCE MEMBER: No, I'm better.

MR. WOLFMAN: Whose client?

AUDIENCE MEMBER: Let me raise these issues . . .

MR. CONE: What's your name, sir?

AUDIENCE MEMBER: My name is Irwin Eisenstein. And, you know, you've many, many different issues. Obviously, you have 50 different states that must pass and frequently do and modify the rules associated with the ABA standards. There was recently a Rule 1.6. That's also being considered for modification that talks about attorney-client privilege and when an attorney may disclose when there's a continuing fraud. And there have been cases in several circuits where attorneys have been brought up on charges for prospective fraud against the government.

Now, there are some issues that you don't raise, and the thing I find is there are so many areas where the public mistrusts and distrusts the secretive nature of the legal process. How many lawyers have filed complaints against judges who they know are acting inappropriately? How many have filed against other attorneys who they know have violated rules of professional conduct? In New York State, there are more than, complaints filed against attorneys. Two hundred of them may result in some type of disciplinary actions. If you spoke to the people who filed those complaints, they would say it's a set-up. California passed something called Proposition which took the evaluation of complaints against attorneys outside of the legal profession because they were so, you know, really disgruntled with what goes on internally. I'd like to say there are certain times I'd love to be charged with the unauthorized practice of law, and let me tell you why; because I'm so much more competent than most attorneys practicing in certain areas that's it's disgraceful that they're allowed to practice. Because you can move from one area in the law to another where you have no confidence and still represent the client and do it, you know, poorly. And, in fact, if you wanted to look at the standards that currently exist, you have to look internally rather than at multidisciplinary procedures.

I am a computer programmer by profession, although I've had a background in accounting and self-study in law. And what I find is, you know, again, I raise the issue of New York, the average attorneys use when you talk about malpractice. I don't want the average attorney because most of them really don't know many areas of economics and statistics that I know and, you know, if I have to rely on an attorney, I'm putting myself at a significant disadvantage. And, you know, right now, for example, I have an action, a quia timet action, which is multi-state, and it is frightening to see the responses from those states' attorney generals who don't know whether their state can effectively be brought into a federal forum (unintelligible) federal government. When you talk about all of the issues you raised and again, Rule 1.6, I think, goes along with the multidisciplinary practice because it does (unintelligible). And accountants, when they find fraud, have an obligation to the public to report it. Attorneys sort of hide their, you know and look the other way when effectively, if it's a prospective fraud, they should be reporting it. They don't.

MR. CONE: Thank you. Are there any other comments, questions? Yes?

AUDIENCE MEMBER: My name is (unintelligible); I am a diplomat from Japan. My question is also raised to the attorney-client privilege. Last year, the (unintelligible) to the I.R.S instructing that the attorney privilege attorney-client privilege expanded to the non-lawyers. I am wondering that that law changes have any impact on the discussion of the MDP or what kind of response or position is taken by the A.D.A.

MR. SAX: I can speak a little bit to that. The reference was to the accountant client privilege that the AICPA or Big Five procured from the Congress in in the form of I think it is Section of the Internal Revenue Code, which provides a fairly limited privilege. Most, I think, observers view that exercise as an attempt by the accounting world to procure enough of a privilege that they can market themselves to clients as having the same sort of protections and privileges that lawyers had.

Whatever their intention, history shows that they didn't do a very good job of getting what they got because the privilege they procured doesn't cover work product. It doesn't cover criminal assertions, it doesn't protect in corporate or tax shelter activity, and it doesn't protect against invasion by state taxing authorities in consequence of which, and for other reasons, I think the Big Five have figured out that it is too perilous to use much. It's simply dangerous, and they haven't made much of it, and in consequence of that, it's not been much of a factor in the MDP deliberations, where I think the high relevance lies, is that it tells us something about their ability to get done in Washington what they want. They understand how Washington works; they understand campaign contributions; they understand power; they understand how to get together in small groups and how to act and to achieve what they want. I approach as an outgrowth of that exercise, I approach the notion of the federally-regulated multidisciplinary practice notion with a high degree of trepidation. Because I think, in the final analysis, they are likely to prove better at getting what they want from the Congress than we are at getting what we want.

MR. CONE: On the other hand, they don't draft legislation very well.

MR. SAX: Right, and this exercise is closed to conclusive proof.

MR. CONE: I would like to turn to one last subject, if I may, and that is and we've touched on it a bit the subject of ancillary business. Now, Alison Crawley, I believe, said that the ancillary business approach is one that the Law Society has under advisement to counsel. Maybe you might tell us just a bit about that, and then if there are people what want to talk about the ancillary business approach in this country, we can use that as an a sort of conclusion.

MS. CRAWLEY: As I understand it and I think we followed the ABA on ancillary businesses the idea is if lawyers have got to remain independent to justify law services through their legal firm, they can have business interests in other businesses providing ancillary services that could be used in the law firm or could stand alone. So you may have engineers, other types of consultants, and lawyers in a firm can own or have on ownership interest in a separate business providing these services ancillary. And we went down that route in England sometime ago and then sort of expanded it a little bit more to try and show that we aren't being overly restrictive in relation to lawyer-dominated legal services.

I guess the spin-off from that is that if the accountants' rules allowed it, what about firms of solicitors actually having ownership in or being a partner in an accounting firm and linking an independent law firm with the accounting firm in that way. That's not quite happened yet in Europe or in England where there are the links with accountancy firms. But there could be, for example, that lawyers in the English partner firms of Pricewaterhouse or whatever could become partners in the accounting network and provide a link in that way. It seems to me at the moment our rules would prevent that.

MR. CONE: Any comments on that from any point of view? Yes, sir.

AUDIENCE MEMBER: I would like to ask David Gordon-Krief why that isn't working in France. I mean, as I hear you say, either the ancillary or as I understand it, in France, the law firms are self-standing supposedly but they carry on business under the rubric of the accounting firm. Why isn't the Bar able to regulate the self-standing law firm effectively? If that's the one way we might go.

MR. GORDON-KRIEF: I'm not sure I know the answer to your question. Is it a question of means or will? I don't know. It's true that, if you take the example of Coopers, for example, it is a real independent law firm. I mean, in terms of what does control mean? Coopers, only lawyers working for Coopers in Paris, probably about lawyers, but they have the name Coopers but suddenly, they learn that they merged with another firm; now it's only lawyers. Of course, they are controlled by others. So we are controlling the way the conseils (unintelligible), the Bar counsel. I mean, we are trying to control the way certain lawyers I mean, every individual lawyer does his job, and we are not doing bad job. I mean, they are not violating each individually any substantial rules, any core values. It's just the way the network works, and we have no grab on the rest of the network.

So this is why the idea one of the suggestions from the ABA and the commission report which was done like shifting the burden on the controlling party like having you go to an MDP and you say you want to have lawyers working for you so you have to respect the controlling entity. You, PricewaterhouseCoopers, have to respect and sign in with the court that you will respect all the core values of the law firms. Of course, they want to do it, the MDPs, otherwise, we wouldn't be here. I mean, it's an important expansion idea for them. So putting the burden on them would maybe be the solution, just controlling every I heard that in Canada, too, in Edmonton, trying the control only the individual lawyer.

We you know that in France, advertisement is not I mean, is is authorized for lawyers but under certain conditions. Couple of months ago, we had this huge worldwide campaign from PricewaterhouseCoopers on ethics of law, whatever. It's like there's poor kids in South America, and they could provide a great service all around the world. And we considered the Bar counsel of ethics was not nice for lawyers to do such advertisement. So we went to see the partners and say, "You couldn't do that," and they say, "We didn't do it. It's not us." So how do you want us to have any disciplinary action against a lawyer belonging to that law firm, who didn't do a thing? He did not decide. On the opposite (unintelligible), asking PricewaterhouseCoopers to sign (unintelligible) worldwide, this might be the chance to do it.

MR. CONE: I would point out that PricewaterhouseCoopers is the only one of the Big Five that's under the jurisdiction of the Paris bar. The other four of the Big Five are located outside of Paris, and they are not under the jurisdiction of the Paris bar. I asked you, David, at lunch whether the recommendation of the Nallet Report and there is a summary of the Nallet Report in your materials that the agreements and constitutive documents setting up ancillary businesses, the recommendations of those documents had to be filed with the local bar and made available to clients or else they would be null and void, whether that might be a way to go. And so, having asked you the question once, and being very careful asking only a question I know the answer to, I will ask you that question again but in public. Why is that not the way to go?

MR. GORDON-KRIEF: I don't think it's enough. In answer to your question, I didn't mention at lunch because we were discussing other things, is that this rule already exists in France. Every single lawyer, every single law firm is supposed to disclose all the agreements they have, every single thing, your rental agreements, your lease, your employment; everything should be disclosed. And if it's not disclosed, it's considered to be void. So by having the government or the national assembly reaffirming this principle, and what about if we don't disclose, and we don't know about? MR. CONE: Well, that was the part of your answer that interested me, that it would become a non-rule

MR. GORDON-KRIEF: Sure.

MR. CONE: It would create a non-rule, okay. Anything else on ancillary business? Yes? 

MR. LEVINSON: I think if a law firm owns an ancillary business, which is an important source of revenue and profits to the law firm, I believe the non-lawyer principles of the ancillary business are de facto partners in the law firm, insofar as they have certainly some influence on law firm policy; they have a special value to the law firm. I don't say this is bad but I think it's something to bear in mind, and the laws of the ancillary business role in the overall revenue of the law firm (un