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LawBiz® TIPS – Week of January 17, 2017

MDPs: Serving Clients Best

The concept of multidisciplinary practice groups (MDPs) has been hotly debated, with the ABA weighing in with a final no in 2000. However, it is time to rethink MDPs.

MDPs are groups consisting of lawyers and nonlawyers jointly providing legal services. Our rules of professional conduct forbid lawyers to "share fees" with nonlawyers.

However, working with accountants, financial advisers, consultants, and other nonlawyer professionals is exactly what lawyers already do for many clients—just not via a fee-sharing arrangement. So what is so sacrosanct about dividing fees?

One of the main reasons for prohibiting the MDP concept is that the client's confidences could be violated. However, the privilege has been eroded in a number of important areas anyway:

  • Internal Revenue Code Section 1099 and its regulations require a lawyer to issue a Form 1099 to her clients when she collects money on their behalf. Sending the form to the IRS discloses the identity of the client.
  • Lawyers who suspect that a client will commit a "serious" crime in the future are obligated to warn the authorities in advance of the commission of the crime. Client confidentiality in this case no longer exists.
  • A lawyer who represents a client against another lawyer can no longer make a settlement on the basis that the alleged negligence of the first lawyer will not be disclosed. Thus, the ability to keep the client's confidence about the facts that allegedly occurred in an earlier matter has now evaporated.
  • In some cases, lawyers who advise clients about their options for asset protection are subject to prosecution, and confidences learned from clients in the process of such advice are no longer fully protected.

Ultimately, what matters in any discussion of the appropriateness of MDP is how the clients' needs are best served. The rules of professional conduct must allow lawyers to do this in the most effective way possible.

Lawyers should provide in their engagement letters that the client authorizes the lawyer to debit trust account funds after a reasonable time from the date of billing—for example, 15, 30, or 45 days, whichever is most reasonable under the circumstances. This provides a date certain for payment to the lawyer. Note that the client, in most jurisdictions, will retain the right to dispute the charges. Once disputed, funds should be transferred back to the client's trust account until the dispute is resolved.

No check should be drawn from the client's trust account until after the draft or check is honored and the deposit is confirmed to be valid.



MDPs: Serving Clients Best

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