[sbinews] Multi-disciplinary Practice

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Sat, 13 Dec 2003 08:00:55 +0500

The one-stop professional stop

[ THURSDAY, DECEMBER 11, 2003 11:09:59 PM ] 
It is true that Microsoft Word provides Trinidad variation for the English 
language tool, but alas no Indian variation. Try typing in “crore” and you will 
get options like chore, core and crone, if your automatic spell check is on. 
But things are constantly changing so who knows what tomorrow will bring. 

Consider the professional services space, clients are demanding an “all-in-one” 
solution to various issues, and what best than to provide a one stop 
professional outfit.   

It was reported in this paper that the central council of the Institute of 
Chartered Accountants of India (ICAI) has decided to allow partnerships between 
CAs, lawyers, company secretaries and cost accountants. Amongst other 
conditions, such a multi-disciplinary practice (MDP) is required to be set up 
as a new separate unlimited liability partnership firm and be regulated by the 
respective professional bodies. The ball now seems to be in the court of the 
other professional institutions and, of course, the Department of Company 
Affairs (DCA). 

It is true that a consensus will be needed on several fronts. The ICAI’s 
central council has not suggested the emerging concept of Limited Liability 
Partnerships; this may be one issue for discussion.  There are others as well. 
Till date the American Bar Association (ABA) is grappling with the idea of 
permitting lawyers to partner with others. The main fear is that lawyers are 
required to uphold attorney-client privilege and may thus find themselves in 
direct conflicts with non-lawyers whose duty it may be to disclose the very 
same information. 

Conflict of interest is another issue, which will need further discussion. When 
an entity increases the number of services it offers, the potential conflicts 
associated also increase manifold. Further if many interrelated but distinct 
professional services are offered by one entity with one bottom line and one 
bonus pool, professionals of a MDP may not question each other’s actions. And 
post-Enron, no one would like to repeat history. 
Nonetheless, world-wide trends indicate the growing popularity of MDPs. The Big 
Four Accounting firms have already made significant inroads into the legal 
profession in a number of countries that include New South Wales in Australia , 
Canada , France , Spain and the Independent States of the former Soviet Union . 
 MDPs also exist in Germany and France . 

Since the late 1940s Germany has permitted lawyers and accountants to form 
MDPs. Today, lawyers are permitted to form MDPs with an enumerated list of 
professionals, including auditors, chartered accountants, and tax advisors. 
France permits accounting firms to utilise captive law firms. UK does not per 
se permit fee sharing or partnerships between lawyers and non-layers. However, 
since the early 1980s professionals are allowed to develop close relationships 
and form alliances, which offer package prices for provision of legal and 
non-legal services. 

ABA ’s Commission has developed various multi-disciplinary practice modules. 
One of which is the “Ancillary Business Model”. It requires the law firm to 
operate an ancillary business that provides non-legal services associated with 
the MDP. Lawyer and non-lawyer partners of this ancillary business share fees 
and make joint decisions, with the lawyers operating as consultants and not 
providing per se legal services. On similar lines, back home the ICAI has 
recommended that the MDP which its members enters into with other professionals 
should not perform those activities that are the sole domain of CAs, namely 
audit and attestation of financial statements. 

Zenobia Aunty is lately singing the praises of the ICAI for its progressive 
decision. But she wonders whether the other professional institutions and the 
DCA can do some further thinking. Taking the suggestion of the ICAI and the 
ancillary business model a bit further, would it be possible for members of a 
MDP to create a holding company with separate subsidiary corporations for 
various disciplines of practice? Each of the subsidiaries would then purchase 
services from one another. 

This model would resolve a few of the concerns associated with MDP, such as 
regulation by the respective professional institution. Further, fees and client 
funds could also be segregated easily. Corporatisation of professional firms 
would, however, be a gigantic step. But then, there is no harm in thinking 
aloud and in deliberating; is there? 

(The author is a CA. Views are personal) 

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