Online Journal of Ethics (OJE) Volume 3, No. 1 (Summer 2000)

Transcription

1 Online Journal of Ethics (OJE) Volume 3, No. 1 (Summer 2000) Ethical Underpinnings for Multidisciplinary Practice Regulations in the United States and Abroad; Are Accounting Firms and Law Firms Really Different? By Scott A. Jensen "The man of character, sensitive to the meaning of what he is doing, will know how to discover the ethical paths in the maze of possible behavior." i -Earl Warren, Former Chief Justice, United States Supreme Court- I. INTRODUCTION If you were in need of an appendectomy would you turn to your dentist first? If you were in need of a root canal would you turn to your physician first? The answer to each question is likely no. However, both doctors and dentists have studied and practice in the field of medicine and provide services that have a similar focus, you the patient. Even with these similarities however, it is unlikely that you would turn to only one of the providers to render both services. But what if they both worked in the same office for the same medical practice, could you get both things done in one place? Perhaps the answer is yes. Now consider this, what if your accountant could provide you with legal services? What if your attorney could provide you with accounting services? In the United States this practice is generally prohibited. ii But, in foreign countries the merger of accounting practices and law practices is well under way. iii Now the issue of whether to allow this recent phenomenon termed multi-disciplinary practices (MDPs) to occur has come to the forefront in the United States. To understand the ethical issues involved in the potential business entities and the implications for the behavior of those that will be affected, it is important to understand exactly what a multi-disciplinary practice (MDP) is. The Canadian Bar Association defined MDPs as business arrangements that bring persons with differing professional qualifications to practice together in a partnership or other arrangement. iv The general idea behind MDPs is that by combining persons with different areas of professional qualification, professional entities may provide their clients with wider ranges of services, becoming one-stop shops. MDPs generally exist in three forms: 1) single service organizations; 2) quasi-integrated associations; and 3) loose alliances or associations. v In effect, MDPs would bring lawyers and non-lawyers including accountants together in settings that would allow the associations to offer wider ranges of services to clients. Much has been written concerning MDPs since June 8, 1999, when a special commission of the American Bar Association (ABA) made a recommendation that the rules prohibiting MDPs be changed to allow the merging of practices between lawyers and non-lawyers. vi vii because while the ABA may recommend model rules of professional conduct, States must formally adopt those rules in governance of the attorneys that practice within their boundaries. viii However, in August 1999, the ABA's House of Delegates voted to formally postpone indefinitely the decision of whether to support a change to allow such practices. ix Many arguments have been made for and against such practices, but the central focus of the issue seems to be on ethics. The purpose of this paper is to explore the ethical implications underlying the debate over the merging of accounting practices and law practices. This paper will focus on the differences between the two service bodies and provide a comparison of the potential practice in the United States with that of foreign countries. In the first section of the paper the reader will be provided with ethics background and definition along with a cursory review of the current state of MDPs. Next, the paper will provide theoretical framework upon which the ethical issues underlying this debate may be evaluated. Finally, the reader will be given a glimpse of various parties concerns, feelings and comments on MDPs with a final evaluation and conclusion as to the likely outcomes of this issue in the United States.

2 II. BACKGROUND A. Ethics Defined Although the word "ethic" and concept behind it is difficult to neatly explain, one definition describes ethics as "the system or code of morals of a particular person, religion, group, [or] profession..." x This definition can be broken down into two distinct components. The first component is that ethics are comprised of a system or code of morals. The second is that the code or system belongs to a specified body. Lawyers and accountants have historically been viewed as very distinct and separate professional service bodies. Lawyers and accountants each have their own code of regulated moral behavior that has been created and enforced by professional service organization bodies. By definition then, this leads to the derivation of two bodies of ethics, legal ethics and accounting or business ethics. When one attempts to further define specific bodies of ethics the daunting task becomes no easier. Definitions of business ethics abound, but one book points out that the purpose of business ethics is not so much to teach the differences between right and wrong, but rather to provide business people with the tools and framework for dealing with moral complexity. xi Business ethics help business persons identify and think through the moral implications of business decisions. xii Similarly, legal ethics provide a basis or framework for those in the legal profession to evaluate decisions and actions. According to BLACK'S LAW DICTIONARY, legal ethics are "[t]he customs of the legal profession, involving the moral duties that its members owe one another, their clients, and the courts." xiii It is important to point out here that the definition of legal ethics emphasizes the parties to whom the moral duty or duties are owed, namely other attorneys, clients and the courts. The definition continues by stating that legal ethics include the regulations that govern and embody those moral duties, and refers the reader to the Model Rules of Professional Conduct. xiv These codified rules regulate the professional moral behavior of respective practitioners. If lawyers and accountants were allowed to practice in a form that would create one group then the result would necessitate merger, unification or redefinition of the systems or codes of morals that govern each respective body individually. The beginning of this redefinition is precisely what has driven the recent debate over whether such enterprises should be allowed. B. Description of the Status Quo In other countries accountants and attorneys practice under the same corporate or association umbrellas. In fact in 1998, PricewaterhouseCoopers (PwC) employed 1,663 non-tax attorneys in 39 countries and they were not alone. xv Similar to PwC, competing Big-Five firm Arthur Anderson employed 1,500 non-tax attorneys in 27 countries. xvi Rounding out the big-five, KPMG employed 998 non-tax attorneys, Ernst & Young employed 851 attorneys in 32 countries and Deloitte and Touche had 586 attorneys in 14 countries. xvii To provide perspective on these numbers, when compared to the largest law firms, PwC and Arthur Anderson ranked number three and four respectively in total number of attorneys employed worldwide. xviii The numbers are impressive, but alone they do not justify quick acceptance of MDPs. Many still argue against the acceptance of MDPs in the United States. xix The opponent's contentions center on three main issues: 1) the avoidance of conflicts of interest; 2) the maintenance of independence; and 3) the strain on client confidentiality where accountants are required to make broad disclosure and attorney's are required to keep strict confidentiality. xx On the other hand, proponents offer several arguments in favor of MDPs but one argument always seems to receive the most focus. That argument is that client service should be the lawyer's first priority and as such, one-stop shopping is a more efficient means of providing professional services to clients. xxi Proponents generally hold a progressive attitude emphasizing the need for the legal market to evolve to increase efficiency and to keep pace with the quickly changing global market place. xxii As a companion to this argument, proponents often point to the acceptance or tolerance of MDPs in other countries for support of their position. xxiii The proponent's reliance on the existence of MDPs in other countries however, misses the real issue at stake. The proponents seem to gloss over the fact that even where MDPs exist, they have not come easily

3 and are not without strong opposition. xxiv Rather than the United States keeping up with the Jones, the real focus of consideration should be placed on core legal values. When looked at from a broader perspective, the arguments by proponents and opponents center on core values. The debate concerns whether the core values of the legal profession can merge without compromise with the core values of the accounting firms. The answer is not clear. Furthermore, the acceptance or tolerance of MDPs in foreign countries does not necessarily prove conclusive. III. EVALUATION OF THE ISSUE: INTERNATIONAL ORGANIZATIONAL BEHAVIOR; ETHICAL BEHAVIOR FRAMEWORK Where the underlying issue causing the heated debate and newly emphasized consideration of MDPs focuses on relative ethics, an understanding of ethical theory may help to provide a tool for analyzing the potential merger of the two bodies of ethics. The following sections provide the theoretical basis for understanding the origin and basis for both legal and general business ethics. A. Moral Compass The focus of any ethical decision is based on moral underpinnings. The decision of right or wrong can be affected by many concerns. One aspect of ethical theory focuses on the groups setting the basis for the standard of right or wrong and the parties to which the standards apply. The three main theories are individual ethical relativism, cultural relativism and ethical universalism. Under the theory of ethical relativism, there is no universal right or wrong. xxv Instead, the definition of what is right or wrong is determined by each individual based upon his or her particular situation and set of circumstances. xxvi Like ethical relativism, cultural ethical relativism would suggest that the correctness of a decision or the determination of right or wrong in each particular situation is dependent upon one's culture. xxvii In contrast, ethical universalism suggests that there exists a set of ethical rules, deeply engrained within societies that run across all cultures. xxviii What this means to the MDP ethical debate is that it may not be enough to consider the differences between business ethics and legal ethics. The acceptance of MDPs may also hinge on cultural ethical relativism versus ethical universalism. If one were to follow the theory of cultural ethical relativism, the blending of legal and business ethics while completely acceptable in one country may be completely inappropriate in another country. By way of comparison, if one were to follow the theory of ethical universalism, then perhaps the merging of these two bodies of ethics should be based on the same universal principles. The theory of ethical relativism may also lead one to consider the fundamental values of each body of ethics that may also provide insight into the appropriateness of the merging of these two areas. B. Competing Ethical Responsibility Theory In one of the most interesting contrasts of social theory, it appears that the bodies of ethics for accountants and lawyers each fits well within differing theories of ethical responsibility. It appears that law-firms fall well within general social responsibility theory or Freeman's stakeholder theory while accounting firms align more closely with Milton Friedman's efficiency theory. By viewing business ethics and legal ethics under different ethical theory, one may gain a greater appreciation for the import of ethical relativism as it relates to the consideration of MDPs. 1. Efficiency Theory by Friedman for Accounting firms Milton Friedman was a Nobel prize-winning economist who theorized that corporations do not have any social responsibility except to obey the law and maximize the profits of shareholders. xxix His theory centered on the idea that because corporations are not persons they cannot have responsibility; only people can have responsibility. xxx Corporations hire business executives to act in their behalf and as such, Friedman would argue the social responsibility of those executives is to uphold their respective ends of the employment contracts by using the corporate assets to operate within the rules of the marketplace in a way that maximizes the profit for the owners of those assets and the corporation. xxxi

4 This seems to suggest that the decision making focus of business executives should only be on maximizing return to shareholders. This is vastly different from any focus that may emphasize consideration of other stakeholders or society in general. Friedman's theory of ethical responsibility is narrow, focusing only on the responsibility to the owners of the corporation. Friedman's efficiency theory appears to suggest that the only concern that the employee of a business corporation should have is how they can maximize profits while operating within the rules of the law. There does not appear to be any larger concerns. The emphasis of the corporation is first and foremost to make money. Although this theory is not necessarily a perfect fit for accounting firms, it does seem to provide a potential explanation for the driving forces behind the pace at which accounting firms and particularly the Big-Five are pushing for MDPs. Accounting firms appear to be focused first on making money. This is accomplished through providing services to customers. The actions of individual employees in accounting firms have been governed by professional service organization rules because of the nature of the services they provide and the imperative need for fairness and basic standards of reporting. Unlike legal ethical standards however, the regulations for accountants seem to have developed as a subsequent necessity to standardizing services provided. Where clients have larger service demands, accountants and the Big-Five especially seem to perceive the economic benefit of entering new areas of service. xxxii The focus of this entry and combination of professional services from the accounting firm perspective seems driven by the ability to earn greater profits and thus according to Friedman's theory, maximize the return to the shareholders. 2. Social Responsibility and Stakeholder Theory by Freeman for Law Firms According to William M. Evan and R. Edward Freeman managers' duties extend beyond that owed to the shareholders. xxxiii Under stakeholder theory, managers have a fiduciary duty to each group of stakeholders of the firm. xxxiv Like the efficiency theory, managers still owe a duty to the shareholders because they are included in the group of stakeholders. Other stakeholders of a firm may include employees, creditors, suppliers, customers and the community. xxxv Under Evan and Freeman's stakeholder theory a corporation has a larger social responsibility, owing a duty to all of its stakeholders with no greater loyalty due to any one group of stakeholders. xxxvi Similarly, law firms appear to owe a fiduciary duty to a group much larger than its shareholders. For this reason legal ethics seem to more closely fit stakeholder theory. Unlike accounting firms, Lawyers seem to have a greater social responsibility where they owe a duty to a group much larger than that of the shareholders of the firm. In the words of Jack Dunbar, speaker in the House of Delegates of the American Bar Association: Lawyers are special people. We're not like accountants. We're not like MBAs and deal-doers and investment bankers. We're fiduciaries. We're in the Constitution. We're officers of the court. And we hold in trust the very fabric of this society. It has been lawyers who have kept the playing fields level, who have kept people honest in the marketplace, and who have stood between the individual and the abuse of authority for 200 years and contributed to the success of this great American experiment... xxxvii This greater responsibility is evidenced by the focus of parties to which a moral duty is owed according to the definition of legal ethics. xxxviii Because of the function that the law plays in society and the role that lawyers play in the functioning of our judicial system, an attorney must necessarily have a different if not greater moral framework to navigate in decision making than that of an accountant or ordinary businessperson. Comparison of these two ethical theories and the viability of fit for each respective body of ethics under consideration here suggests that there is a distinct difference that must be accounted for with the prospective merger of accounting firms with law firms. Because lawyers play a very distinct function in our society, they are necessarily located in a very different respective situation that accountants. An accountant does not owe the same larger duty to the courts or society that an attorney does. These differences tend to lend support to the applicability of ethical relativism in this debate. The determination of what is right or wrong for the accountant may be vastly different then that for an attorney. As a result, the mergence of the differing bodies of ethical regulation may not be functionally possible without also compromising the differences in roles that each of these two professionals plays in our society.

5 C. Hofstedes Framework for Foreign Countries Beyond the scope of ethical relativism, the theory of cultural ethical relativism may also provide a basis for evaluating the arguments. One source for evaluating cultural difference has been provided by Geert Hofstede. xxxix By looking at his dimensions of cultural values and considering the current state of affairs of various countries, one may attain insight into the basis of acceptance of MDPs in differing countries. Geert Hofstede was a Dutch researcher that undertook an intense study of cultural attitudes based on 116,000 questionnaires in more than 50 countries. xl In his study, Hofstede identified four dimensions of values that differentiated countries. xli The four dimensions are 1) individualism/collectivism; 2) power distance; 3) uncertainty avoidance; and 4) masculinity/femininity. xlii By understanding these dimensions one may obtain framework for understanding the acceptance or non-acceptance of MDPs by other countries. Individualism/collectivism is determined by looking at a countries emphasis on the individual compared to the whole. In more individualistic countries, persons tend to focus more on themselves and their families and less on the greater society. xliii Organizations in these countries tend to focus on satisfying individual preferences. xliv Comparatively, collectivist countries tend to focus on the greater good of society and individuals are valued based on their respective ability to contribute to the collective good. xlv Power distance categorically measures a countries acceptance of social class distinction. xlvi In small power distance countries differences in social rank or role are often minimized and decision making often occurs with disregard to hierarchy. xlvii Larger power distance countries tend to emphasize differences in social roles, treating persons at higher- level positions with greater respect. xlviii Uncertainty avoidance indicates the extent to which a country feels threatened by unknown or uncertain situations. xlix Countries with stronger uncertainty avoidance tend to prefer more rules, laws and regulations and societally tend to be more risk adverse. l In contrast, weak uncertainty avoidance countries tend to be more flexible accepting a much wider range of behavior. li Finally, in a more masculine country, society places greater emphasis on values such as financial success, competition, assertiveness and money. lii Comparatively, more feminine countries tend to emphasize personal relationships, quality of life and service with gender roles being less significant. liii With an understanding of Hofstede's four cultural dimensions one can more thoughtfully consider cultural ethical relativism as it relates to the current state of affairs of MDPs at home and abroad. The following is a sample of the state of affairs of MDPs in foreign countries. This review is divided into three classes: 1) countries with some form of MDP; 2) countries that do not allow MDPs; and 3) countries where the state of affairs is more uncertain. liv 1. Countries that Allow MDPs Countries that allow MDPs in some form include, Germany, Canada, France, Switzerland and Australia. Considered below are the affairs of Germany and Canada. GERMANY German law permits MDPs. This allowance flows from the freedom of profession protected in Article 12 of the German Constitution. lv Even with the acceptance of MDPs the German Bar is still especially concerned with competition and client choice. lvi Even though MDPs are allowed, non-legal members of MDPs must comply with the Professional Rules of Conduct for Lawyers. lvii The firms that participate are generally smaller firms and associations that do not seem to have any struggles with independence, conflict of interest or confidentiality. lviii These firms lack the source of outside control that is more typical of a Big-Five MDP. CANADA Canada also currently allows MDPs. lix However, the Law Society of Upper Canada allows MDPs in forms only for the purpose of providing legal services. lx This means that non-lawyers may join with lawyers only to

6 add to the delivery of legal services. lxi This is similar to the MDPs allowed in the District of Columbia of the United States. The core values at issue in Canada are similar to those in the United States. V. Randell J. Earle, Chair of the National Multi-Disciplinary Partnerships Committee for the Federation of Law Societies of Canada identifies independence, confidentiality and avoidance of conflicts of interest as the core values of the Canadian legal profession. lxii HOFSTEDE ANALYSIS: Canada and Germany are more individualistic countries. lxiii Although certainly not extreme, both countries also have low power distance. lxiv One difference between the two countries is that Canada has a weaker uncertainty avoidance and Germany a stronger one. lxv Canada and Germany also tend to be closer to a masculine oriented society than a feminine oriented one. lxvi From this limited review a very general profile tends to emerge. It may be argued that countries that have accepted MDPs and changed laws to allow MDPs are more individualistic with power distance that tends to be low. These countries also tend to be more masculine oriented than feminine oriented. The state of MDPs in these countries tends to support the characteristic profile. It seems very logical that these countries strongest similar characteristics were individualism and low power distance. As discussed earlier, proponents for MDPs often argue for the ability to provide both one-stop shopping and greater efficiency to clients. Emphasis on efficiency is one major characteristic of individualist countries. lxvii The focus tends to be oriented more towards the firms ability to serve the customer and less oriented toward the role of these professionals in the community. The functional importance of an attorney to the greater society in the administration of justice is likely more valued in countries that tend to be more collectivist than individualistic. Similarly, countries with lower power distance tend to place less emphasis on social roles. Where these countries have allowed MDPs they seem to be accepting the idea that there is less difference between the professional roles of attorneys and accountants or at least a difference perceived to be manageable. 2. Countries that Do Not Allow MDPs UNITED KINGDOM/ GREAT BRITAIN (ENGLAND & WHALES): In Great Britain MDPs are prohibited. A solicitor cannot share fees with any person other than a solicitor or a registered foreign lawyer. lxviii Barristers are not allowed to form a partnership with other barristers, members of any other profession or foreign lawyers. lxix Portugal has always forbidden MDPs. lxx PORTUGAL DENMARK In Denmark, MDPs are not allowed. One unique feature of Danish law is that although law firms may only be owned by attorneys, law firms are not prohibited from using an accounting firms name. Arthur Anderson recently won a court victory allowing a law firm to use the name of the Big-Five accounting giant, calling itself "Arthur Anderson Law Firm." HOFSTEDE ANALYSIS Great Britain ranks as the third highest individualistic country in Hofstede's analysis. lxxi Denmark also tends to be a highly individualistic country, ranking higher on the scale than Germany but lower than Canada. lxxii Portugal in contrast is a more collective oriented society. lxxiii Great Britain and Denmark have low power distance while Portugal has a much higher power distance. lxxiv In one interesting comparison, Portugal ranks as the number two country with the strongest uncertainty avoidance, while Denmark and Great

7 Britain have clearly weak uncertainty avoidance. lxxv Denmark and Portugal both tend to be more feministic countries with Great Britain being more masculine. lxxvi The profile of countries that do not allow MDPs is less clear. While these countries appear to be individualistic Portugal is still collectivist. The countries also appear to be lower on the power distance again with Portugal being different and ranking high on this scale. Uncertainty avoidance measurement is similar in that it appears that these countries have weak uncertainty avoidance but Portugal has high uncertainty avoidance. Finally, countries disallowing MDPs appear to be more feminine oriented even though one country, Great Britain is more masculine. The profile of a country disallowing MDPs is not as clear, but if the analysis holds true, it would seem logical that more collectivist countries with greater power distance and higher uncertainty avoidance would appear under this category. Portugal seems to fit the theorized profile for a country disallowing MDPs quite well. It is collectivist, which would tend to support the notion that as a country it would value the role that an attorney plays in the administration of justice more than it would the value of efficiency and response to the client. Additionally, where Portugal has a higher power distance, it would likely place more value on the difference in roles in society for an attorney and an accountant. One characteristic not considered in countries that allow MDPs that also provides weight for Portugal being a classic example of a country disallowing MDPs is uncertainty avoidance. Countries with high uncertainty avoidance tend to prefer more laws, rules and regulations. It seems to follow that it would also tend to prefer heavier regulation and or regulatory distinction between service professions. 3. Countries Where the State of the Law is Unclear SPAIN The law of Spain neither expressly prohibits nor permits MDPs. The 7th congress of the Spanish legal profession has formally decided to "energetically denounce" MDPs with auditors. Spain prohibits lawyers "from being involved in any incompatible matter...such that the duties of confidentiality would be put at risk." Incompatibility is defined specifically to include the incompatibility of the practice of accounting and law. lxxvii BELGIUM The state of affairs is unclear in Belgium. lxxviii The Council of the Ordre National has the authority to determine which other professions can associate themselves with attorneys and the Council has not done so. lxxix HOFSTEDE ANALYSIS A look at the dimensions of the countries whose state of affairs with respect to MDPs is unclear provides some interesting results. Spain and Belgium share similar characteristics in that they are both more individualistic with high power distance. lxxix addition, both had strong uncertainty avoidance. lxxx The one difference between these two countries is that Belgium tended to be more masculine while Spain tended to be more feminine. lxxxi Conclusions may also be drawn from these characteristics. The country characteristic of individualism has been analyzed and tied to the pull of proponents to respond to individual client demand and the need for greater efficiency. The country characteristic of power distance has been most closely tied to MDP opponent's arguments for the need to maintain the sharp distinction in social roles of an attorney and an accountant in order to protect core legal values of independence, client confidentiality and avoidance of conflicts of interest. The countries with an unclear state of affairs share similar characteristics in that they appear to be more individualistic with higher power distance. These two characteristics may reveal a tension between the desires to service individual client needs, i.e. the high individualism, while still maintaining sharper social roles, i.e. the high power distance. Perhaps the unclear state-of-affairs are a result of the difficulty in reaching a compromise between these two dimensions. 4. Emerging Patterns

8 From the above analysis using Hofstede's dimensions, a two-part pattern seems to emerge. The first part shows that countries that have a greater power distance and a high tendency toward individualism may have difficulty in resolving the MDP issue. In contrast, countries with high individualism and lower power distance will come to quicker resolutions of the issue. The resolution of whether to allow MDPs or disallow MDPs becomes the second part of the pattern. Countries allowing and disallowing MDPs both have higher individualism and lower power distance. The distinguishing characteristic may be masculinity. Countries more likely to accept MDPs are more masculine oriented while countries tending to formally disallow MDPs tend to be more feminine. Countries allowing MDPs, tending to be more masculine, emphasize success, competition, money and assertiveness. Countries disallowing MDPs and tending to be more feminine, emphasize personal relationships and the quality of life. This distinction appears to logically follow the debate. A country allowing MDPs would be more likely to accept the arguments for increased competition with attorneys and the focus on the ability to increase profits. A country disallowing MDPs may be more inclined to consider the overall quality of life and this may be affected by the erosion of the role of attorneys and the protection for the core values at stake in this debate. Together, the distinctions between dimensions of the countries considered above appear to support the theory of cultural ethical relativism. It seems that while the practice of law and accounting may be appropriate in one country, the same may not be in another. The question of right or wrong may not be completely hinged on a question of whether such practice is universally right or wrong. This answer may be affected in part by the different characteristics of different countries. Additionally, the practice of MDPs may not be appropriate due to a culture or countries ability or inability to resolve conflicts in characteristic dimensions. This brings us to the next logical question. What are the United States cultural dimensions and what does this tell us about the likely future of MDPs in the United States? IV. UNITED STATES CULTURAL DIMENSIONS AND LIKELY OUTCOME OF THE MDP DEBATE A. United States Cultural Dimensions and MDPs The United States is a highly individualistic country. lxxxii It is also moderate to low on power distance.lxxxiii In addition, it has weak uncertainty avoidance and tends to be more masculine in nature. lxxxiv Under the framework developed in the preceding sections then the United States should likely struggle with the issue but it most likely will not be a lengthy one. This is due to the fact that in the first part of the pattern the U.S. can be characterized as highly individualistic. The U.S. will highly favor the clients desire to receive greater services from one provider in the form of one-stop shopping. The current struggle and the prediction that such a struggle will not be long lived is based upon the United States moderate to low power distance. lxxxv While a low power distance would suggest that there is less formal respect for roles in society a moderate position may be the influence of a slight tension causing the current debate. Assuming that the two-part pattern holds true, the United States should likely resolve the issue in favor of allowing MDPs. This prediction is based upon its highly masculine nature. As seen in the emerging patterns of other countries, the distinguishing factor for countries that have settled the issue appears to be masculinity/ femininity. Because the United States is more masculine it will tend to favor increased competition, including that in the market for legal type services along with placing emphasis on success and assertiveness of the Big-Five in other countries. lxxxvi B. Current Movement in the United States The current feeling about this issue within the legal profession in the United States may best be characterized by one comment of the President of the Atlanta Bar Association who said, "there are people who think it's the salvation of the profession and people who think the profession will go to hell in a handcart." lxxxvii Many different people have expressed their opinions on this issue recently including, accountants, lawyers, business people, scholars and more. Although the Big-Five have been unusually quiet in this debate, many accountants have expressed the opinion that fee sharing and MDPs would be in the public's best interest. lxxxviii In addition many in the accounting profession believe that the acceptance of MDPs in the United States is inevitable. lxxxix The Big- Five have been more expressive through their actions rather than through words in the MDP debate. xc Even though they have not formally taken up a position in the debate within the United States, it seems clear that they are heavily pushing for a change. xci The heads of many of the bar associations within the United

9 States, while not necessarily in unison as to their ultimate conclusions about MDPs, recognize a sense of urgency to resolve this issue. xcii This sense of urgency is based in part on the push by accounting firms. xciii The evidence for the sense of urgency and the swift coming resolution seems clear. The only question really left then is whether the issue will be resolved in favor of MDPs or against, with the larger question still remaining whether legal ethics and business ethics can be merged. V. CONCLUSION The MDPs in other countries is widespread. Now the question of whether or not to allow the practice of accounting and law under the same company umbrella has finally been forced upon the United States legal system. Arguments for and against acceptance of this form of business are strongly supported. The resolution to the issue however, may depend most upon ethical cultural relativism. Where this practice may be appropriate in one country, it may not be appropriate in another. Whether or not it is, may depend largely on the cultural values of each country. The United States appears to be highly individualistic, placing high value upon competition and efficiency. These basic values may outweigh the core values that the opponents of MDPs in the United States seek to protect. Whenever this issue is resolved, it will require a careful consideration and weighing of the values of the legal and business ethical regulatory structures. i JAMES B. SIMPSON, SIMPSON'S CONTEMPORARY QUOTATIONS (1988) (citing Christian Science Monitor, May 21, 1964). ii See George A. Riemer, Bar Counsel: Coming to a City Near You? Issues Surrounding Non-Lawyer Ownership of Law Firms, 59 OR. ST. B. BULL. 27, 27 (May 1999). Multi-Disciplinary practices have been prohibited in all 50 states since See Janet L. Conley, ABA Takes on Multidisciplinary Practice, N.Y.L.J., Aug. 5, 1999 at 1. The only exception in the United States is found in the District of Columbia, which currently allows multi-disciplinary practices in a very limited form devoted solely to the practice of law. See id. iii See Randall Roth, Perspectives: Are We Credible?, 3 HAW. B. J. 4 (Sept. 1999). iv CBA International Practice of Law Committee, Striking a Balance, The Report of the International Practice of Law Committee on Multi-Disciplinary Practices and the Legal Profession, CAN. B. ASS'N 11, Aug (visited Oct. 28, 1999). v See id. vi See Us Legal Regulators Poised to Sanction MDPs, INT'L ACCOUNTING BULL., June 14, 1999 at 1. vii See e.g. Donald S. Gray, President's Page: Multidisciplinary Practice of Law, 41 ORANGE COUNTY LAWYER 4 (April 1999) (Gray is the President of the Orange County Bar Association); Richard Pena, Where Do We Go From Here?, 62 TEX. B. J. 328 (April 1999) (Pena is the President of the State Bar of Texas); J. Thomas Lenga, President's Page: A Peak At The Future, 78 MI B.J. 658 (July 1999) (Lenga is the President of the State Bar of Michigan); Roth, supra note 3, at 4 (Roth is the President of the State Bar of Hawaii). viii One example of state law prohibiting MDPs is found in Wisconsin. See WIS. SUP. CT. R. 20:5.4 (1998), cited by Louise G. Trubek, Memorandum to Wisconsin Board of Bar Governors, Jun. 18, 1999, COMM'N ON MULTIDISCIPLINARY PRACTICE (visited Oct. 18, 1999). ix See Rocco Cammarere, Multidisciplinary Practices: Gone But Not Forgotten, N.J. LAWYER, Aug. 16, 1999 at 4. x NEW WORLD DICTIONARY OF AMERICAN ENGLISH 467 (3ed. 1991). xi See CHARLES W. L. HILL & GARETH R. JONES, STRATEGIC MANAGEMENT THEORY, AN INTEGRATED APPROACH 55 (3ed. 1995). xii See id.

10 xiii BLACK'S LAW DICTIONARY 369 (1996). xiv See id. xv Lenga, supra note 7, at 658. xvi Id. xvii Id. xviii Id. xix See Facing The Future of The Practice-Now, LEGAL TIMES, Aug. 2, 1999, at 18. xx See Gray, supra note 7, at 41. xxi See Lee Smalley Edmon, President's Page: Our Changing Profession, 22 L.A. LAWYER 11, 14 (May 1999). xxii See Doug Bandow, Lawyers Need to Evolve With the Economy, J. COMMERCE, Aug. 13, 1999, at 9; Gray, supra note 7, at 4. xxiii See id. xxiv See Ramon Mullerat Abogado, Report on Multidisciplinary Practices in Europe, COMM'N ON MULTIDISCIPLINARY PRACTICE, Apr (visited Oct. 28, 1999). Abogado, from Barcelona, Spain is the former President of the Council of the Bars and Law Societies of the European Community (CCBE). See id. The CCBE is composed of an integration of the national bars of the European community including the Bar Associations of Scotland, Denmark, Ireland, Sweden, and England & Wales. See id. at 2. In Mullerat's report he cites numerous examples of resistance to the MDP movement in Europe including formal declarations such as that made by the CCBE in November 1993, which stated that MDPs between lawyers and non-lawyers should not be permitted. See id. at 3. The 1993 Declaration was unanimously approved by all national delegations to the CCBE. See id. In addition to the formal declaration, other examples include numerous court cases involving Big-Five accounting firms in which the accountants were successful and others in which the MDP movement was not. See id. xxv See ANNE MARIE FRANCESCO & BARRY ALLEN GOLD, INTERNATIONAL ORGANIZATIONAL BEHAVIOR 42 (1998). See also Andrew C. Wicks, Norman Bowie and Richard Porty on Multinationals: Does Business Ethics Need "Metaphysical Comfort?," 9 J. BUS. ETHICS 191, 191 (1990). xxvi See FRANCESCO & GOLD, supra note 25, at 42. xxvii See id. xxviii See Wicks, supra note 25, at 191. xxix See Dwight R. Lee & Richard B. McKenzie, Corporate Failure as a Means to Corporate Responsibility, J. BUS. ETHICS,, Dec. 1994, at 969. xxx See id. xxxi See id. xxxii See David Segal, Rules May Shake Law Industry; ABA to Break Accounting Barrier, WASH. POST, June 4, 1999 at E01. Segal cites critics of the American Bar Association rule against MDPs that believe the rule is simply a way to protect a $100 billion a year monopoly on the legal services market that the accounting firms "have been eyeing." Id. Other estimates place the legal services market of the United States at the $130 billion mark. See William Glaberson, Lawyers Contend With State and Federal Efforts to Restrict Their Rising Power, N.Y. TIMES, Aug. 5, 1999, at A16.

11 xxxiii See Joseph S. Spoerl, The Social Responsibility of Business, 42 AM. J. JURIS. 277, 290 (1997) (citing William Evan & R. Edward Freeman, A Stakeholder Theory of the Modern Corporation: Kantian Capitalism, in ETHICAL THEORY AND BUS. 75). The author also refers to a second source for a more detailed explanation of stakeholder theory, R. EDWARD FREEMAN, STRATEGIC MANAGEMENT: A STAKEHOLDER APPROACH (1984). xxxiv See id. xxxv See id. xxxvi See id. xxxvii Gary T. Johnson, Written Testimony to General Practice, Solo and Small Firm Section of the American Bar Association, COMM'N ON MULTIDISCIPLINARY PRACTICE (in Connection with the Commission's Hearing on October 9, 1999) (visited Oct. 28, 1999). xxxviii See BLACK'S LAW DICTIONARY, supra note 13, at 369. xxxix See ANNE MARIE FRANCESCO & BARRY ALLEN GOLD, INTERNATIONAL ORGANIZATIONAL BEHAVIOR 23 (1998) (In their analysis of Hofstede's work Francesco and Gold cite Geert Hofstede, Motivation Leadership, and Organization: Do American Theories Apply Abroad?, ORGANIZATIONAL DYNAMICS 50 (Summer 1980); Geert Hofstede, Cultural Constraints in Management Theories, ACADEMY OF MANAGEMENT EXECUTIVES 91 (1993); GEERT HOFSTEDE, CULTURE'S CONSEQUENCES: INTERNATIONAL DIFFERENCES IN WORK-RELATED VALUES (1980); Geert Hofstede & M.H. Bond, The Confucian Connection: From Cultural Roots to Economic Growth, ORGANIZATIONAL DYNAMICS 4 (1988)). xl See Philippe d'iribarne, The Usefulness of an Ethnograhic Approach to the International Comparison of Organizations, 26 INT'L STUDIES MANAGEMENT & ORG. 30 (Winter 1996/97). xli See Geert Hofstede, Attitudes, Values and Organizational Culture: Disentangling the Concepts, 19 ORG. STUDIES 3 (1998). xlii See id. xliii See d'iribarne, supra note 40, at 41. xliv See FRANCESCO & GOLD, supra note 39, at 23. xlv See id. xlvi See Cognizant of Culture, SMALL BUS. REPORTS, Aug. 1994, at 6. xlvii See FRANCESCO & GOLD, supra note 39, at 23. xlviii See Cognizant of Culture, supra note 46, at 6. xlix See d'iribarne, supra note 40, at 41. l See FRANCESCO & GOLD, supra note 39, at 26. li See id. at 26. lii See Cognizant of Culture, supra note 46, at 6. liii See d'iribarne, supra note 40, at 41; FRANCESCO & GOLD, supra note 39, at 26.

12 liv The author notes that categorization of this type for foreign countries is not clear. In some writing and commentary this distinction is based only upon whether there is a form of accounting and law operating under the same roof, while in other commentary the distinction is based upon the prohibition or allowance generally by statutory law. For purposes of this paper, the distinction and categorization has been based upon whether formal foreign law allows MDPs or prohibits them. This classification seems most applicable to the discussion of regulatory schemes which seek to mandate certain levels of ethical behavior, where a classification based only upon whether or not MDPs exist would only reveal actual behavior and not the theoretical formal ethical framework under consideration here. lv The authority to participate in MDPs has been specifically recognized in Section 59 of the Bundesrechtsanwaltsverordnung (German Lawyer's Act). See Abogado, supra note 24, at 9. lvi See id. lvii This requirement is captured in the Berfusordnung fur Rechtsanwalte (Professional Rules of Conduct for German Lawyers). See id. lviii See id. lix See V. Randell J. Earle, Multi-Disciplinary Partnerships: Report to Delegates, FEDERATION OF L. SOCIETIES CAN., Aug (visited Oct. 28, 1999). lx See id. lxi See id. lxii See id. lxiii See FRANCESCO & GOLD, supra note 39, at lxiv See id. lxv See id. lxvi See id. lxvii See Harry C. Triandis, Reviews on Cultural Phenomena-Cultures and Organizations, ADMIN. SCIENCE QUARTERLY, Mar. 1993, at 132. lxviii See Abogado, supra note 24, at 23. lxix See id. lxx See id. at 12. lxxi See FRANCESCO & GOLD, supra note 39, at lxxii See id. lxxiii See id. lxxiv See id. lxxv See id.

13 lxxvi See FRANCESCO & GOLD, supra note 39. lxxvii See Abogado, supra note 24, at 9. lxxviii See id. Although the Report on Multidisciplinary Practices in Europe indicates Belgium that the acceptance of MDPs in Belgium is unclear, other sources report that MDPs are accepted. See e.g., Earle, supra note 59, at 3; US Legal Regulators Poised to Sanction MDPs, supra note 6, at 1. lxxix See Abogado, supra note 24, at 12. lxxx See id. lxxxi See id. lxxxii See id. at 24 lxxxiii See id. at 25 lxxxiv See FRANCESCO & GOLD, supra note 39, at 25. lxxxv Further support for the conclusion that the struggle will not be long lived can be found in the sense of urgency with which almost all that are faced with this issue feel to resolve it. See e.g. Edmon, supra note 21, at 11 (Edmon indicates that many of the members of the legal profession believe "this is one of the most important issues to face the legal profession during this century."); Scott Olson, Law Practice Remains Unchanged, IND. LAWYER, Aug. 18, 1999, at 1 (referring to outgoing Indiana State Bar Association President Lee McNeely who said, "[t]here's no question in my mind there's a sense of inevitability to this...it's inevitable that we are going to be faced with the need to make a decision on this most important issue."). lxxxvi See Bandow, supra note 22, at 9. lxxxvii Janet Conley, Multidisciplinary Practice Hot Topic at ABA Meeting, RECORDER (ATLANTA), Aug. 6, 1999, at 3 (quoting Paula Frederick, Deputy General Counsel of the State Bar of Georgia and President of the Atlanta Bar Association). lxxxviii See e.g. Olson, supra note 86, at 1 (citing Certified Public Accountant James Alerding of Clifton Gunderson in Indianapolis, Indiana who said he thought that fee sharing was good for the profession and the public.). See also Faqs About Multidisciplinary Practices, TEX. LAWYER, Aug. 9, 1999 at 6 (recognizing that the Big-Five has "kept a conspicuously low profile."). lxxxix See Olson, supra note 86, at 1. xc This is evidenced by big-five's actions in foreign countries where they have been involved in much litigation centering on the MDP issue. See Abogado, supra note 24. xci Big-Five accounting giant KPMG recently added fuel to the fire in the MDP debate by forming a strategic alliance with San Francisco law firm Morrison & Foerster. See Ritchenya A. Shepherd, Why MoFo Teams With KPMG, NAT'L L.J., Aug. 23, 1999, at 12. Donald M. Griswold, KPMG's partner in charge of state and local tax technical services acknowledged that KPMG had about 200 persons with law degrees located across virtually every jurisdiction in its state and local practice alone. See id. xcii See Olson, supra note 86, at 1. xciii Sherwin P. Simmons, Head of the American Bar Association's MDP Commission recognized that lawyers are already working for many companies such as H&R Block, American Express and the Big-Five. He said, "[t]hey are, as best we can tell, providing legal services," and acknowledged that no bar

14 associations or courts are really challenging whether they are complying with legal ethics rules. See Janet Conley, Multidisciplinary Practice Issue Delayed, Not Dead, TEX. LAWYER, Aug. 16, 1999, at 10.