AAI Says Legal Profession's Recommendations on Multidisciplinary Practices May Violate Antitrust Laws

AMERICAN ANTITRUST INSTITUTE SAYS LEGAL PROFESSION'S RECOMMENDATION ON MULTIDISCIPLINARY PRACTICES MAY VIOLATE ANTITRUST LAWS

WASHINGTON - A new monograph by the American Antitrust Institute (AAI) calls an American Bar Association recommendation that would restrict multidisciplinary practices "nothing more than an effort to protect lawyers and law firms from competition," and asserts that the proposal in its current form "should not survive antitrust scrutiny."

The legal profession has been under pressure to relax several of its rules in order to allow multidisciplinary firms to evolve. "The convergence of professional services is a natural response to a dynamic market in which demand for an integrated package of services is growing," said author Albert A. Foer, President of AAI. "The ABA's efforts to thwart this development raise serious issues of our national policy favoring competition and consumer choice, rising even to the level of a possible violation of antitrust laws. The ABA is putting itself behind entry barriers that limit choices for consumers and limit consumers' access to the benefits of competition."

The ABA will convene its mid-year meeting in Dallas this week, where its Commission on Multidisciplinary Practice, appointed in 1998, will hold hearings and continue debate about eliminating the ban on partnerships between lawyers and non-lawyers. In a series of public hearings, the Commission found broad-based demand for integrated professional services from individual lawyers, small businesses, large corporations and consumer organizations. Last June, the Commission recommended that some prohibitions be eliminated, but only if certain new conditions were put in their place. The AAI criticized these recommendations as "substituting one set of guild rules for another."

"The net effect of the Commission recommendations is to limit MDPs to those controlled by lawyers, so that legal services - as broadly defined by the Commission - could only be offered through the traditional law firm or through something closely akin to it, an MDP controlled by lawyers," said Foer. "In the name of change, the 'monopoly' awarded to lawyers through the bar rules today would be preserved and indeed extended under the Commission's proposal."

The AAI's monograph concludes that the ABA is not immune from antitrust scrutiny where its standard-setting activities adversely affect competition independent of state adoption of those standards. Of particular concern is the Commission's recommendation for a broad definition of the "practice of law," which would encompass a wide variety of tasks that even today are routinely performed by non-lawyers. Non-lawyers performing those tasks could find themselves at increased risk of unauthorized practice of law charges, a threat that the AAI believes would further erode competition.

"The antitrust laws were enacted to provide a means of curbing conduct which harms competition in this manner," said Foer. "The Commission recommendation would be found wanting under the 'rule of reason' analysis applicable under those laws. The core values of the legal profession do not demand that the ABA choke off competition from multidisciplinary services firms, or that the legal profession dominate the integrated service market."

The AAI's reaction comes just a few weeks after the New Jersey State Bar Association voted to undertake a "whistleblowing campaign" to bring complaints, both civil and criminal, on behalf of clients with grievances against lawyers who work outside traditional law firms. New Jersey bar members also approved a resolution urging the ABA House of Delegates to disband the Commission on Multidisciplinary Practice, part of a move by some lawyers to drive the Commission out of existence. Foer said the New Jersey bar's reaction was further evidence that some of the members of the legal profession are intent on preserving the guild.

"I find it sad that so many members of the legal profession are apparently intent on denying consumers access to much-needed legal services," said Foer. "But I believe the Commission has an important opportunity to reshape its recommendations to accomplish three goals: provide consumers with increased choice and convenience in accessing legal services, preserve the legal profession's core values, and avoid serious issues with antitrust laws. Already the Commission has acknowledged possible flaws in its own proposal, including the overly broad definition of the practice of law. We urge the Commission to revisit its recommendations and produce a final proposal that better meets the needs of consumers in the 21st century."

The American Antitrust Institute is an independent Washington-based non-profit education, research, and advocacy organization. The complete American Antitrust Institute monograph can be found on www.antitrustinstitute.org.

Converging Professional Services: Lawyers Against the Multidisciplinary Tide can be read on-line Many members of the ABA believe that the process of setting professional standards for the American legal profession, as well as the professional standards themselves, are immune from antitrust scrutiny because of the "Noerr-Pennington" doctrine. Noerr-Pennington immunity, however, is not absolute. More than ten years ago, the U.S. Supreme Court concluded that model standards set by a private professional organization were not insulated from antitrust liability if they have anticompetitive effects independent of any state action. The Commission's proposals are likely to have "their own force in the marketplace."

  • The ABA's current rules stand in the way of widespread demand for integrated services. Consumers of all shapes and sizes - including individuals, consumer organizations, small businesses, and large corporations - have said that they want the opportunity to purchase integrated services and that they believe the ABA ought to change its rules to let them.
  • The ABA's rules, likewise, burden lawyers who have expressed an interest in joining multidisciplinary firms. Many of the lawyers so burdened are ones who have been traditionally excluded from the profession's power structure, and who therefore had no say in creating the rules against which they now must battle.
  • The legal profession's restrictions, old or new, are not necessary to the maintenance of core values. The restrictions do have many unfortunate consequences, including obstructing the professional services market's response to fundamental changes in the way the world does business.
  • Converging Professional Services: Lawyers Against the Multidisciplinary Tide can be read on-line here.