New York courts OK multidisciplinary practices, with limits. (News & Trends).

New York has become the first state to adopt rules that specifically govern lawyer participation in multidisciplinary practice groups (MDPs).

The rules--proposed by the New York State Bar Association and adopted by joint order of the four New York Appellate Division departments in July--allow attorneys to form practices and share fees with professionals from other disciplines, including accountants, financial planners, and health care providers, but do not give these attorneys full rein.

"Throughout the nationwide debate on MDPs, we have been maintaining that lawyers can provide clients with the purported benefits of coordinated professional services without giving the nonlawyer professionals any say, directly or indirectly, in the way the lawyers practice law," said Steven Krane, president of the state bar association. "The new rules accomplish that goal by establishing a regulatory framework for cooperative business relationships that reaffirms and protects the core values of the legal profession."

Among the rules:

* Lawyers whose practices provide nonlegal services are bound by legal ethics rules in performance of them, unless the nonlegal services are distinct from the legal ones.

* Lawyers may enter contractual relationships with nonlegal professional-service providers only if the nonlegal profession has certain minimal education standards and enforceable rules of ethical conduct.

* Nonlawyer professionals may have no control over the manner in which the lawyer or law firm practices law.

* A lawyer who refers a client to a non-legal professional-service provider with whom the lawyer has a contractual relationship, or who receives a referral of a client from that nonlawyer professional, must provide the client with a written statement of his or her rights in cooperative business arrangements. The lawyer must also obtain the client's written consent to the referral.

"These rules were the product of a close collaboration between the [bar association] and the Administrative Board of the Courts," Krane said. "We hope that the rules are recognized and accepted as a reasoned solution to the MDP debate and ultimately become the standard nationwide."

Multidisciplinary practice is common in Europe, where international accounting firms routinely provide legal services. Court-imposed lawyer ethics rules have discouraged fee sharing and mixed professional partnerships in the United States since 1908 and barred them since 1969, although the District of Columbia allows nonlawyer partners in law firms that are devoted solely to practicing law.

The New York State Bar Association's endorsement of the rules was based on a report written by a special committee that advocated "side-by-side" business arrangements with nonlawyers as opposed to full-fledged partnerships.

(For more information on the MDP debate, see ABA Commission Proposes Rule Change to Allow Fee Sharing, TRIAL, Aug. 1999, at 80; ABA Nixes Multidisciplinary Practices, TRIAL, Sept. 2000, at 95; Fee-Sharing Proposal Rejected, TRIAL, Oct. 1999, at 95; and N.Y. State Bar Committee Gives Thumbs-Down to Multidisciplinary Practices, TRIAL, July 2000, at 135.)