The Gazette 1989

GAZETTE

FEBRUARY

1989

Multi Disciplinary Partnerships

In May 1988 the C.C.B.E. examined the issue of multi-

disciplinary partnerships. Mr. H. Collot d'Escury from the

Netherlands presented a paper from which the following is

an extract. Mr. d'Escury looked firstly at developments within

his own country and examined some of the more general

arguments both for and against such partnerships. He then

attempted to list the various professional combinations which

might make up such practices. Finally, in the extracts

included here, he proceeded to examine the conflict of

interest issue and looked specifically at partnerships between

Lawyers and Chartered Accountants.

Some examples of the kind of

problems that may arise

In order not to create the impress-

ion that a mixed partnership is all

honey, let me give you some

examples of problems that never-

theless may arise.

Conflicting professional rules:

In the case of notaries in the

Netherlands, it is professionally

acceptable for the notary, should

two parties wish to enter into an

agreement, to advise and draw up

a draft agreement for both parties

concerned.

Now let us assume that one

party is a client of one of the

notaries of your firm and the other

of one of the lawyers. The first

client (that of the notary) regards

it as normal and insists that his

notary makes the draft for both

sides and does not accept that the

lawyer-partner advises the other

client, which client has a much

longer standing with the firm.

What do you do?

Conflicting interest:

The difference in the type of

practice may create difficulties. The

notary may have clients who use

his services always for convey-

ancing matters in real estate. Such

a notary client - certainly where

the mixed partnership is fairly

young - not necessarily uses the

same MDP firm for lawyer services.

Now it may happen that such a

notary client is engaged in a

conflict leading up to legal action

against a client of one of the lawyer

partners. As the notary client

himself has instructed another law

firm to handle this matter there

seems to be no problem. The

lawyer partner is acting for the

adversary of the notary client.

So far so good. What may

happen, however, as we found out,

was that suddenly out of the blue

the notary client objected to the

lawyer partner acting in this matter

on the ground that the notary

partner has privileged knowledge of

certain real estate transactions he

intended to complete involving con-

siderable amounts of money. He

felt that this was dangerous for

him.

It has been argued of course that

there was no reason for the notary

client to be afraid, because the

lawyer partner will never try to have

and cannot have access to this

privileged knowledge.

Furthermore, we pointed out that

he himself had chosen another law

firm to assist him in the legal pro-

ceedings. All to no avail! We

decided in the end to withdraw

from the lawsuit, but were not

happy.

It created much commotion, also

within the law firm and brought us

to the conclusion that a "mixed

committee" to handle these highly

complicated conflicts of interest

problems - which in this case we

in fact had not foreseen - was

absolutely necessary!

This example brings me to

another problem. How do you

realise as partners of the one

discipline that there may be a

conflicting interest with a client of

one of the partners of the other

discipline?

In our case we can ask the

administration whether the name

of the counterpart of one of our

clients appears in the client

administration of either the law

practice or the notary practice and

who is the responsible partner. The

client administration is split in two

parts but the administration, at

least the head of the administra-

tion, can do this check.

The question was put to me

whether one should not avoid the

possibility that the partners of one

profession can get to know the

names of the clients in the section

of the other profession. In our case

we do not want to avoid this unless

the partner in question in a very

special case decides that for

reasons such as protection of the

client, it should not be known.

One can, however, keep this

totally separate and avoid this

possibility if there were reasons -

for example, again, the protection

of the client. This could arise in the

case of a mixed partnership with a

tax lawyer or accountant, who do

not - like the lawyers - enjoy the

privilege of professional secrecy in

criminal investigations.

One would then have to keep the

administration of the law practice

totally separated from that of the

tax practice or accountant's

practice and include only the result

in the administration of the mixed

partnership.

In our case there remains the

question of professional secrecy.

We see no reason to avoid the

situation where a practitioner on

the one side can find out whether

a certain person or company is a

client of one of the partners of the

other side. The knowledge he thus

obtains is privileged and thus

protected. In case of a mixed

partnership with tax lawyers or

chartered accountants one would

have to arrange a system whereby

the tax lawyer and/or accountant

would have no access to the names

of the clients of the law practice,

combined with a warning system

for the lawyers.

The mixed pertnership with

chertered occountents

Let us now look at the question

whether (under a ruling such as in

force in the Netherlands) a mixed

partnership between lawyers and

chartered accountants could be

allowed.

In my opinion there are certainly

grounds to argue that it should not

be allowed. Basically, these

grounds are to be found in the

prime function of the chartered