Corporate counsel: key to MDP success
13 October 1998
22 September 1998
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11 November 1997
IN-HOUSE counsel will play a key role in deciding whether multi-disciplinary partnerships (MDPs) succeed, delegates were told last week at the fifth annual conference of the world's largest in-house lawyers' association.
Speaking at the American Corporate Counsel Association (ACCA) conference, Garrigues & Andersen president Antonio Garrigues said: "You will be the ones to decide in what cases MDPs will be useful and in what cases they will not be useful."
"Be sure that finally the decision will fall to in-house counsel," he said.
But he warned that MDPs were an inevitable result of the globalisation of business.
"In three to five years' time there will be 15 global law firms, two or three of which will be MDPs," he said. "We as lawyers have to play a role in globalisation - no one is going to stop it."
Garrigues, whose Spanish firm has tied up with Arthur Andersen last year, said such MDPs had "mentality of long-term investment", which was alien in many law firms.
But the growth of MDPs was attacked by another speaker at the Versailles conference. Baker & McKenzie Paris partner Christine Lagarde said she accepted the advent of MDPs - in France six out of the top 10 firms are linked to accountancy firms - "as long as there is fair competition in the market".
But she warned delegates of her doubts about whether MDPs were properly able to deal with conflicts of interest, arguing "Chinese walls are not as Chinese as they claim". And she expressed fears that unfair trade practices might emerge. "Competition is healthy - but only if certain rules are respected, including transparency," she said.
Garrigues said that his firm, Garrigues & Andersen, had put procedures in place intended to deal with such problems and that ethics were going "down and down" in the profession as a whole and not just in MDPs.
He also launched a strong attack on local Bar associations for the state of confusion over the regulation of MDPs.
"They have always been delighted to limit the possibilities of lawyers," he said. "They will have to change their minds."
Garrigues found support from Swedish lawyer Carl Belding, vice-president and general counsel of IBM Europe. Belding said there was an "ugly national aspect" to the debate about MDPs.
"MDPs are usually Anglo-American and Bar associations see that as 'the foreign threat'," he said.
Belding said he would use MDPs for tax advice, mergers and acquisitions and legal advice in "exotic" locations, and expressed his concern at the "difficulties in finding legal support in parts of the old Soviet Union".
Belding said one-stop shopping was the major advantage of MDPs, which he thought would help drive down the cost of outside legal advice. "I like predatory pricing," he joked.
Belding did express concerns about conflicts of interest and the fact that the IT consultancy arms of MDPs were often competing with his company for work.
Elizabeth Wall, director of legal services at Cable & Wireless, told delegates that when her company had asked management consultants from a "big five" accountancy firm to help reorganise its in-house legal team, they had tried to get their captive law firm involved. "I was not pleased about that," she said. Wall was in favour of the greater choice MDPs would bring, but warned: "I want to make a choice myself, not have it thrust on me."
At the International Bar Association conference in Vancouver last month, Chris Arnheim of Arnheim Tite & Lewis (Pricewaterhouse Coopers' captive law firm) revealed that his firm had several times been instructed via a company's finance director or board without the knowledge of the in-house counsel. The finance director has a strong relationship with the MDP doing the company's audit.
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