Arthur Andersen and Garrett & Co were the first accountancy firm and law practice to form an association in the UK. Now Price Waterhouse and Arnheim & Co have followed their example, and it seems likely more will follow suit.
It can only be a matter of time before all the Big Six accountancy firms have their own associated law practices. It is also likely that the next rung down of accountants will establish law firms to complement their activities, particularly on a regional basis, to service their small to medium-sized clients.
At present, the Solicitors Accounting Rules prevent a lawyer sharing his profits with a non-solicitor. Further, an in-house solicitor is not allowed to provide legal services for the accountant's clients. However, there is nothing to prevent a lawyer having a close working relationship with a firm of accountants and acting as a solicitor for that firm's clients.
Chris Arnheim, formerly of Hammond Suddards' London office, has set up as a sole practitioner in a Price Waterhouse office. His firm will advise on corporate transactions and business law issues. Arnheim & Co and Price Waterhouse will refer clients to each other when they consider it is in the clients' interests, stressing the right of the client to chose his own adviser.
Price Waterhouse also has a network of legal practices on the continent, where the rules on multidisciplinary practices (MDPs) are more relaxed and Arnheim & Co will become part of that network.
The law firm, while having its own staff, will have support services provided by Price Waterhouse, subject to service agreements. Support services are likely to include finance on a renewable, yearly, commercial basis, the audit and some of the overheads, such as office accommodation.
Alison Crawley, head of policy at the Law Society, is watching the situation with interest. She says: “If a solicitor's firm is owned and controlled by solicitors, we will believe that until the contrary is proved. There is no objection to different professions working in mutual co-operation.”
She adds: “We are currently reviewing our strategy. We are aware of the Labour Party's proposals to remove restrictive practices. The rules against MDPs are virtually our last such practice.”
Other solicitors are also keeping an eye on developments. “Accountants are shrewd businessmen,” admits the senior partner of a medium-sized City firm. “It was thought that accountants would not do legal work for fear of upsetting existing referrals. But that is changing. Accountants are much more aggressive about marketing their work.”
Accountants offer a wide range of consultancy services in diverse areas, many of which involve legal work. For example, local and central government consult them on matters ranging from competitive tendering, to the disposal of housing assets to tenant or commercial groups.
Such consultancies inevitably involve legal issues, and accountants which link up with a law firm can offer clients a convenient one-stop shop.
The Big Six accountancy firms clearly view the development of legal services in UK as part of their global strategy. The continental MDPs have proved lucrative because they provide a one-stop shop for cross-border transactions; firms can offer clients corporate restructuring, taking advantage of differing tax regimes and laws without having to seek advice from external lawyers.
Global earnings for MDPs can run in to the tens of million, so it is not difficult to see the attractions of a potentially wide-open UK market.