Will MDPs bring salvation to the high street?
17 November 1998
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Many sole practitioners see MDPs as their only chance of survival, but others still insist they are 'the devil's work'. Tim Watkin reports.
Only Two wooden doors separate Patrick Hurd's office from Hughes Allen - a top 50 accountancy firm. The few paces between the two doors protect his independence as a lawyer, but the easy access to his accountant neighbours brings him new clients on a regular basis.
Hurd made what he delicately calls an "affiliation" with Hughes Allen in October last year. It is an unusual arrangement, more official than the odd referral, but still short of the multi-disciplinary partnership (MDP) banned by the Law Society.
Hurd laughs about his rare relationship, pointing to the calculator which takes pride of place on his desk as evidence that there are accountants nearby.
But he says there are serious advantages in forging closer ties. He saves on fixed costs by sharing a reception area with Hughes Allen and they combine regularly in areas such as tax work.
As if to prove his point, he breaks off part way through our conversation to call an overseas client dealing in property in the UK. With details confirmed he nips next door to arrange a meeting with the accountants. For the client, two birds are killed with one telephone call.
"The advantage is the ability to work more efficiently and save some costs because we are working together more regularly," he says.
Hurd is happy that the relationship remains unofficial and non-exclusive. Not that he has any choice. Under existing Law Society regulations, lawyers can neither join in partnerships, nor share their fees with any non-lawyer. But last week The Lawyer revealed that the Government is to put the Law Society under pressure to change those rules.
The society reacted angrily to the Government's tone, not least because it is part way through a consultation process with its members about MDPs - the results of which are due in February. But with or without consultation or government edicts, many lawyers are convinced that building bridges with other professionals is the best way forward. In larger professional firms, various disciplines are already working hand-in-hand.
But the advent of MDPs may be more significant for high street or sole-charge practices. At a time when bread and butter legal aid and conveyancing work is under threat, there is a hope that MDPs could offer the increasingly desperate high street new ways to make money.
"A lot of people feel it's the only way forward," says Angela Deacon, the sole practitioner representative on the Law Society Council. "It may be the only way certain firms will be able to survive."
Tony Bogan, director of the Solicitors' Property Centres, agrees that public demand for one-stop shops is growing and such mergers are inevitable. Small town solicitors joining with the accountants or surveyors down the street could bring the capital investment in marketing and IT that small firms cannot afford, he says. It is a matter of pooling resources.
By forming partnerships with estate agents, accountants or financial advisers, lawyers would gain access to revenue streams often more reliable than legal fees. And one-stop shops offer marketing opportunities.
But does that amount to actually generating new business? Law Society vice-president Robert Sayer thinks not. It doesn't create any more need for legal services and could actually limit a lawyer's ability to form loose relationships with, and gain referrals from, any number of other professionals, he says.
And if the main gain for lawyers is access to other profession's profits," he asks, "why would other professions want to share their income with a struggling solicitor?
At the heart of many concerns is the creeping fear that formal partnerships will be lead by other professions, with solicitors playing second fiddle to the more commercial accountants and, god forbid, estate agents. Hurd downplays such worries. "In the big firms, sure, it could happen," he says. But from the second tier of firms down to sole practices, Hurd says, solicitors have the higher value clients and earn higher fees, so need not capitulate.
Another common concern is about the loss of a lawyer's independence. Sayer warns that forming partnerships with "devils" such as estate agents could damage, and even destroy, the integrity of the legal profession. With the accountant or estate agent partner pushing to get a deal done and signed, the client's needs could be pushed aside in favour of a quick buck.
Hurd's experiences suggest these worries could be overstated. He agrees that MDPs, especially those involving estate agents, do present risks to independence. But he says his affiliation with accountants has never caused a conflict of interest. He says accountants have similar codes of conduct, and argues that a business lawyer working with accountants presents fewer problems than a property and employment lawyer working in partnership.
Sayer says that even if MDPs offer new directions, he cannot see any merger momentum among sole-practitioners. "They're so depressed, so absolutely fed up, they don't care anymore. Many just want to get out."
What both Sayer and Bogan want to see is not mere mergers, but solicitors taking charge of the situation by buying into compatible firms.
"Solicitors have got to get off their backsides and begin buying up estate agents and other ancillary businesses," Sayer says.
Bogan says the principle of legal independence can only be protected if lawyers retain control of any crossover between professions. He would be happy to see accountants and estate agents working for lawyers, but warns that if other professions start buying up law firms, commercial pressures will see legal standards suffer.
He prefers the much-discussed solicitors' property centres, the first of which seems set to get under way early next year. Under this system solicitors band together to fund a property centre that handles the buying and selling of properties. People in the property market deal through their lawyer, not their estate agent.
Over the next few months, the Government's mood will become clearer and lawyers will speak via the Law Society referendum. In this supermarket society, partnerships of some kind seem inevitable.
The doors between lawyers and other professions are likely to be kicked open or prised ajar, subject to certain locks and latches. Whether this is the door to a new era for struggling high street practices, however, is highly questionable. It may do little to stop the hardest hit from looking for the exit.