Living in the real world

Earlier this month about 100 in-house lawyers gathered in Versailles to discuss MDPs at the fifth annual conference of the European chapter of the influential American Corporate Counsel Association.

They gave MDPs a cautious welcome. A more hostile response would have been understandable, given that many in-house lawyers originally practised at City-type firms, where opposition to MDPs is traditionally strong.

Many in-house lawyers would be forgiven for suspecting that MDPs and their captive legal practices are effectively run by the Big Five accountancy firms.

But the conference showed that they are living in the real world. Entrusted with choosing external lawyers by their companies, in-house counsel are key to the success of MDPs. They know that their companies will go for value-for-money when choosing external legal advisors.

Attracted by the resources of the MDPs and their global reach, in-house lawyers know how much easier it would be to one-stop shop.

When the Wilde Sapte-Arthur Andersen merger collapsed unexpectedly, many City lawyers found it difficult to hide their glee.

But the Versailles conference has put the Wilde Sapte debacle into perspective.

Lawyers can talk about conflicts of interest and independence until the cows come home. The reality is different.

While some lawyers in private practice have been getting worked up about MDPs, their colleagues in-house would appear to be taking a good hard look at the concept.

If the conference is anything to go by, they can see a great many advantages to MDPs. They may not be queuing up to hand their legal work to captive law firms at the moment. But they do seem to be telling the accountants that, if they get it right, they could be onto a winner. They will have taken succour from the failure of Andersens to pull off the deal. As long as they are happy that they are getting the necessary quality, they will go for the cheapest option.