PwC triumphs against Paris bar in landmark MDP ruling

Paris Court of Appeal against Paris bar’s ban on MDPs; accounts free to expand

The Paris Court of Appeal has decided in favour of Landwell & Associés, the legal arm of PricewatehouseCoopers, in a landmark case which rules that the Paris bar cannot lay down an ethical code of conduct for MDPs.

The report says that the Paris bar acted beyond its powers and should not have forced Landwell to comply with the bar’s ethical standards.

The decision works in favour of the big five accountancy firms being scrutinised by the French legal market for their links with multidisciplinary practices (MDPs).

The litigation is part of an ongoing debate over Article 16 of the ethical standard rules set up by the Conseil National des Barreaux (CNB) in 1999, which says that if a law firm is attached to an MDP, then all the MDP members must be covered by bar rules. These state that law firms must remain independent and avoid any conflict of interest.

Accountancy firms, therefore, cannot represent clients which are audited by the MDP and they must make it clear to the public that they are part of an MDP.

White & Case managing partner John Riggs is worried that the Court of Appeal’s decision challenges the legal profession’s independence.

He says the problem lies in the drafting of Article 16. He says: “Article 16 is weak. It doesn’t place any restrictions, but instead forces firms to comply with standards.”

But Landwell managing partner Gerard Nicolay says that Article 16 is an obvious declaration of war against the big five. “They want us out of the legal profession,” he says. “But the courts have decided that the article is void against litigation and we’re very pleased. It’s a very important decision because it’s in Paris, and the Paris bar represents half of the lawyers in France.”

He believes the legal market is threatened by the big five and wants to limit their possibility to expand.

“But the courts say it’s a free market,” he says. “Obviously, there are ethical rules, but the courts can’t legislate to prevent us expanding.”

Article 16 has become a national issue. But whereas the bar in the La Défense area of Paris, which is controlled by the accounting profession, rejected Article 16, the central Paris bar and the bar in other areas of France accepted the entire code of practice.

Fidal, the firm linked to KPMG, brought the same case against bar associations across France. The only other victory for the accountancy firms, however, was in Lyon.

In 1992 the two French legal professions merged and the accountancy firms were able to join the new profession without any restrictions.