The Leader Column

As if Enron wasn't bad enough, last week's ruling by the European Court of Justice (ECJ) came as yet another blow to the cause of accountancy-tied law firms.
The ECJ's decision, which upheld the Dutch Bar's ban on multidisciplinary partnerships (MDPs), was the culmination of years of litigation. That litigation was sparked by Andersen Legal and PricewaterhouseCoopers in response to the Dutch Bar performing a U-turn on the matter back in the early 1990s, just as the threat of the major accountancy firms was starting to worry local lawyers.
Seven years on and the move has backfired spectacularly. The ECJ's decision to uphold the Dutch Bar's ban on MDPs is a major setback for accountancy-tied firms and is certainly out of sync with practice elsewhere; the Office of Fair Trading report last year drove a coach and horses through lawyerly protectionism.
As one might expect, Andersen played the competition card for all it was worth. A statement from the firm says: “This litigation cuts to the heart of some very basic principles of competition and the freedom to provide professional legal services to clients… Regulation should be aimed at preventing abuses and protecting consumers, not unfairly hindering the innovative and effective provision of legal services.” Or, as Andersen Legal's Tony Williams snaps: “I suppose lawyers can always make law to protect lawyers.” (Ouch.)
Not only does the ruling allow the backwoodsmen around Europe to renew their assault on MDPs, but it is equally likely to inconvenience other UK law firms with Continental ambitions – particularly those with associated tax and legal practices.
Enron, which nightmarishly showcases the difficulties of running any professional practice in parallel with audit, casts a huge shadow over the MDP issue. Yet it's worth remembering that potential MDPs come in all shapes and sizes. Different law firms have set up plenty of related businesses and income streams, from lobbying outfits to forensic accountancy. Indeed, tax is the obvious MDP product; the inability of law firms to make tax advisers full partners has seriously hampered their ambitions in that arena.
Yet, in the final analysis, the accountancy-tied law firms can bellyache all they like. The fact remains that they are simply not making the progress they would want to – and that's not just down to the regulatory environment. As one in-house lawyer remarks: “I don't want to be told who I can and can't use. But then I'd never use Andersen anyway.”