The Gazette 1989

GAZETTE

FEBRUARY

1989

Multi Disciplinary Partnerships In May 1988 the C.C.B.E. examined the issue of multi- disciplinary partnerships. Mr. H. Collot d'Escury from the Netherlands presented a paper from which the following is an extract. Mr. d'Escury looked firstly at developments within his own country and examined some of the more general arguments both for and against such partnerships. He then attempted to list the various professional combinations which might make up such practices. Finally, in the extracts included here, he proceeded to examine the conflict of interest issue and looked specifically at partnerships between Lawyers and Chartered Accountants. Some examples of the kind of problems that may arise least the head of the administra- tion, can do this check. The question was put to me whether one should not avoid the possibility that the partners of one profession can get to know the names of the clients in the section of the other profession. In our case we do not want to avoid this unless the partner in question in a very special case decides that for reasons such as protection of the client, it should not be known. One can, however, keep this totally separate and avoid this possibility if there were reasons - for example, again, the protection of the client. This could arise in the case of a mixed partnership with a tax lawyer or accountant, who do not - like the lawyers - enjoy the privilege of professional secrecy in criminal investigations.

So far so good. What may happen, however, as we found out, was that suddenly out of the blue the notary client objected to the lawyer partner acting in this matter on the ground that the notary partner has privileged knowledge of certain real estate transactions he intended to complete involving con- siderable amounts of money. He felt that this was dangerous for him. It has been argued of course that there was no reason for the notary client to be afraid, because the lawyer partner will never try to have and cannot have access to this privileged knowledge. Furthermore, we pointed out that he himself had chosen another law firm to assist him in the legal pro- ceedings. All to no avail! We decided in the end to withdraw from the lawsuit, but were not happy. It created much commotion, also within the law firm and brought us to the conclusion that a "mixed committee" to handle these highly complicated conflicts of interest problems - which in this case we in fact had not foreseen - was absolutely necessary! This example brings me to another problem. How do you realise as partners of the one discipline that there may be a conflicting interest with a client of one of the partners of the other discipline? In our case we can ask the administration whether the name of the counterpart of one of our clients appears in the client administration of either the law practice or the notary practice and who is the responsible partner. The client administration is split in two parts but the administration, at

In order not to create the impress- ion that a mixed partnership is all honey, let me give you some examples of problems that never- theless may arise. Conflicting professional rules: In the case of notaries in the Netherlands, it is professionally acceptable for the notary, should two parties wish to enter into an agreement, to advise and draw up a draft agreement for both parties concerned. Now let us assume that one party is a client of one of the notaries of your firm and the other of one of the lawyers. The first client (that of the notary) regards it as normal and insists that his notary makes the draft for both sides and does not accept that the lawyer-partner advises the other client, which client has a much longer standing with the firm. What do you do? Conflicting interest: The difference in the type of practice may create difficulties. The notary may have clients who use his services always for convey- ancing matters in real estate. Such a notary client - certainly where the mixed partnership is fairly young - not necessarily uses the same MDP firm for lawyer services. Now it may happen that such a notary client is engaged in a conflict leading up to legal action against a client of one of the lawyer partners. As the notary client himself has instructed another law firm to handle this matter there seems to be no problem. The lawyer partner is acting for the adversary of the notary client.

One would then have to keep the administration of the law practice totally separated from that of the tax practice or accountant's practice and include only the result in the administration of the mixed partnership. In our case there remains the question of professional secrecy. We see no reason to avoid the situation where a practitioner on the one side can find out whether a certain person or company is a client of one of the partners of the other side. The knowledge he thus obtains is privileged and thus protected. In case of a mixed partnership with tax lawyers or chartered accountants one would have to arrange a system whereby the tax lawyer and/or accountant would have no access to the names of the clients of the law practice, combined with a warning system for the lawyers. The mixed pertnership with chertered occountents Let us now look at the question whether (under a ruling such as in force in the Netherlands) a mixed partnership between lawyers and chartered accountants could be allowed. In my opinion there are certainly grounds to argue that it should not be allowed. Basically, these grounds are to be found in the prime function of the chartered

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