Tony Bromell & John Young

Overcoming our differences

Let’s start with the proposition that anything should be allowed unless there is a good reason to prohibit it: possibly an unfashionable view, but one that I think is worth pursuing.

The ICAEW certainly takes that line with multi-disciplinary practices. We have been consistent supporters of the freedom of professional people to practise in MDPs, if they so wish.

Accountants thrive in competitive environments and we believe it is in the best interests of the economy for competition to be extended as widely as possible, subject to the maintenance of professional standards.

The Office of Fair Trading’s findings on the subject explained the advantages, and the likely beneficiaries, clearly in its report on the professions in 2001.

It stated that ‘restrictions on MDPs may inhibit new entry and prevent the exploitation of possible economies of scale and scope. MDPs might achieve advantages in branding, overhead cost savings, and the ability to transfer resources in response to fluctuations in demand and to give a seamless service to clients. While these advantages may benefit firms of all sizes, they are likely to be especially marked at the level of the high-street firm.’

Some argue that MDPs of accountants and lawyers would create conflicts of interest, but these are nothing new and there are ways of managing them.

Our ethics code adopts a principles-based approach to ensure that ethical principles are adhered to: individuals have procedures to identify potential conflicts, assess whether they pose a threat, and implement safeguards. These might be Chinese walls, informed consent, independent review or whatever. If such safeguards cannot be implemented, you don’t do the work.

There are regulatory issues to be resolved. For example, lawyers and accountants have different ethical codes and the client needs to know which framework any work is being carried out under. Standards should be maintained and regulators should ensure regulation is complete, but not duplicated. We are certainly willing to play our part.

Tony Bromell is head of accountancy markets and ethics at the ICAEW

Don’t get your hopes up

A few years ago, a court in New York decided that it was legal for members of the public, of either sex, to travel topless on the New York subway. This caused a considerable degree of public comment.

The US press cannot normally compete with the UK tabloids for lurid, speculative reporting, but on this occasion they managed to imply that New Yorkers might now have rather more than the adverts to grab their attention when travelling on the subway.

They were, of course, wrong, as is anyone who concludes that just because something has been legalised it will become common.

Something of this reaction can be seen in relation to the government’s unexpected proposal that lawyers will now be permitted to operate in the context of alternative business structures. Inevitably, the suggestion has been raised that we shall now see a flood of merged legal and accountancy firms. I doubt it.

Although it has not previously been possible for lawyers and accountants to join together in partnership it has not, in practice, been difficult for them to work together. The Big Four accountancy firms all formed legal wings in the 1990s, working through the regulatory system as it existed at the time.

In the aftermath of Sarbanes-Oxley, these arrangements have been dismantled. We are not about to see a flood of similar arrangements because Lord Falconer now says they are legal.

Lawyers and accountants generally get on well and, I think, understand each other better than they used to; but just because they are allowed to get married does not mean they will do.We shall undoubtedly see supermarkets and department stores setting up legal arms for more routine work. And some law firms will see the benefit of having a few specialistson board.

However, these specialists are as likely to be estate agents as accountants and one profession or another will still be in charge in each case. On the whole, our two professions are too independently minded to merge their fortunes with each other to a greater degree than this.

John Young is senior partner atinternational law firm Lovells

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