UN rights expert welcomes European court judgment on lawyer-accountant partnerships

A United Nations human rights expert today welcomed the recent judgement by the European Community’s court that upheld a Dutch law barring lawyers from entering into professional partnerships with accountants, saying the ruling was even more significant in light of the Enron case and its allegations of serious conflicts of interest.

“I am pleased the European Court of Justice has distinguished the legal profession from other professions and upheld the importance of the independence of the legal profession,” the UN Special Rapporteur on the Independence of Judges and Lawyers, Dato’ Param Cumaraswamy, said in a statement.

The case was brought before the European Court by two Dutch lawyers who were refused authorization by the General Council of the Netherlands Bar to enter into a partnership with the accountancy firms Arthur Andersen and Price Waterhouse.

Mr. Cumaraswamy said the Court found that partnerships between practicing legal and accounting professionals were incompatible and could interfere with the legal obligations of lawyers to advise and represent their clients independently.

Unlike lawyers, accountants are not bound by professional client confidentiality, the Court said. It also observed that the accountancy market is highly concentrated, to the extent that the firms dominating it internationally are known as “the big five.”

The Court also alluded to possible problems of conflict of interest if law firms also became highly concentrated. The General Dean of the Bar Council of Netherlands had referred to partnerships of law firms with such gigantic accountancy firms as resembling more “the marriage of a mouse and an elephant than a union of partners of equal stature.”

In a 1996 report to the UN Commission on Human Rights, the Special Rapporteur expressed concern about the increasing trend towards the commercialization of the legal profession, particularly in the developed countries.

“[T]he organization of legal practices of lawyers needs to keep pace with modern changes, advances and liberalization policies,” Mr. Cumaraswamy wrote. “At the same time, professionals in the practice of the law must be mindful of the need to retain the element of independence needed to discharge their professional duties…It is this independence in the profession which distinguishes it from any other vocation or profession.”