Multi-Disciplinary Firm (MDF) or a Mega Firm means a Partnership Firm with more than 25 Partners. It is a Partnership Firm which provides a Professional Service as its main or core service along with other non-core Professional Services. Say for example, ABC and Associates, Company Secretaries, is providing Company Law and Corporate Law Services as its core Professional Services and along with it, it also provides Accounting, Project Finance, Taxation, Cost Accountancy and such other allied non-core Professional services.
The objective behind formation of MDF’s is ‘One-Stop-Solution’ for Clients.
A Brief History of Multi-Disciplinary Firm (MDF)
The need for incorporating Multidisciplinary Firms first arose in 1940s in US. The concept of MDF began when some of the Big Global Accounting Firms reached their natural growth. The heads of such Firms realized that Accounting, Auditing and Taxation services could generate only finite revenue. Hence, they started to find more ways to earn revenue. The methods, techniques and procedures varied from Firm to Firm but the motive of Revenue Sharing, remained the same.
Pre-requisites of incorporating a Multi-Disciplinary Firm (MDF)
MDF is a joint or collaborative venture amongst independent individuals. Hence, it is very important to keep below mentioned points in mind: All minds should work in cohesion Treating all partners equally Having mutual faith and respect for all Having Financial Discipline Distribution of Income at regular intervals
Benefits of incorporating a Multi-Disciplinary Firm (MDF)
The working space which is shared by all, is useful and beneficial to the MDF as every partner’s contribution matters a lot. As a result, the goal of complete client satisfaction in accordance with maintenance of professionalism can achieved.
Following are some benefits of incorporating a MDF-
1. Cohesive Working- It will give an excellent opportunity to work with partners with different ideas, expertise, experience, knowledge etc.
2. Exposure to different kinds of work- As a MDF has partners from various recognized professions, the partners themselves as well as the trainees/article clerks will have a good exposure to do a variety of work. Advertisement
3. Cost effective- Since there are large number of partners, the overall costs to run the MDF is shared in agreed profit/loss sharing ratio. Advertisement
4. Revenue Sharing Model- Even if a partner has very less experience in his practice area, he/she can get a share from the work done by other partners subject to terms and conditions of the MDF.
5. Big growth opportunities- With right work ethics and professionalism of each partner, MDF can grow fast as compared to other small firms. Senior partners can focus on complicated or critical tasks and let the rest be managed by comparatively less experienced partners.
6. Liability- Liability of all partners depends upon the Act under which it is registered. For example, if it is registered under Partnership Act, 1932, the liability will be unlimited. On the other hand if it is registered under Limited Liability Partnership Act, 2008, the liability will be limited.
7. Disciplinary Action- Every partner in a MDF is governed by his/her’s respective laws regarding the respective profession. Hence, no need to worry about issues arising out of professional misconduct.
Risks involved in incorporating a Multi-Disciplinary Firm (MDF)
Personal or Professional Conflicts between partners Lack of communication among partners Lack of Transparency Such other risks as the case may be
How to Constitute a Multi-Disciplinary Firm (MDF)?
The formation of a MDF will be possible by taking conscious and sincere efforts by likeminded professionals who are authorized by their respective regulators in this regard. Numerous meetings should be held to decide the future of respective MDF. Mutual Faith and Understanding each other’s Professions and area of Practice is the essence to draft a blue print of the MDF.
Some of the following points need to be put forth for better understanding-
1. Agreement- All the eligible partners shall enter into a Partnership Agreement which shall include the authorities, responsibilities, revenue sharing model, duties etc.
2. Administration- Partners should allocate administrative functions amongst themselves like maintaining Digital Signature Certificates (DSCs) of Clients, Inward-Outward Registers, Office furniture, Computers, Stationery, Accounting etc.
3. Human Resource Function- Every successful organization requires a good Human Resource Manager to manage the employees working in the organization. Hence either one should be elected amongst the partners or should be appointed as an Employee.
4. Public relationship and Brand Building- A MDF is a firm consisting of CA, CS, CMA, Advocates etc. Such Professionals are specifically disallowed to advertise or solicit their clients. Hence, a MDF cannot have a Marketing Department like a Company but can have a Public Relations and Client Maintenance department which would act just like an ‘After Sales Service’.
Recognized professions eligible to form Multi-Disciplinary Firm (MDF) in India
Following are the recognized professions eligible to form MDF in India wherein Partners can be any one of the below mentioned professions (subject to such laws, rules or regulations framed from time to time)-
(a) Company Secretary, within the meaning of the Company Secretaries Act, 1980;
(b) Chartered Accountant within the meaning of the Chartered Accountants Act, 1949;
(c) Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959; (
d) Actuary within the meaning of the Actuaries Act, 2006;
(e) Bachelor in Engineering from a University established by law or an institution recognized by law;
(f) Bachelor in Technology from a University established by law or an institution recognized by law;
(g) Bachelor in Architecture from a University established by law or an institution recognized by law;
(h) Bachelor of Law from a University established by law or an institution recognized by law;
(i) Master in Business Administration from Universities established by Law or Technical Institutions recognized by All India Council for Technical Education.
All the above mentioned professionals shall be members of the respective institutions governing their Profession at the time of admitting themselves as Partners of MDF namely-
(a) The Institute of Company Secretaries of India established under the Company Secretaries Act, 1980 (No. 56 of 1980)
(b) The Institute of Chartered Accountants of India established under the Chartered Accountants Act, 1949 (No.38 of 1949);
(c) The Institute of Cost and Works Accountants of India established under the Cost and Works Accountants Act, 1959 (No. 23 of 1959);
(d) Bar Council of India established under the Advocates Act, 1961 (No. 25 of 1961);
(e) The Indian Institute of Architects established under the Architects Act, 1972 (No. 20 of 1972);
(f) The Institute of Actuaries of India established under the Actuaries Act, 2006 (No. 35 of 2006);
(g) The membership of such other professional bodies or institutions recognised by such law for the time being in force.