| ||Guidelines to Tax Practice Third |
Frederic G. Corneel*
* Editor's Note: The late Frederic G. Corneel, Partner, Sullivan & Worcester, Boston, Massachusetts, was the recipient of the Tax Section's 2001 Distinguished Service Award. His Guidelines to Tax Practice appears at 31 TAX LAW. 551 (1978) and Guidelines to Tax Practice Second at 43 TAX LAW. 297 (1990). He had nearly completed this article at the time of his death. As with prior Guidelines, this Guidelines Third was presented and discussed at meetings of the Section's Committee on Standards of Tax Practice. Nonetheless the views expressed are those of the author, as minimally edited and updated for subsequent events by us. Gersham Goldstein, Stoel Rives, LLP, Portland, Oregon and Paul J. Sax, Orrick, Herrington & Sutcliffe LLP, San Francisco, California.
A well-known tax lawyer, when asked for the source of the ethics governing his conduct, answered, "I don't know; I suppose it is my parents." Surely what this lawyer learned from his parents was not sterile rules but how they lived their lives, how they responded in action to the challenges and opportunities that came their way. Similarly, each of us who has been in practice for any length of time carries within himself or herself both consciously and unconsciously the example of other lawyers whom we have admired. Their specific problems, like the problems of my friend's parents, were different from ours. The guidance they provide is in values and in attitude, in our self-respect and in the sense of our obligation to other individuals, to the government and to the various communities of which we are a part. It is these that we bring to bear on our problems, where usually the question is not what a rule provides or how it applies, but what we should do when different principles pull us in very different directions.
With the increase in the size of law firms, the growth in specialization, the frequency of movement of lawyers from one firm to the other and the ever growing importance of the bottom line, it has become more difficult to ensure that young lawyers receive the kind of guidance all of us need in preparation for the unpredictable challenges of the future. Certainly every senior dealing with or acting in the presence of a junior must remember that he or she is setting an example. But more than that, firms should consider stating in writing what they are about and the standards they expect from those who are working in the firm. To keep that writing a living document, it must be referred to in practice and supplemented or changed in the light of experience and changing standards in the profession. An approach along these lines should help maintain the observance of professional standards in the firm. Also, if there is a failure in an individual case, such an approach may help make clear that it is in fact an individual failure and not a matter of firm-wide disregard of professional standards.
Based upon the foregoing, this paper has two parts. The first part consists of a set of suggested general guidelines. The second part addresses specific problems arising in several areas of tax practice.
The guidelines for each firm will be helpful only if they reflect the particular practice of the firm. The first one, set out below, was drafted for my own firm, where most of the practice is in tax planning for business or personal transactions. However, at least to acknowledge other fields of practice, there follow considerations bearing on guidelines for tax lawyers engaged in criminal tax practice, tax lawyers who are working as corporation counsel and tax lawyers who have been unable to resist the lure (or perhaps lucre) of the Final Four and have become tax lawyers working in accounting firms.
Of course, the basic rules applicable to the conduct of a tax lawyer do not vary, regardless of the lawyer's specialty or place of employment. But rules of conduct to be useful must reflect the context in which they are to be applied. Thus, both an SEC registration statement and a tax return require the lawyer preparing the document to be honest. But the degree of disclosure and the required certainty as to the correctness of what is stated may be different. Therefore, to be helpful, the guidelines of any firm should seek to address the specific aspects of its practice where problems are likely to arise.
The need for specificity in deciding upon the appropriate application of potentially conflicting rules requires caution in the use of these and any other guidelines. What they provide may be generally true, but in a particular situation quite a different course of conduct may be indicated. Nevertheless, the general guidelines supplemented by the second part of this paper hopefully will help the lawyer using them to have a basic understanding, which is fine as long as the lawyer is clear that in any particular case they do not tell the whole story.
Do notice that these guidelines focus on what should be done and not how far we may deviate from accepted standards without exposing ourselves to penalties, disbarment or malpractice liability. Of course, in practice we will from time to time feel forced to go to the limits of what is permissible. But our teaching should relate to the center of the highway. If what we teach is driving on the edge, the young lawyer will soon wind up in the ditch and perhaps we and our firm with him.