I recently started reading Confidence Games by Tanina Rostain and Milton C. Regan, Jr. The book is an overview and history of the late-90s early-2000s tax shelter explosion; I’m not far enough yet to have gotten to the details of the shelters (and the period slightly pre-dates the mid-2000s start of my legal career), but I just read a couple pages that made me reflect on my training in the tax department of Willkie Farr & Gallagher LLP.
When we popularly think of attorneys, we think of zealous advocates on behalf of their clients. The idea of zealous advocacy is ingrained not only in the public imaginations, but in the American Bar Association’s Model Rules of Professional Conduct. And it’s an essential concept.
In tax practice, though, it’s not the end-all, be-all of being a professional. Tax attorneys—including those I trained with—feel an obligation to the tax system, as well.[fn1] And Confidence Games does a good job of explaining these additional obligations tax attorneys feel:
As some elite tax lawyers saw it, it was misguided to regard the relationship between government and the taxpayer as inherently adversarial. “The distinction between taxpayers and their government is wrong,” Henry Sellin declared in 1974, “for the government is the taxpayers, just as the taxpayers are the government. We are they and they are we.” The citizen’s obligation to pay her fair share of taxes was a duty not only to the government but to other taxpayers. . . .
From this perspective, clients were part of a larger community whose survival required cooperation among its members. They might obtain a short-term benefit by not paying their fair share of taxes, but they and their fellow citizens would suffer substantial long-term injury if this became the dominant strategy for all taxpayers. The elite tax bar’s traditional norms therefore included some responsibility to further a client’s enlightened self-interest as a citizen in providing advice about tax obligations.
Members of the elite bar also suggested that tax advisors should foster respect for the tax system among their clients.
This role required that lawyers rely on a sophisticated understanding of their professional obligations, as well as an understanding that the client was both a taxpayer and a citizen, to determine how far they would go in helping their clients minimize their tax liabilities.[fn2]
It’s a tough line to walk, but it’s the line I was trained in. Look, I know attorneys get a bad rap (sometimes deservedly), as does Wall Street (often deservedly).[fn3]
But I’m proud of the work I did at Willkie, and impressed with the ethos of the tax department there. We worked to provide our clients with the most tax-efficient means of doing their deals that we could, but we didn’t try to undermine the tax law, or provide tax benefits that didn’t reflect real transactions.
It can be hard to push back against clients that want to push the limits, especially when those clients can find other firms that are less scrupulous. But I’ve seen members of the elite tax bar in fact hold the line, and I’ve seen it more than once.
I think our professional obligations require us to do so, but I’m also impressed that the tax bar meets those professional obligations so often and so well.
[fn1] For what it’s worth, the Model Rules don’t let attorneys advocate on behalf of their clients at all expense. Zealous advocacy is tempered by an obligation to act within the law and to maintain a professional, courteous, and civil relationship with others in the profession.
[fn2] Confidence Games at 62-63, 65 (footnotes omitted).