Three Reasons Why an Attorney-CPA is better than a CPA
Like most people I am often asked what I do for a living. I sometimes explain that I am both a tax lawyer and a CPA, (Attorney CPA) whereupon I usually get a reply like: “Oh”, accompanied by a look of confusion. “So you could not make up your mind, or what?” This last remark is only fair. Why would someone want to be both a lawyer and a CPA?
I chose to work in the areas of business law, estate planning, and tax law for a few very important reasons. First, my work in the tax and business area fully and artfully uses my expertise of both law and accounting. In business or estate planning meetings, a client will often have both his accountant and his lawyer sitting at the table, both of whom are attempting to dictate the situation, causing conflict between the two. By being both a CPA and lawyer, my ability to understand the numbers as well as the legalities associated with estate planning help me bridge that gap and avoid conflict. This makes the planning process easier for my clients who know that I have all their bases covered.
Secondly, while attorneys may have taken courses on tax or estate law, this is not enough to have comprehensive accounting knowledge. If a CPA obtains his law degree and decides to primarily focus his practice on law, he has a distinct advantage over the majority of attorneys whenever accounting issues arise.
Conversely, if a dual-licensed Attorney-CPA decides to continue an accounting career, he has a distinct advantage over most CPAs due to his familiarity with the legal concepts and procedure, making him a much better expert witnesses in court cases.
No matter what career path a dual-licensed Attorney-CPA follows, he will have an advantage over his competition because of his additional training and education. The legal and accounting fields have many areas of overlap, and becoming dual-qualified gives the practitioner far greater insight and perspective than the average lawyer or accountant.
Everything from transaction tax consequences to estate planning involves complex legal and financial principles that interlink. Becoming a dual-qualified Attorney-CPA gives the practitioner a more well-rounded understanding of how these often abstract concepts work.
Attorneys and CPAs are taught to view problems from unique perspectives as they pursue their education, and a dual-licensed professional is able to combine those distinct analytical approaches to ensure they see every angle. The dual education helps give clients better legal and financial advice due to the ability to avoid blind spots in problem-solving.
Especially important, clients are protected by the attorney-client privilege, which does not apply to CPAs. Recently, in Barry v. Clermont York Associates, LLC, 2014 NY Slip Op. 33335(U), Justice Kornreich held that a client’s communications with an accountant regarding a lawsuit were not privileged. In Barry, the court reviewed a referee’s report regarding disputed privilege claims. One issue the court addressed was whether communications between the plaintiff and an accountant were privileged.
The court explained:
The attorney-client privilege shields confidential communications between an attorney and his client, made during the course of a professional relationship for the purpose of facilitating the rendition of legal services. The party asserting the privilege has the burden of proving each element of the privilege and that it has not been waived. Typically, the presence of a third-party destroys the privilege because confidentiality is lacking. However, where counsel needs assistance from other experts, the privilege extends to such third parties, hired as an agent of the attorney or client to facilitate the rendition of legal services.
Accounting concepts can also be highly complex — analogous to that of a foreign language for many attorneys. The presence of an accountant, whether hired by the lawyer or the client, is often necessary or at least highly useful for the effective consultation between attorney and client. However, if the advice sought is the accountant’s rather than the lawyer’s, the privilege does not apply. Consequently, if a client communicates first with his accountant and later consults his attorney on the same matter, there is no privilege. The lesson here is clear. If possible, hire an attorney who is dual-licensed as a CPA to ensure that all of your communications are privileged.
Perhaps summed up best by Brad Huntington, a multimillionaire business strategist, when trying to decide whether to consult with your attorney or your CPA, ask yourself the following three questions:
1. Does the objective involve a specific financial amount or involve the IRS? Use your accountant.
2. Does the objective involve a third-party (other than the IRS)? Use your attorney.
3. Does your attorney or your accountant disagree with the above-mentioned test? Change your accountant or attorney.
Mark A. Krohn, LL.M Taxation, CPA and a partner at J&G, is in charge of the Business Law Team and is also a member of the Trust & Estates Team. He can be reached by phone at our Walden, NY office at 866-303-9595 toll free or 845-764-9656 and by email.