Milton C. Regan

Tax Advisors and Conflicted Citizens

Thousands of lawyers are involved every day in advising clients outside of litigation. These lawyers counsel clients on how they can benefit from or avoid violating statutes, regulations, and other sources of law. How should we think about the obligations of the lawyer in this setting? This article argues that we should eschew a single prescriptive model of the advisor in favor of a pluralistic conception that bases responsibilities on the salient factors of the context in which the advisor operates. The model of the advocate that suggests that the lawyer take a relatively aggressive approach to interpreting the legal provisions applicable to a client in order to maximize the client’s freedom of action. While an advisor who acts as an advocate may focus on either the letter or the spirit of the law in order to serve the client’s purposes, advisors who act as advocates in the regulatory context often focus on the literal terms of the law to help the client engage in what they is called “creative compliance.” This involves structuring transactions, relationships or entities according to the letter of the law in a way that allows the client to avoid as much of the substantive impact of regulation as possible. An alternate conception of the advisor is as a trustee of the legal system who assumes some responsibility for ensuring its integrity as a mechanism for ordering social life. The trustee is inclined to go beyond creative compliance in counseling clients. She therefore is generally more likely than the advocate to see herself as having an obligation to ensure that the client complies with not only the letter of the law but its spirit.The models of the advocate and the trustee each speak to important features of the relationship between government and citizens in the regulatory setting. Different regulatory regimes may possess different features that impose different obligations on lawyers who advise on them.I analyze the provision of tax advice as an example of a particular regulatory regime that acknowledges the claims of both the advocate and the trustee. Tax advice is an especially notable advisory practice setting because tax advice is a practice setting in which there are powerful strains of argument for an advisor to assume the roles of both advocate and trustee. This reflects the potentially conflicting roles of the taxpayer as a private and a public citizen. The private citizen jealously protects her property and is suspicious of government’s claims on it. The public citizen appreciates that the state cannot function to protect property or liberty unless all taxpayers contribute their fair share of revenues. A tax advisor who assumes an adversarial posture toward the state advances a citizen’s private interest but may do so at the expense of her public identity. An advisor who embraces the model of the trustee may provide assurance that the needs of the public citizen will be met, but may risk providing insufficient protection for the private citizen against state power by resolving all close questions in favor of the government. As the article discusses, this ambivalence about taxation is reflected in the regulation of taxpayer and advisor conduct.

Taxes and Death: The Rise and Demise of an American Law Firm

Misconduct by lawyers in law firms is often attributed to pressures from increasing competition for legal services. Modern firms do face fierce competitive pressures. We can gain more subtle insights, however, by focusing on the specific markets in which particular firms operate and how forms of influence in law firms interact with common patterns of behavior in organizations. This chapter draws on this approach to analyze the experience of Jenkens & Gilchrist, a national law firm that had to close its doors in 2007 because of tax shelter work that triggered civil lawsuits and government investigations.