Tax and Wealth Management

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In a nutshell

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Tax 

“Tax touches virtually every aspect of the economy,” says Les Samuels, tax counsel at Cleary Gottlieb. Accordingly, tax law encompasses a variety of activities, from transactional support and structuring to tax planning and tax controversy.

Working alongside corporate lawyers, tax attorneys ensure that transactions are as tax-efficient as possible, be they centered on public or private M&A, capital markets, investment funds (private equity, REITs and mutual funds), joint ventures or partnerships. Tax planning advice requires familiarity with all relevant domestic and international laws, and it is essential to have an understanding of clients’ overall objectives and the structuring of their businesses.

Tax controversy is more of an independent category, covering a range of contentious tax issues. These include tax-based litigation, IRS examinations and tax shelter investigations. Disputes are usually resolved at the administrative level. Transfer pricing is also grouped with tax controversy.

Wealth management / private client 

Private client lawyers advise wealthy families, individuals, trustees and fiduciaries on all aspects of estate planning, tax planning, wills and trusts, plus various types of estate litigation. This can be domestic in scope, for families living within the US, or it can have an international element if the family has a branch in the US, is seeking asylum in the country, or has invested wealth overseas, for example.

A great deal of private client work is tax-based, particularly involving income and estate tax. Specialists in this area also need their corporate tax knowledge to be up to scratch, as it's not unusual for the families they work for to have multimillion-dollar businesses to their names.

What tax and wealth management lawyers do

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Tax 

  • Advise clients on the tax elements of transactions.
  • Analyze cases and regulations to develop a real understanding of the tax implications of transaction structures. Findings are summarized as memoranda or given through direct counseling.
  • Negotiate terms dealing with the tax aspects of transactions.
  • Draft agreements, especially for M&A and joint ventures, which are particularly tax-intensive. An important element is the drafting of tax disclosures.
  • Liaise with other non-tax lawyers and clients to ensure the smooth running of transactions.
  • If working in tax controversy, negotiate with the IRS, respond to IRS questions, and draft memoranda and briefs.

Wealth management 

  • Work with families in regard to their offshore trusts and the implications of bringing them onshore.
  • Advise families on their international estates, including multijurisdictional legal advice.
  • Liaise with private client lawyers around the world.
  • Represent trustees in litigation as to their conduct of an estate.
  • Draft wills, trusts and estate documents.
  • Regularly meet with clients.
  • Aid families and wealthy individuals on their personal tax liabilities and solutions.
  • Legal research.
  • Strategic thought.
  • Communicate and discuss strategy within a team.

Realities of the job

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Tax 

  • Tax lawyers need to keep up with all new developments in both the law and the economy as a whole. This is especially important for a young lawyer, who needs to build expertise. The law is always changing.
  • By keeping up to date, tax lawyers can become real experts and even innovators within the legal landscape. With experience, they may be able to offer a solution to a tax issue that has previously been unsolvable. For example, the tax lawyer will produce a new financial instrument that becomes accepted by the market. This will sometimes prompt the government to review its regulations.
  • It’s vital to have an affinity for reading case law and regulations, as this is how juniors will spend some of their time. They must be able to rationalize their findings and summarize them accurately.
  • Tax lawyers must have full confidence in their advice. The research must be methodical and complete.
  • In order to ensure that commercial transactions are as tax-efficient as possible, tax practices work closely with corporate departments and understand the non-tax issues that drive transactions. A successful tax department can be a useful marketing tool for firms looking to attract new clients.
  • Tax lawyers need to express themselves clearly and concisely. Solid technical knowledge is essential, as is the ability to explain technical information to non-experts.
  • Excellent interpersonal skills are a must. Tax controversy can sometimes involve liaising with the IRS, and it is important that lawyers be upfront and straight-talking. They may also work with international clients, so cultural awareness is important.
  • Lawyers have the chance to work on a variety of matters, including charity and pro bono. They are expected to comment on proposed regulations and may also give tutorials to colleagues and clients.
  • Tax lawyers sometimes break up their career by spending time working for the government, notably the IRS.

Wealth management

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  • Basil Zirinis, a leading wealth management partner at Sullivan & Cromwell, says: “Our practice is a mix of drafting, meeting, advising and research.”
  • Wealth management tends to offer young lawyers more direct client contact than they'd generally get in a larger corporate or litigation department. “If you're a strong associate and you show drive, there is always the opportunity to be very involved with families face-to-face,” says Zirinis.
  • Research plays a large role. “We're fortunate enough to have a practice where the questions are unusual and complex and there are often no clear answers,“ Zirinis notes. “We add value where the answer is unsettled. So the associates are doing research, but it's creative research. This makes it more challenging and more interesting.”
  • One challenge for private client lawyers is juggling several different matters at once. They don't just focus on one thing at a time. “This element is a challenge, but at the same time it's a high point. There's so much variety and you never see the same thing over and over again. It's thrilling and exciting and fresh,” Zirinis confirms.
  • It helps to have an interest in tax and an appreciation of numbers – there's a large amount of this sort of work involved in private client and wealth management – but by no means is it a math-based area of the law. Tax work tends to be integrated with corporate elements, with the more complex parts being handled by the firm's corporate tax teams. McDermott Will & Emery partner Amy Heller says: “You need to have a strong analytical mind, but the work is more conceptual than adding and subtracting figures.”

Current issues

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Tax 

  • The recession caused a slowdown in demand for tax lawyers, but controversy work has picked up somewhat. A longer-term effect of the economic downturn and the federal budget deficit is that the government is more active in reviewing tax positions to bring in revenue.
  • Lawyers are mostly engaged in advising businesses on how to be more tax-efficient. In workout situations, saving some from failure is professionally rewarding.
  • As a result of rising unemployment, the government is offering tax incentives in a bid to create jobs.
  • Globally, there has been more cooperation regarding tax havens and information exchange.
  • The spotlight is currently shining on the taxation of global financial industries and markets. Tax was a key talking point in the run up to the 2012 presidential election.

Wealth management 

  • “The global nature of wealth certainly has an impact on the practice,” says McDermott Will & Emery partner Amy Heller. “It's increasingly common for wealthy families to have family members and assets in multiple jurisdictions, so it's important to have at least an awareness of other countries' laws and a sensitivity to other cultures.”
  • The changing nature of the law means that lawyers must be flexible in their drafting of wills, trusts and other documents. They must be packed full of additional clauses, which means they can be adapted to fit current regulations at any given time.
  • Wealth transfer tax laws and thresholds are constantly being amended. This includes gift tax, estate tax and generation skipping transfer tax, among others. The fluctuations impact the clients' financial planning, so you have to keep abreast of the shifts.

What top tax and wealth management lawyers say

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Leslie Samuels, partner, Cleary Gottlieb

“It’s important to keep your eyes and ears open to make sure you understand everything about the transaction so your advice is the most effective it can be.”

“You don’t have to be a math genius to be a very successful tax lawyer. You’re dealing more with concepts. We don’t prepare tax returns, and we certainly don’t get busy before the tax filing dates.”

“To the extent that tax lawyers think they’re just servicing the corporate lawyers, it’s a total mistake. The work is so much broader than that.”

“Keeping up with developments is exciting and demanding. There’s so much you have to keep up with every day! But that’s how you become an expert, which is one of the attractive aspects to practicing tax law. You really can become the go-to person who knows everything about topic X.”

Basil Zirinis, partner, Sullivan & Cromwell

“Because it's such a human area of the law, it can be extremely emotional. Do you leave assets outright? Do you trust your family? There is no right answer. When families are fighting they want you to help them settle it, but given the emotions and family history it can very difficult. It's not about 'right' or 'wrong' family members, it's just that there is often no clear or perfectly right answer.”

“Students should definitely take as many tax courses as they can in law school - including corporate tax. The more of a background they have in tax, the more helpful it will be.”

“The broader the courses you take, the better off you'll be. We do everything from corporate law to litigation in our practice – so the broadest possible academic experience is important.”

“An international perspective on the world in general is helpful, especially because the explosion of wealth is global. It's not US and Europe any more. Its increasingly mobile – China, Latin America, etc. That's where the most interesting work will ultimately be for young lawyers, so languages are extremely important.”

Amy Heller, partner, McDermott Will & Emery

“To be successful in this practice you have to have a natural curiosity and an interest in working with different areas of the law. You need a strong analytical mind.”

“You may end up working with families for years and years, and potentially establish close relationships with people. This can be a very satisfying aspect of the practice. Dealing with death and family dynamics can be difficult and emotional for clients, though. It helps to be able to read people and to be able to find practical solutions to complex problems in conjunction with them.”

“We work in a field that requires the lawyer to explain complex tax and estate law concepts to clients who may have little or no background in this area. This is unlike certain areas of corporate practice, where lawyers may more typically be dealing with businesspeople or other attorneys.”

“I have found that law students who enjoy their tax law and property law classes tend to enjoy practicing in this area. I advise our summer associates to take as many tax classes as possible. Take a class in estate and gift taxation, if offered at your school, and as many income tax classes as possible."