NUMBER 344 1938

Question. May a lawyer, apart from his regular law business, enter into a partnership agreement with an accountant, who is admitted to practice before the United States Board of Tax Appeals, to conduct business as tax consultants, and operate such business independently of his regular law business, making use of a separate letterhead for the tax business upon which the firm is designated as tax consultants, with no reference whatsoever upon such letterhead to the fact that one member of the firm is a lawyer? An acknowledgment and answer would be appreciated.

Answer. Canon 33 of the Canons of Professional Ethics (as amended September 30, 1937) provides in part: “Partnerships between lawyers and members of other professions or nonprofessional persons should not be formed or permitted where any part of the partnership’s employment consists of the practice of law.”

Consultation regarding tax matters, not strictly limited to the field of accounting, necessarily involves interpretation of tax statutes and relevant precedents, and frequently the determination of other legal factors.

The U.S. Treasury Department regulations governing admission to practice and practice before it, while providing that “nothing in these regulations shall be construed as authorizing persons not members of the Bar to practice law,” and imposing specific restrictions on “agents” who are not “attorneys,” nevertheless permit such “agents” to function as advocates and to draft protests, etc., which are in the nature of pleadings. The Treasury regulations thus permit a qualified and restricted practice of law before that department by laymen.

Rule 2 of the U.S. Board of Tax Appeals provides for practice before the Board by attorneys at law and certified public accountants. Such practice necessarily involves advice to clients as to the wisdom of taking appeals to that board after protest and hearing in the Treasury Department, the making of a proper record before the board as a basis of effective appeal there from, and other functions which clearly constitute the practice of law.

As the rules now stand in both the board and the Treasury Department, there is an anomalous dual practice, with both lawyers and accountants performing functions essentially comprised in the practice of law. In the opinion of the Committee, the present existence of this anomaly does not justify the proposed partnership. Part of the partnership’s employment as “tax consultants” would necessarily consist of the practice of law; this would contravene the express language of Canon 33 cited above, and also the spirit of the further provision in Canon 33: “In the formation of partnerships for the practice of law, no person should be admitted or held out as a practitioner or member who is not a member of the legal profession duly authorized to practice, and amenable to professional discipline.”

In the opinion of the Committee the proposed partnership would also tend to violation of Canons 27 and 35, which disapprove advertising, solicitation of professional employment, and the control or exploitation of a lawyer’s professional services by a lay intermediary. Separate conduct of his “business” as “tax consultant” would not preclude the lawyer from using it as a feeder for his law practice. Clients would seldom realize and still more seldom be governed by any distinction between retaining the partners as tax consultants in a preliminary protest and retaining one of the partners as attorney in consequent court action. One step would ordinarily follow the other, and the attorney would inevitably acquire professional employment through business solicited by his accountant partner. (See N.Y. Penal Law Sections 270, 270a, 270d.)


In its answer in Opinion 201, a majority of the Committee was of the opinion that it was not professionally proper for a lawyer to form a partnership with a certified public accountant “for the practice of public accounting and tax report service” because the implication of the arrangement was that the partnership furnished legal services of the lawyer to its customers; because this constituted exploitation of professional services for the profit of those not entitled to practice law, admitted to the emoluments of the office those not entitled to its privileges or bound by its discipline or amenable to summary correction, and afforded an opportunity to the layman to give legal advice. The present question contains no element leading to a contrary conclusion, and in the opinion of the Committee should be answered in the negative.