In a nutshell

“Tax touches virtually every aspect of the economy,” says Les Samuels, tax partner 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.

What tax lawyers do

• 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.

Realities of the job

• 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.

Current issues

• The recession caused a slowdown in work, 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.

What top tax lawyers say

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 everyday! 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.”