Sheltering Lawyers: The Organized Tax Bar and the Tax Shelter Industry

This Article considers the role of tax lawyers in the corporate tax shelter controversy. In the mid-1990s, a large market emerged in abusive tax shelters, which cost the Treasury tens of billions of dollars in lost tax revenue a year. Although individual tax lawyers were deeply involved in abusive tax shelters, the organized tax bar supported law reforms intended to rein in the tax shelter market. The bar\u27s initiatives included due diligence obligations for opinion letters issued in connection with tax shelters and other proposals intended to strengthen practice standards. The tax bar\u27s positions in the tax shelter debate cannot be adequately explained by conventional accounts of the organized bar, which assume that bar groups act to further lawyers\u27 or clients\u27 economic interests or to improve the reputation of the bar. Nor, however, should the bar\u27s positions be taken as pure expressions of public-mindedness. A more nuanced conception of professionalism is required to account for the bar\u27s initiatives. This Article argues that the bar\u27s positions reflect a specific professional ideology of tax practice in which tax lawyers, by virtue of their expertise, serve as gatekeepers for the tax system. While not conferring immediate economic benefits to tax lawyers, the bar\u27s reforms further tax lawyers\u27 long-term reputational and other interests, even as they serve to bind lawyers to higher practice standards and protect the integrity of the tax system

The IRS Under Siege

This is Chapter 1 of Confidence Games (MIT, 2014). Confidence Games provides an account of the wave of tax shelters that occurred at the turn of the twenty-first century. During this period, some of America’s most prominent law and accounting firms created and marketed products that enabled the very rich—including newly minted dot-com millionaires—to avoid paying their share of taxes by claiming benefits not recognized by law. These abusive tax shelters bore names like BOSS, BLIPS, and COBRA and were developed by such prestigious firms as KPMG, Ernst & Young, BDO Seidman, the now defunct Jenkens & Gilchrist and Brown & Wood, now merged into Sidley Austin. These shelters brought in hundreds of millions of dollars in fees from clients and deprived the U.S. Treasury of billions in revenue before the IRS and Justice Department stepped in with civil penalties and criminal prosecutions targeting the professionals and firms involved. As we suggest, the decade of tax shelter activity between the mid-1990s and mid-2000s is the most serious episode of professional misconduct in the history of the American bar. Chapter 1, available here, describes how an overstretched and under-resourced IRS came under attack in the late 1990’s by anti-tax and anti-government members of Congress. In the chapters that follow, we describe the heightened competition for professional services, the relaxation of tax practitioner norms against aggressive advice, and the creation of complex financial instruments that made abusive shelters harder to detect. By 2004, the tax shelter boom was over, leaving failed firms, disgraced professionals, and prison sentences in its wake. A central theme that we explore in the book is the role of organizational forces in abetting wrongdoing. In the conclusion, we assess the regulatory responses that ultimately put an end to this wave of shelters. We also consider strategies and approaches that might serve to strengthen professional norms governing tax advice. The rise and fall of the tax shelter industry offers a cautionary tale that we believe remains highly relevant today, as lawyers and accountants continue to face intense competitive pressure and regulators continue to struggle to keep pace with accelerating financial risk and innovation

Access to Justice as Access to Data

This Keynote Address, delivered in celebration of the launch of SCALES, discusses the importance of making local and state court data available for research on the functioning of the American civil justice system. It describes the regulatory and administrative challenges of obtaining good-quality data from courts. It calls for a concerted effort among researchers and policymakers to develop open-source technologies for the development of case management systems and data infrastructure. And it urges researchers to foster a collaborative research ecosystem based on broadly sharing court data

Techno-Optimism & Access to the Legal System

For legal technologists, apps raise the prospect of putting the law in the hands of disadvantaged people who feel powerless to deal with their legal problems. These aspirations are heartening, but they rest on unrealistic assumptions about how people living in poverty deal with legal problems. People who are poor very rarely resort to the law to solve their problems. In the situations when they do seek solutions, they confront educational and material impediments to finding, understanding, and using online legal tools effectively. Literacy is a significant barrier. More than 15 percent of all adults living in the United States are functionally illiterate, meaning that, at best, they read at the fourth-grade level. Inadequate access to the Internet and limited research skills compound the challenges. To reach people from marginalized groups, access-to-justice technologies need to be integrated with human assistance

Measures of Justice: Researching and Evaluating Lay Legal Assistance Programs

In recent years a national movement to train lay advocates and advisors to assist people with their common justice problems has emerged in the United States. A host of new programs have launched that allow trained navigators and justice workers to provide legal assistance. These programs – developed in Alaska, Delaware, South Carolina, Arizona, and Utah, among other places – vary in their substantive focus, the skills they impart, and their approaches to reaching the people and communities they seek to help. The proliferation of lay legal assistance programs creates research imperatives and opportunities. These programs need to be assessed to determine whether they risk harm to users, improve access to justice, and are equivalent (or better) alternatives to relying on lawyers. While the legal profession rarely attempts to assess the value of lawyers’ services, evaluation is a core element in social and health services. Drawing on assessment in other service areas, we offer a preliminary framework for evaluating lay assistance programs that focuses on fidelity and harm avoidance, effectiveness for individual users, and social impact. We highlight the importance of adopting a people-centered perspective on the value of interventions intended to help people achieve just resolutions of their problems. We offer this framework as a first step in the development of shared rubrics for assessing lay legal assistance. Over time, our hope is that a greater emphasis on assessment will prompt the legal profession to adopt evidence-based approaches to determining the value of legal services