Tax Law: Howard Liebman, Partner, Jones Day.
BL: What range of issues does a tax lawyer typically cover in private practice?
HL: You see, I am somewhat of an atypical tax lawyer. I do more than pure tax. Typically, tax lawyers either provide tax advice to corporate lawyers or independently find answers to specific tax questions. However, a lot of different areas can and often need to be looked at when developing a corporate/tax structure: pure corporate law, commercial law, contract law, and even labour law – all of these areas of the law link in with tax law.
To give you an example in the labour law context, a tax lawyer may be asked how to best structure an employment contract in order to ensure that the income is delivered in a tax-efficient manner. The same often applies for how to optimally deliver termination indemnities when an employment contract is to be ended.
So essentially, my work consists of a rather large matrix of issues that allows for a very broad and varied practice of law. In the end, I need to understand a little bit about many areas of the law in order to provide clients with comprehensive solutions. If problems are approached purely from the tax point of view, the solutions arrived at will be too narrowly focused.
Again, for example, I do a considerable amount of pan-European structuring and restructuring work. If I were to neglect company law in counselling clients on how to proceed with such matters, I would soon run into trouble! What is in fact needed is a balancing of competing considerations, integrating elements from a number of areas in the law in order to lay the foundations for an effective corporate and tax structure.
BL: What drew you to a career in tax law?
HL: The fact that I have ended up as a tax lawyer was really somewhat of an accident. As I had studied International Relations and Economics before my law degree, I had thought I would want to practice international trade law, as I assumed that it would deal primarily with contracts for cross-border transactions in goods and services. In fact, as I now know, this is not actually the primary focus of an international trade lawyer these days.
But even before I could find that out, I had the good fortune to stumble into a job at the U.S. Treasury Department following my first year at law school. Surprisingly, through contacts and luck, I was hired as a Consultant there, with the task of carrying out a study on Subpart F of the U.S. Income Tax Code. This is a very complicated set of provisions which is inherently international in nature, as it deals with the taxation of income earned by so-called "Controlled Foreign Corporations". Although it took me literally a week to read the 13 sections of Subpart F, I eventually wrote up my study, which was later absorbed into a more detailed report authored by my boss at the time.
At the end of this experience, I had a real head start on tax matters as compared to my classmates, and ended up enrolling in a number of tax classes in my second and third years at law school. This trend then trickled over to my first job out of law school. Although I was initially asked to work in other areas of the law, as soon as my then-employer discovered I had an international tax background, I was up to my knees in tax work!
BL: How creative do you perceive your work to be?
HL:Very. Although many tax matters will admittedly entail alot of grunt work, such as the filing of tax returns, I am fortunate enough to largely avoid the less interesting aspects of practicing tax law. I carry out a lot of research into cross-border tax issues in order to address clients’ needs. For me, this is like an art: I am given a blank sheet of paper and need to find answers to questions that I have often never been asked before.
There is no one right answer. Lots of options exist, which is why this work usually ends up in the form of a very complex diagram. With some intuition, a little bit of knowledge of alot of different country tax (and as noted above, other) laws and treaty inter-relationships, one can then create a structure that -- hopefully?! -- makes sense. The result is a diagram, or a picture if you will, on a piece of paper. Voila!! There you have my artwork.
BL: If you had to pick a downside to your job, what would it be?
HL: The practice of law is a hybrid between a business and a profession. At Partner level, in addition to directly advising clients, we are tasked with running the business side of things. We are required to oversee the work produced by our more junior colleagues. We are expected to take care of the marketing and pitch for new business. We are required to run the office at the operational level. Thus, we end up wearing many hats, which is very time-consuming.
But if I had to give a specific downside, I would say fee collection. While some clients pay on time, even those with the best track records may delay payment, especially in a bear market. Collecting bills from certain kinds of clients can be a difficult and unpleasant experience, to say the least!! It is certainly not what I like about the practice of law.
BL: What do you say to those who say tax law is boring?
HL: To be provocative (and in no way wishing to denigrate my accounting colleagues), I would say they are mistaking tax law for tax accounting! While the latter is often numbers-driven form filling, the former is artistic, creative, challenging, and fun!
