Situations When Lawyers Hire Accountants

Accountants are important financial professionals who can help individuals and businesses with tax matters, bookkeeping, and other tasks.  Accountants often operate separately from lawyers, but sometimes, the expertise of an accountant is needed by an attorney in the course of their work for a client.  Indeed, there are a variety of situations when lawyers need accountants to provide the best representation possible for clients.

Tax Consequences

One critical time when lawyers need accountants to best serve a client is when attorneys work on tax matters.  Some of the decisions lawyers make can have a substantial impact on the types and amounts of taxes that will be owed by an individual or business.  For instance, lawyers are oftentimes tasked with forming companies for clients and drafting all of the paperwork associated with operating a business.  However, various types of companies are treated differently by tax authorities and an accountant can make sense of the amount of taxes a business may owe and what types of filings need to be completed by a given business.

Accountants may also be important when lawyers evaluate trusts and estate matters.  For instance, lawyers may advise clients to establish trusts for loved ones during their lifetime or after they pass away depending on a variety of factors.  Establishing trusts can have a huge impact on taxes, depending on whether the trust is revocable, the purpose of a trust, and a number of other factors.  Accountants sometimes understand the tax consequences of certain activities better than lawyers, and this can be helpful when providing holistic advice to clients.

Forensic Accounting

Another situation when lawyers hire accountants is when forensic accounting is needed.  Forensic accounting generally refers to the work of accountants to track down money and determine if an individual is receiving all of the funds to which they are owed or if money is being hidden by legitimate or illegitimate means.  Forensic accounting is important to many types of legal matters.

For instance, in a dispute between business owners, it is commonly alleged that one business partner is not paying another business partner all the money to which they are owed.  In addition, in divorces, one spouse may allege that another spouse is hiding money or may not be truthful about the true extent of their resources.  Forensic accounting can verify if parties are being truthful about the statements concerning revenue and financial resources which can impact how attorneys are involved in a case.

Expert Testimony

Expert testimony from accountants may be needed depending on the type of lawsuit, and this is another situation when lawyers hire accountants.  For instance, in certain malpractice cases, accountants may need to testify about best practices and other topics within the field of accountancy.  This might involve situations when financial advisors gave poor tax advice, failed to properly handle a client money, or in other circumstances.  Accountants may also need to opine about the valuation of assets in any number of cases, since depreciation, book value, and other considerations can all impact the amount of money a party may be entitled to in litigation.  When an accountant needs to provide expert testimony, they usually need to submit a written report and they might have to sit for a deposition and answer questions before trial.  If a case proceeds to trial, an accountant may need to provide live testimony so the finder of fact is provided the accountant’s information that may be relevant to a case.

Investigations

Accountants can be invaluable during tax investigations, and this is one important situation when lawyers hire accountants.  Clients hire lawyers for many different types of tax investigations.  This includes routine audits, claims of intentional underreporting, and other matters.  While lawyers can make legal arguments about the issues involved in the investigation, and can conduct legal research to support their case, they may not be too knowledgeable about financial matters underlying tax investigations.  Accountants can provide the support needed to evaluate books and other financial records in order to evaluate claims made by taxing authorities.  Moreover, accountants can sometimes help lawyers craft the financial arguments that may support some of the defenses asserted by a client during a tax investigation.

Government Filings

Another time when lawyer hire accountants is when regulatory filings need to be completed.  Some companies need to submit regular documentation to state and federal authorities.  This might include documents required of publicly-traded companies, paperwork needed to maintain certain businesses licenses, and other situations.  Some of this paperwork requires that clients conveyed detailed financial information.  In addition, some licenses may require that an accountant make certifications about a client’s business and their financial information.  Lawyers may need accountants to review balance sheets and other financial paperwork needed to complete many government filings.  In addition, if a lawyer does not work at a law firm with an accountant on staff, they may need to procure the services of an accountant to make certifications that may be necessary to receive certain licenses.

The Rothman Law Firm has good relationships with many different kinds of accountants, and we support our clients who may needed the help of financial experts.  If you are looking for an experienced New York and New Jersey lawyer to help with your financial matter or other legal issue, please feel free to contact us to request a free consultation.