Tax Law

Consider the tax burden on high earners once the Bush administration’s tax cuts expire next year. Add up the federal, state, city and sales taxes for a lawyer in New York City who earns $300,000 a year. Depending on the circumstances, this individual could be facing marginal tax rates in the range of 60 percent.

– Professor Tyler Cowen, arguing in favor of reducing government spending, in a piece for the New York Times.

Today is a very special and important day. Do you know what day it is? (And no, we’re not talking about the official release of the U.S. News law school rankings, which we’ve already covered.)

It’s not National Be Kind to Lawyers Day, which took place on Tuesday. Now your secretary has no reason to be nice to you. But you have to be nice to him very soon — this coming Wednesday, April 21, is Administrative Professionals Day.

Today is April 15: TAX DAY. The day you have to cough up some of your hard-earned cash to Uncle Sam. The time each year when you must render unto Caesar the things which are Caesar’s.

We reached out to some tax gurus and groupies for thoughts on this special day. They provided us with a wealth of insights and links — plus opportunities to GET FREE STUFF, and alleviate the financial burden associated with today….

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(And information about tax day giveaways.)

The Major League Baseball Season started last night and gets underway in earnest today. Football might be the biggest sport on the American landscape, but baseball is still America’s pastime. It’s a favorite of lawyers and judges — and according to a recent poll, baseball is the sport that draws a nearly equal percentage of liberal and conservative fans.

If you’ve actually been to a baseball game in the past decade, you know that the experience is ridiculously expensive. My first baseball game cost my dad $55 all-in (Mets/Padres, 1987, Straw hit one out). My last game cost my wife and I upwards of $200 — and we saw the pitiful Nationals in bad seats.

Duke law professor Richard Schmalbeck and Rutgers business professor Jay Soled think they know why the price of attending a baseball game has skyrocketed. They blame the tax code and the money generated from corporate ticket buyers. Have you ever gone to a game on your firm’s dime? If so, you are part of the problem …

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It’s one of the few things still shrouded in secrecy at most firms: which partners have equity in the firm and which don’t. Actual partners, of course, get a share in the firm’s profits, and are part of the PPP calculations reported by Am Law. Non-equity partners get the partner honorific, but in actuality they’re often just glorified senior associates, at least when it comes to matters like salary and major firm decisions. (Of course, this varies from firm to firm.)

Being a non-equity partner can be nice. You generally don’t have to toil on management committees or get caught up in partnership politics, and you may be less personally exposed to financial fallout should the firm’s fortunes sour (assuming the equity partners made personal guarantees on loans). But being a non-equity partner is also like being a stepparent that the children don’t respect. You don’t have any real power and don’t get to reap the full rewards from your investment and care.

Women and minority groups have tried to put pressure on firms to reveal partners’ equity or non-equity status when it comes to diversity reporting. But firms have resisted, saying that they don’t want to stigmatize non-equity partners. Angela Onwuachi-Willig sums it up on Concurring Opinions:

Over the past two years, the National Association for Law Placement (NALP) has tried to obtain information regarding the breakdown of equity and non-equity partners by gender and race at law firms. The majority of NALP’s law firm members refused to hand over the information, and NALP eventually gave in on February 12.

The Executive Director of NALP, [James] Leipold, indicated that most firms cited privacy concerns for not divulging the details of their equity and non-equity partnership breakdowns. According to Leipold, small firms especially worried that providing such information would allow non-equity partners to be easily identified and stigmatized.

Well, Delaware firm Young Conaway Stargatt & Taylor has revealed who its non-equity partners are, though it did so by accident. The firm’s controller needs a little lesson on the use of “bcc”…

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Many of the things I enjoy in life (smoking, drinking, kicking children who speak out of turn) are either illegal or subject to a sin tax. Luckily, most of the laws against my illegal vices are unenforceable if I commit infractions discretely. (“I don’t know what happened to little Jimmy. He must have fallen onto my foot.”) But I can’t avoid sin taxes — and thus I can’t stand them.

First of all, they are regressive. Secondly, they’re anti-business. So we literally have a tax regime that freedom-loving progressives and money-loving conservatives should hate, and yet sin taxes continue to be an acceptable way for the government to shove its morality down our throats.

The Texas Supreme Court is wrestling with just such a question of morality versus freedom and money. Specifically, it’s a battle between morality and the freedom to stuff money into a g-string. The Austin-American Statesman reports:

Is exotic dancing, performed partially clothed or fully nude, a form of free speech protected by the U.S. Constitution?

Strip club owners insist that it is, and on Thursday they asked the Texas Supreme Court to strike down the state’s $5-per-patron tax as an unconstitutional limit on free expression.

Of course, proponents of the tax can’t just come out and say “we hate men who like to look at nude women.” Check out the hook they’re trying to hang their abuse of legislative power on…

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tax headaches tax evasion taxation tax crimes.JPG‘Tis the season for… W-2s. When you get that handy-dandy form from your employer, we suggest that you file it with your federal income tax return — in timely fashion. [FN1]
And don’t forget to file any applicable state and local tax returns, too. Otherwise you could find yourself in deep doo-doo. From the Long Island Press:

Three attorneys, an accountant and a doctor were arrested Tuesday for failing to file a combined total of more than $365,000 in state personal income taxes, Nassau prosecutors said. The arrests were part of a statewide sweep by the New York State Department of Taxation and Finance (NYSDTF).

Arresting someone on a failure-to-file charge? Seems a bit extreme. But if the authorities wanted to send a message about how seriously they take tax crimes, they succeeded.

The attorneys who were charged with failure to file a personal income tax return include 47-year-old David Mollon of Great Neck, 50-year-old Kelly Talcott of Sea Cliff and Dennis O’Leary, 57, of Westbury. Facing the same charge is 53-year-old Gerald Gartner of Lawrence, a certified public accountant, and 62-year-old Avelino Rosales of Cedarhurst, a physician.

O’Leary is a personal injury lawyer — res ipsa loquitur. But Mollon and Talcott are (or were) partners at large law firms, places whose names you’d recognize.
Find out which firms, as well as how much Mollon and Talcott earned during the tax years in question, after the jump.

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John OBrien John J OBrien headshot Sullcrom Sullivan Cromwell partner.jpgBack in April, we wondered about the departure from Sullivan & Cromwell of John O’Brien, a highly regarded and well-liked corporate partner who focused on M&A work. This development captured our interest because it’s unusual for lawyers to leave the (highly lucrative) partnership of a top firm like S&C.

When partners leave a place like Sullivan & Cromwell, there’s often a story behind the departure. E.g., Carlos Spinelli-Noseda (partner left S&C after billing clients and firm for more than $500,000 in fraudulent travel and entertainment expenses).

In addition, word on the street was that O’Brien was escorted from the building by security personnel. Partners are being asked to leave their firms with increasing frequency during the recession — but they’re not usually walked out by muscle.

So we decided to do a little digging.

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Ronald George Chief Justice Ronald M George Ron George.jpg
In a speech last night before the American Academy of Arts and Sciences, the chief justice of the California Supreme Court, Ronald M. George, criticized his state’s reliance on the initiative process. His remarks focused on how that process, direct democracy taken to the extreme, has paralyzed state government, especially when it comes to fiscal matters.

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erisa lawyers.jpegLet’s push forward with our series of open threads on small law firms in different practice areas. To see what we’ve covered so far, click here and scroll down.
Today’s topic: ERISA LAW. For those of you who aren’t familiar with ERISA, we’ll quote a prior post of ours:

For all of you non-lawyers — or for those of you who sat in the back row in law school — ERISA stands for the “Employee Retirement Income Security Act.” It’s the federal law, originally passed in 1974 and subsequently amended, that governs the administration of pension and employee benefit plans. So yes, it’s pension law.

This area of law may not sound sexy, but it has some sexy practitioners. Back in 2006, we held an ERISA lawyer hotties contest. Feel free to check out the male nominees, the female nominees, and the ultimate winners.
More substantive thoughts on ERISA practice, after the jump.

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will last will testament trusts estates.jpgWe continue our series of open threads about small law firms focused on different areas of practice. In light of the turmoil being experienced by Biglaw, as well as the many laid-off lawyers and job-hunting law students looking for other opportunities, now is an excellent time to look beyond large law firms.
Today we turn our attention to TRUSTS AND ESTATES. What is it like to work at a small (or at least non-big) firm focused on T&E work? What are your hours like? Your compensation? What do you like the most — and the least — about your job?
Please discuss, in the comments.
Speaking of trusts and estates, at the recent Lavender Law conference we attended a workshop on advanced estate planning. The panelists offered advice that might be helpful to people who practice in, or aspire to practice in, trusts and estates.
Read about it, after the jump.

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(Plus another Lavender Law panel write-up.)”

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