LEGAL ETHICS & PROFESSIONAL RESPONSIBILITY eJOURNAL
"The IRS Under Siege"
Confidence Games: Lawyers, Accountants, and the Tax Shelter Industry, Cambridge, Mass.: MIT Press, 2014
TANINA ROSTAIN, Georgetown University Law Center
MILTON C. REGAN, JR., Georgetown University Law Center
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.
"Metadata Redux: Now You're Telling Me I Need to Provide Metadata to the Opposing Side?"
The Wyoming Lawyer, p. 46, June 2014
BLAKE ANTHONY KLINKNER, Assistant Attorney General - Natural Resources Division
Metadata is "data about data." As has been discussed in previous literature, problems may arise for lawyers and their clients when certain kinds of metadata are inadvertently provided to opposing attorneys and parties. However, in other situations, attorneys and their clients may be under an obligation to provide their metadata to opposing attorneys and parties. This article begins by reviewing the case law involving metadata and providing a brief history of the discoverability of metadata. The article next addresses best practices for obtaining metadata at the outset of litigation. Next, the article addresses best practices for limiting metadata at the outset of litigation. The article concludes by commenting on metadata's overall role in the discovery process.
"Contract Review: Cognitive Bias, Moral Hazard, and Situational Pressure"
9 Ohio St. Entrepren. Bus. L.J. __, 2014, Forthcoming
Wayne State University Law School Research Paper No. 2014-08
ERIC A. ZACKS, Wayne State University Law School
This Article explores the contract drafting and review process of attorneys from a cognitive and social science perspective. Based on an understanding of the behavioral tendencies of individual attorneys as impacted by cognitive bias, moral hazard, and situational pressure, the drafting attorney may be able to secure particular transactional advantages for her client. For example, the anchoring effect, which suggests that individuals are affected by the presence by an initial value position, may explain why drafters should and do include extreme positions in their initial draft. Similarly, time pressure may affect an attorney’s review of a contract, which a drafting attorney can anticipate and exploit to her advantage by increasing contract length and complexity. The drafting attorney can also seek to take advantage of particular moral hazards that the reviewing attorney faces when representing clients, such as when the reviewing attorney is compensated on a per-transaction basis or would like to appease the client and avoid disrupting a transaction. Understanding the cognitive processes and situational influences helps explain or predict particular patterns of contracting behavior. These factors suggest significant limitations in the attorney as an effective tool in checking opportunistic behavior, both prior to and after contract formation, and undermine a positive model of the transactional attorney as a value-adding transaction cost engineer.
"Obligation and Social Practice"
To appear (in Spanish translation) in Convencionalismo y Derecho, Lorena Ramírez Ludeña, Josep Maria Vilajosana (eds), Marcial Pons, 2014 Forthcoming
NICOS STAVROPOULOS, University of Oxford - Faculty of Law
My topic is the role of social practices in the explanation of certain obligations. I discuss Hart’s view and a realist variant. Both suppose that the role is determined by the logic of claims of duty made by insiders. I argue that we shouldn't hope to find a full template for the fundamental explanation of the relation between practice and duty already packaged in those claims, but would rather have to call on substantive moral theory to do so.
"Legal Principles Governing the Disqualification of Judges"
PHILIP BRYDEN, University of Alberta - Faculty of Law
JULA HUGHES, University of New Brunswick Faculty of Law
This is the seventh, substantially revised and updated version of a paper that was presented originally to the National Judicial Institute Continuing Education Seminar for Appellate Judges held in Vancouver on April 10, 2002. The original paper was published by Professor Bryden in (2003), 83 Canadian Bar Rev. 556. Beginning with a review of a number of leading Canadian and other common law decisions on judicial disqualification, we explore the implications of the divergent strands of thinking that emerge in the jurisprudence to improve our understanding of the Canadian jurisprudence and then move to a discussion of the substantive rules governing judicial disqualification in six categories of cases. We argue that the conceptual tools we use in addressing issues of judicial impartiality tend to fail us precisely in the analytically marginal cases where, based on the jurisprudence or policy, plausible arguments could be advanced for suggesting both that a judge should or should not be disqualified. This uncertainty puts pressure on judges to recuse themselves in marginal situations in which it would be better from the standpoint of the efficient administration of justice for them to sit.
"Accountability of International Prosecutors"
Law and Practice of the International Criminal Court, Carsten Stahn ed., Oxford UP, 2014, Forthcoming
JENIA IONTCHEVA TURNER, Southern Methodist University - Dedman School of Law
The dilemma of holding prosecutors accountable while ensuring their independence was at the center of the debates surrounding the establishment of the International Criminal Court (ICC). The drafters of the Rome Statute for the ICC understood that the Court would be handling cases with significant political implications and yet working with limited resources and no independent enforcement capacity. To enhance prosecutors’ ability to operate successfully in this environment, the drafters enshrined prosecutorial independence into the Statute and gave prosecutors significant discretion over charging and investigation decisions. At the same time, drafters worried that ICC prosecutors were not sufficiently accountable to anyone. This led to the decision to give judges and the Assembly of States Parties limited authority to oversee prosecutorial actions.
This chapter reviews how the ICC has addressed prosecutorial mistakes and misconduct in the first ten years of its existence. It evaluates how existing sanctions and remedies for prosecutorial wrongdoing respond to the challenge of preserving the independence of international prosecutors while ensuring their accountability. Finally, the chapter examines whether stricter internal oversight, discipline by external professional bodies, or informal sanctions can usefully supplement existing judicial and administrative sanctions for prosecutorial misconduct at the ICC.
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Legal Ethics & Professional Responsibility eJournal
Vice Dean and Professor of Law, New York University School of Law
DAVID J. LUBAN
Georgetown University Law Center
RONALD DANIEL ROTUNDA
Doy & Dee Henley Chair and Distinguished Professor of Jurisprudence, Chapman University, The Dale E. Fowler School of Law
WILLIAM H. SIMON
Arthur Levitt Professor of Law, Columbia University - Law School, William W. and Gertrude H. Saunders Professor of Law, Stanford University - Stanford Law School
DAVID B. WILKINS
Harvard Law School - Program on the Legal Profession
CHARLES W. WOLFRAM
Charles Frank Reavis Sr. Professor Emeritus, Cornell Law School