Gerry Lean, CPA, JD Founding Partner, Naden/Lean LLC
For most Americans, preparing your annual federal and state income tax returns does not rank high on a list of favorite things to do. The arduous, time-consuming process is not always pleasant, especially if you have to include a check for taxes owed. Luckily, for most of us, taxes are a once a year task, so it may be difficult to understand why someone would choose to dedicate his entire professional life focused on taxes; however, Gerald H. Lean, CPA, JD, partner at Naden/Lean LLC, finds the complex world of taxes invigorating.
“People ask me all the time: ‘ How can I do the same thing every day for over 50 years?’ I make it clear that I don’t do the same thing every day. The tax code is always changing, and I find it fascinating. Plus, every one of my clients’ tax needs is different and I love hearing their stories. That is what gets me excited to go to work every day,” Lean says.
One of the reasons why Lean may find his profession so fascinating is that there is a clear difference between tax preparation and the more extensive work he does concerning individual and corporate tax planning, tax compliance, tax representation, and financial and business management.
“There is still a need for tax preparers who can quickly complete a straight-forward 1040 Form for someone who has one W-2 form with no deductions; however, we focus beyond tax preparation,Lean says. “I work with clients by planning throughout the year so that there are no surprises, always looking for ways to reduce taxes through the year, as well as retirement planning.” Lean says that many clients prefer a “one-stop shopping”model that Naden/Lean has, allowing them to obtain all their tax and financial planning needs through one company (see below).
“However, some clients are only interested in tax preparation and compliance. Some prefer to prepare their own taxes and hire me as a consultant. Others have uneven cash flow throughout the year, so they need to do quarterly taxes and need me to consult with them each quarter. Some businesses are a seasonal business, such as some retail stores, and need consultation on cash flow. Whatever their need is, we can help,” Lean says.
In addition to being a CPA, Lean is also an attorney admitted to practice before the Court of Appeals of Maryland and the United States Tax Court. “Because I am admitted to practice in the Tax Court, if your return is being examined by the IRS or if there is some sort of tax controversy and it can’t be resolved administratively, I can take the case to court. Also, my knowledge of law helps clients know how to abide by all the rules and regulations to avoid any legal issues,” he notes.
Destined for Tax Work
While many professionals change jobs and even industries several times during the course of their careers, some people are lucky enough to know at an early age what career they desire. It’s safe to put Gerry Lean in the latter category.
After graduating with a degree in accounting from the University of Maryland, Lean landed a job as a field agent for the Internal Revenue Service. “ It was a great job to get right out of college, and in 1963, I met Paul Naden when I was assigned to examine one of the returns he had prepared,” Lean recalls. Naden had started his own accounting firm in 1956 as a sole proprietor and initially operated out of his basement before moving in a shared office space and then into its own space in Belvedere Towers in northwest Baltimore for the first 10 years. While Lean was a student at the University of Maryland Francis King Carey School of Law and still employed at the IRS, a colleague mentioned that Naden was looking to add a CPA with tax experience to his growing business. “I joined the firm on a part-time basis as a contractor while I grew my own book of business” Lean says.
The firm expanded, and in 1973 moved into a standalone office building in the Mount Washington area. It acquired more staff to help meet the needs of the burgeoning business. “In 1979, we decided to merge our businesses as partners, and became Naden/Lean, LLC,” Lean recalls. Over the next 37 years, the firm moved to Lutherville, then Timonium and then Hunt Valley, where it is now headquartered. It has seven equity partners and 35 employees. After retiring from the firm in 1997, Naden passed away in 2013.
As he looks back on his 50 years with Naden/Lean, a mid-sized CPA firm that is consistently ranked in the top 10 of regional firms, Lean says that the firm has grown from five employees to its current size and has expanded its geographic scope with approximately 15 percent of the firm’s business anchored in the Washington, D.C., metro area. One of the biggest growth areas, Lean says, is the dental field.
“When Paul started the firm, a few of his classmates in undergraduate school ended up going on to dental school or medical school,” Lean says. While the medical field has seen a lot of consolidation and doctors moving away from being independent and under the umbrella of large hospitals, the dental field has remained mostly sole proprietorships or small partnerships. “One of our partners – Tim Lott – has become an expert on managing dental practices’ finances, as well as with mergers and acquisitions and sales of dental practices.” To capitalize on this new growth area, Naden/Lean launched Dental CPAs, a full service accounting, financial and administrative consulting firm targeted specifically for dentists, and N/L Transitions, a dental brokerage firm that services dentists throughout the Mid-Atlantic region who are transitioning in or out of their practice. “The dental field has really been a major growth area for us over the past five years, and we have clients as far west as St. Louis. Now with technology, we can handle all of the work here in Hunt Valley.
To capitalize on this new growth area, Naden/Lean launched Dental CPAs, a full service accounting, financial and administrative consulting firm targeted specifically for dentists, and N/L Transitions, a dental brokerage firm that services dentists throughout the Mid-Atlantic region who are transitioning in or out of their practice.
“The dental field has really been a major growth area for us over the past five years, and we have clients as far west as St. Louis. Now with technology, we can handle all of the work here in Hunt Valley. We’ve created a very successful niche,” he says.
Like many industries, accounting has seen an enormous amount of mergers and acquisitions with companies like American Express branching out and acquiring some significantly sized local CPA firms. “We’ ve been approached about merging or being acquired over the years. We’ ve also acquired a few small firms; some of which worked.
“We’ ve been approached about merging or being acquired over the years. We’ ve also acquired a few small firms; some of which worked out and some that did not. From my perspective, it rarely works when you suddenly work for a large firm when you are used to being independent. We saw some bad experiences, so we’ve avoided entering into any sort of large merger,” Lean says. “When you are an independent firm, you get to call your own shots. We have seven partners who run the day-to-day operations of Naden/Lean. I like that I can make my own decisions …I don’t need to talk to anyone about billing policies, for example.”
Lean does recognize that large firms, such as KPMG, can offer specialized training for its employees, which may serve as a disadvantage for Naden/Lean when it comes to recruiting talent. However, in the end, it comes down to acquiring talented employees who prefer working for a mid-sized firm. “Some CPAs desire the atmosphere that a large firm provides, but for the 40 hours of
continuing education that is required each year to remain a CPA in Maryland, our employees can acquire that through the Maryland Association of CPAs or through online webinars.
”Being independent and having been in business for 60 years also gives Naden/Lean’s clients a sense of stability, which is especially important when dealing with people’s and businesses’ money. “Having the history of their finances and our closeness to their family is a definite asset for us,”Lean notes. “We can provide personalized service that a large, national firm cannot. It’s like going to Macy’s versus a small retailer that provides customer service direct from the shop owner. With us, clients are dealing with the same person, year in and year out. At a large CPA firm with a lot of turnover, one moment you are dealing with ‘Joe,’ and then ‘Sarah’ and then ‘Nick.’ There is no history or continuity, but with Naden/Lean, we have such small turnover. At a big firm, unless you are a large public company with large assets, you are a small fish in a big pond …here you are always a big fish in a small pond.
“We provide a hands on approach and don’t operate on a 9 a.m. to 5 p.m. model; I am available to my clients 24/7. This access is important as there are times where a client has genuine concerns about their finances and it simply cannot wait until Monday morning.
They can call me and be assured that everything is OK, and they appreciate that access,”says Lean, who adds that it’s that type of personalized service that has led to many new clients Naden/Lean gains via referrals from existing clients.
Lean notes that some commercial clients have grown to a point where they have outgrown what Naden/Lean can provide or they merge with another company who has an in-house CPA, but Lean looks at those situations with pride – it’s a testament that the service Naden/Lean has provided those companies has helped them succeed and grow their business.
A Love of Taxes
Walking around Lean’ s office, his love affair with taxes is apparent, most notably by the proudly hung replica of the first income tax form used after the 16th amendment was ratified in 1913 allowing for an income tax. “I am a student of the tax code. I am fascinated by the history and how the tax code has evolved over the past 103 years,” Lean says. “An income tax was passed after the Civil War in an attempt to pay off the country’s war debts, but the Supreme Court ruled it unconstitutional because the Constitution only allowed a per capita tax, so the 16th amendment in 1913 was needed to allow for an income tax,” says Lean, his love of history evident in his voice.
Lean says that there are reasons for every new provision in the tax code, which guide and incentivize certain economic and social behaviors, and says that a simplification of the tax code may be in order. In any event, the ever-evolving nuance of income taxes only solidifies the importance of having a trusted CPA who knows your personal and business taxes thoroughly. “If a client asks me if they can deduct something, I don’t just tell them no. I explain the reason why they cannot, which educates the client, which helps both of us. It helps them make better business decisions as they then keep their taxes in mind.”