Based on my experiences, a client is best served when their lawyer and CPA work together on issues or transactions as each provides different, but critical skills and analysis.
Often, lawyers are engaged by a client to handle a specific situation and are selected based on the lawyer’s unique area of expertise that is applicable to the situation at hand (i.e. acquiring/financing of real estate). The CPA, with a relationship based on annual financial statements or taxes, generally has a broader knowledge of the client, albeit not necessarily an expert on the subject matter as the lawyer.
As a team, the CPA and lawyer working together should be well positioned to address:
1) Tax implications for the transaction as contemplated and alternatives
2) Risk management and the consequences of the transaction not being successful
3) Integration/implication to broader goals of the client (i.e. estate/succession or charitable plans)
4) Ensuring financial covenants/measurements are appropriate and measurable
As applied to the example of a client acquiring/financing real estate, the lawyer would primarily focus on the transaction. Due diligence regarding title, land use, environmental and lender security interests are critical to completing the goal of closing on the real estate and related financing. However, the CPA likely has had discussions with the client regarding estate planning and transitioning future value to the client’s children. As such, introducing the children as original acquirers could provide an opportunity for future appreciation to be in the direct ownership of the real estate in lieu of a future gift by the client. In regards to the financing, the lawyer will be focused on reasonable covenants and remedies, while the CPA should be verifying that the financial covenants can be achieved based on current performance as well as any implication the new financing may have to existing financings and their related covenants.
The business topics best addressed as a team range from the sale or succession planning for a family business that includes both a legacy and charitable plan to a lease negotiation where the terms may have certain tax implications if structured appropriately. Valuation and litigation support services often arise in the ordinary course of business too.
By working together, both strategically and tactically from the onset, the lawyer and CPA will increase the probability of success not only for the transaction, but also ensure alignment with the client’s overall goals and objectives. As important, the lawyer and CPA team can also identify risk and/or issues upfront, which can be timely addressed and resolved in lieu of a last minute crisis.
In the end, both the legal and accounting professions measure their success based on the success of their clients. Our firm has developed relationships with lawyers who share our view on working as a team and we stand ready to support our collective clients. I95
Weyrich, Cronin & Sorra
Jeffrey A. Jacobson, CPA, Esq., Tax Director at Weyrich, Cronin & Sorra Chartered, joined WC&S in 2015. In addition to his years of experience as a CPA, Jeff spent 13 years with a real estate development and management company in roles as CFO and General Counsel. He is experienced in tax, law, accounting, financial planning and management. Specialties include leadership and growth management for businesses and family owners, financial and estate planning, management advisory services, audits and reviews, as well as tax and financial reporting. Jeff is chairman and board member of Goodwill Industries of the Chesapeake, a member of the AICPA and Maryland Association of Public Accountants and the Maryland Bar Association.