Legal Question in Business Law in California

Re: Business entity for attorney & cpa

I believe so-called "co-practice" and rules and laws to facilitate it has been a topic of debate in recent years. I am not aware of any break in what appears to be an impasse, but if you were to contact the California State Bar and inquire I'm sure they have a means to bring you up to date.

Re: Business entity for attorney & cpa

Although the situation may change in the future, California lawyers are forbidden to split their fees with non-lawyers. The reason for this rule is that partners have a fiduciary duty to protect each other's business interests, and your legal obligation to a non-attorney partner might conflict with your duty to protect the interests of your client. If your CPA partner wants to defer income to next year but your client needs a quick settlement, you will have a problem.

You cannot legally form a partnership with a non-lawyer if the business intends to earn fees from your legal services. You can be disbarred for doing so. You and a partner can run a restaurant together or have other types of business, but you can't practice law for a partnership that includes non-lawyers.

Re: Business entity for attorney & cpa

this is a very interesting inquiry --- as an attorney i would first suggest that you contact the ethics section of the state bar and there will be a basic guidence there -- many forms of "partnership" or other business relationship exists but that begs the question as to whether the relationship is legal -- i have not heard that any attorney can practice law with clients in an entity that shares fees with others not liscensed to pracrice law within that entity -- that does not mean that something might be available to you but only if it conforms to curretn b and p code sections and personally a written approval of the bar --- i hve some things in mind but need far more facts to properly answer --- if you wish you may call me at 925-945-6000

Re: Business entity for attorney & cpa

With all due respect, you can't. You may not share fees with a non-attorney (assuming the CPA is not also a licensed attorney).

Joel Selik

www.seliklaw.com

Re: Business entity for attorney & cpa

I agree with everything every other attorney has said in response to your question. I, too, have a background as a tax attorney (LLM Georgetown), and have at many times in my career worked with actuaries, accountants, etc., but never within the context of a law firm.

What you might consider doing is forming two distinct entities, one for the practice of law, and one for the practice of accounting. Obviously, you are sole owner of the law firm; he or she sole owner of the accounting firm. Funnel the accounting fees to the accounting firm and the legal fees to the law firm. To the extent you need each other's services on an overlapping matter, refer the client to the other, or pay the other directly for the advice as a business expense (you pay the accountant for the accounting advice; he pays you for the legal advice). Do not "mark up" each other's bills for any additional profit by the other's firm. Transmittal the advice from the other's area on the other's letterhead.

Even though you are separate entities, you could enter into joint leases of business premises, etc., and periodically adjust the expense-sharing structure. Through the use of the expensing structure, you can get a result at least loosely resembling a partnership, but it won't be exact. This is because there cannot be a "return on capital" element for your "partner"...you can only expense the fair market value of his/her services in providing accounting advice to your clients. You can share leases, etc., and you can both be under the same roof, share some expenses, such as reception, etc. You might even be able to go so far as to say the two of you are "affiliated" in providing services to clients in areas overlapping accounting and law. But, I would recommend your door says "Lawyer, PC" and his says "Accountant, PC" so the public is clear when they go see one or the other. But, direct fee or profit-splitting is pretty much a no no. And watch out! If your client needs accounting advice and your phantom "partner" is not the best accountant for the mission, refer it elsewhere.

Although I practice in Georgia, I have been a member of the California Bar since 1979. [email protected].