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July 25, 2011 - Phil Hodgen

How the IRS audits attorneys

For those of you concerned about the IRS and your risk factors, please take a look at the Attorneys Audit Technique Guide on the IRS website.

Attorney-Client Privilege When Your Attorney Gets Audited

For those of you who are deeply concerned about confidentiality and how far the IRS can go in digging into your life, look particularly at the area on attorney-client privilege.  It isn’t pretty.

Generally:

• The attorney-client privilege protects the disclosure of confidential communications between a client and attorney.
• The identity of the client and the fee arrangement between the attorney and client is not protected by the attorney-client privilege.
• The attorney-client privilege must be claimed by the CLIENT, and the privilege must not have been previously waived.  If you have made a disclosure to a third party already, that would result in a waiver of the privilege.  (Hint — don’t take any extra people along with you when you meet with your attorney.)

There is more.  Read it.

This is not new stuff.  But there are plenty of people out there who have serious problems and need to protect themselves.

In many cases, the question of attorney-client privilege is one of academic interest, not of real practical value to the client.  Too many third party disclosures have already been made and the cat, so to speak, is out of the bag.

Tin Foil Hat Lawyering

If you are deeply concerned about this and think you need as much protection as possible, it is in your best interests to (1) not accidentally waive the attorney-client privilege; and (2) go into tinfoil hat mode.  In tinfoil hat mode we do not talk to the client on the phone except to set a meeting.  We do not email each other, not even PGP-encrypted email.  We meet in person in neutral, secure places outside the United States.  Tinfoil hat mode is expensive.

Hat tip to Jim Counts, CPA for triggering this blog post.