When Should an Attorney Call a CPA?

December 31, 2012

When should an attorney call a CPA for assistance? The short answer is, “Whenever business issues or numbers are involved.”
 
Your CPA won’t be happy unless you are successful. Involving a CPA in litigation and practice management matters can help you realize greater profit and have a much healthier practice.
 
Business and Asset Valuations
 
In matrimonial cases, CPAs use available financial documents, such as tax returns and bank statements, to help attorneys determine a spouse’s true financial position. These documents often contain clues that can be used to identify and estimate the values of bank accounts, real estate or other assets.
 
In commercial cases, CPAs provide estimates of business values under various scenarios. For example, the value of the business (if it continues in operation) can be compared with the value of the assets in a sale or liquidation.
 
Cash Flow Analyses
 
One common service provided by CPAs is cash flow analysis. Your opponent’s cash flows can be analyzed to determine the best settlement option that will maximize recovery for your client while minimizing the strain on the opponent – ensuring your client has the best chance to make a full recovery.
 
CPAs also provide valuable insight into your law practice cash concerns. They review accounts and procedures to help you manage your practice to enhance your cash receipts and control your cash payments.
 
Tax Reviews
 
Whenever you have a document or transaction that has tax effects, you should consult your CPA to determine the full scope and find alternatives to minimize tax problems.
 
Your CPA can review documents to ensure the narrative is consistent with the desired tax outcome and that you have not overlooked important tax considerations. Tax reviews can be very important when drafting marital property settlement agreements or conducting real estate or business transactions.
 
Interpreting Business Transactions
 
Your opposing party or counsel often will give a positive spin to business transactions in settlement negotiations or litigation. Chapter 11 bankruptcies are particularly susceptible to this type of characterization because of the pressure on management to produce an acceptable plan of reorganization.
 
The positive spin is not necessarily made in bad faith, but the client must be protected from the potential harm of accepting such characterizations at face value. CPAs are uniquely capable of seeing beyond the spin to understand the true nature of the transaction. Financial documents can reveal important considerations that are not always easily discernible by attorneys.
 
Law Office Management
 
Possibly the most important need for a CPA is in the area of law office management. This is particularly true with respect to lawyers’ trust accounts.
 
CPAs can also help to:

• Resolve partner compensation disputes
• Optimize associate and staff compensation levels to increase profit and reduce employee turnover
• Control expenses
• Improve collections
• Maximize billable hours