United States > Tax > Overview
The mood in East Coast tax practices in early 2011 was cautiously optimistic. Although the aftermath of the financial crisis continues to reverberate, strategic deals have returned to market. The firms included in this section range from the leading global firms to fairly modest regional partnerships. Each of the firms offers expertise and high service standards, whether across the board or in particular areas which are highlighted in the editorial. Clients should carefully consider their own requirements before instructing. While larger firms have the capacity to form multidisciplinary groups to handle complex, large scale instructions for international corporate clients, mid-tier and privately-held companies might find a more comfortable fit with one of the smaller firms mentioned, where partner involvement is often higher and, possibly the fees lower.
In the northern part of the Central Time Zone law firms mainly cluster in Chicago, the dominant financial and industrial centre of the Midwest, a region badly hit by the recession. Here, restructuring and insolvency linked instructions continue, although the tax practices of the larger Chicago firms have leveraged skills into national, and even international, practices to good effect. To the south, Houston and Dallas have become global legal centers for the oil and gas sector, with tax expertise to match, and the Texas airline and shipping hub has created a tax niche in the transport sector.
West Coast tax practices have experienced similar patterns to those in other regions, with deals returning to the market in the second half of 2010. Expertise in the region’s technology, entertainment, bio-pharma, and media businesses is now well developed and the larger West Coast firms address national and international markets in these sectors. The smaller firms listed are recommended by clients for expertise and high service standards; particular niches are mentioned in the editorial.
Employee benefits and executive compensation (EBEC) practices continue to expand. Since The Employee Retirement Income Security Act of 1974 (ERISA) was introduced, US law firms have increasingly addressed employee benefits as a separate area of practice, distinct from tax and labor law. As a separate development, executive compensation issues such as equity-incentives and other tax efficient elements of compensation packages, have increased demand for expert advice. Increased levels of M&A activity demand expertise from both disciplines. The latest developments include a demand for advice from compensation committees following the Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed into law in July 2010.
In the EBEC area, there is no template to which practices conform, and potential clients should carefully consider the editorial coverage in deciding which practice group best suits requirements. The larger transaction driven firms tend to be biased towards compensation matters, and few deal with ERISA and healthcare issues except within transactions. A few firms, mostly Washington DC-based, specialize in benefits, and in particular complex ERISA fund restructuring, controversy and litigation. Between the two, some firms have built large departments which endeavor to cover the entire EBEC territory.
The tax groups mentioned within the financial products section work closely with finance departments on the most complex and cutting edge financial products. Recent instructions have been generated to a significant extent by the Global Financial Crisis (GFC) whether in the form of advice in restructuring and bankruptcy, or through transactions involving distressed assets. 2010 also saw the return of more activity in the hard hit asset classes of the securitized market.
With the return of strategic M&A transactions to the market, and a continuing need for advice in restructuring in the aftermath of the GFC, demand for international tax expertise has risen sharply. Lawyers also report that a greater proportion of M&A transactions involve cross-border issues. Combined with an increase in post-acquisition integration assignments from multinational companies, international tax groups have been busy, although senior lawyers remain cautious about the fragility of the global economy. Particularly active regions for cross-border work are Asia, and increasingly Latin America, where several global firms have now established offices.
The tax controversy section covers law firms with a significant dedicated group working in both federal and state tax controversy and administrative appeals. All the lawyers interviewed confirmed an increasingly aggressive approach by both federal and state tax authorities coupled with a willingness on behalf of their clients to contest disputed issues vigorously. The majority of firms emphasize that all efforts are made to avoid litigation, which is both expensive and uncertain in its outcome. The majority of firms accept only civil instructions and those firms which are prepared to act in criminal tax disputes are noted.