United States > Tax > Overview
The volatility in the markets resulted in a drastic slowdown in transactional work across the board, continuing a trend having its origins in the 2008 financial crisis. In this cost-conscious climate, deals have tended to become more tax intensive than ever before, with clients demanding to see value. Tax lawyers working in national and international markets alike have benefitted from the elevated level of internal restructurings, including tax-free spin-offs, often pulling together assets needing to be separated within corporations spread across a number of jurisdictions.
Fiscal stresses are not limited to the federal authorities and the tougher approach in parts of the US with regard to state and local taxation has precipitated a high volume of litigation in the face of fewer opportunities for settlement. Driven by the need to raise revenue, state authorities have also brought about a significant increase in intrusive discovery requests, which has had the effect of elevating the tax function of some state and local tax practices to far higher levels of client contact.
In the centers of high finance on the East Coast, the cookie-cutter work which has characterized the past few years has fallen-off in preference to more partner-intensive, highly negotiated transactions that allow for less delegation. Firms are getting less leveraged as the trend moves towards carving out businesses, handling joint ventures, and strategic synergistic acquisitions in a more sophisticated, precise business environment distinguished by restructurings and a relative dearth of leveraged buyouts.
Bankruptcy refinancing has grown significantly as companies who took advantage of cheap money available back in 2008-09 have begun to default on their refinanced obligations, leading also to discussions over consensual dealings with banks and bankruptcy filings, while lenders have little interest in repossessing assets.
On the West Coast, Silicon Valley firms continue to be the envy of tax planning and IP practices around the world; many have continued to expand their international footprint, particularly in Asian markets, in the modern global economy where valuable IP rights are less and less the preserve of hi-tech businesses. Alternative energy work has seen an uptick, with real estate tax also moderately more active. However, the overall finance practice has been flat to down, reflecting the economy as a whole.
Booming energy MA continues to buoy firms in the Central US, driven by high commodity prices and technological advances which have made the vast shale gas reserves recoverable. MLPs are still big and the energy space has seen a number of traditional IPOs, while cash-and-carry transactions have also been very popular throughout 2011.
Within financial products, the teams covered tend to work closely with their respective finance departments, not only in an advisory capacity, but also actively involved in the development of complex and innovative financial products. Work continues to be influenced by the global financial crisis, although there has been renewed activity in general across the financial industry, particularly with regards to banks searching for new ways to raise low-cost financing. Several firms have also witnessed an increase in international, cross-border activity.
The firms covered in the tax controversy section have significant dedicated groups working across both federal and state tax controversy matters, with the approach of both federal and state authorities consistently reported as aggressive. The teams have witnessed an increase in international work, particularly regarding transfer pricing. A few of the firms listed handle criminal tax disputes, and those which do are noted.