What Tax Lawyers Do
Tax lawyers typically work in an advisory capacity, assisting people with wealth management and personal tax liability issues as well as businesses with minimizing their tax liabilities.
They’re required to know a myriad of laws at a municipal, state/ province, and federal level, and often work alongside accountants to better assist clients or work in law firms that offer tax services. However, tax lawyers also handle litigation / defense matters and/or negotiations when a client requires representation.
Who would enjoy a career in Tax Law?
Tax law is a particularly good field of law for those who appreciate the intricacies of law and navigating it, but would rather spend more time with clients and doing research or desk work than in a courtroom. Like other lawyers or solicitors, tax lawyers must also be strategic thinkers, negotiators, and be able to communicate effectively across multiple modalities and to many different types of people. It’s helpful to have a background in accounting as well.
Who mightn't like the career?
The career can be stressful due to the high demands placed on attorneys by partners, courts, and clients, so it’s not a good fit for those who don’t cope with stress well. Those in larger law firms are also expected to put in many hours. Although the pay for tax lawyers can be very significant, it doesn’t allow much time for interests outside of work, so those who are driven by leisurely pursuits or balance will likely feel unfulfilled or overwhelmed. Lastly, tax lawyers tend to enter the courtroom less often than other legal specialties do, so someone with expectations of high-stakes court battles may feel uninspired by the practice of tax law.
Admittance into an accredited university upon completion of entry exams is the first step in entering law. Quality institutions have rigorous requirements and competition for positions is fierce. Many tax lawyers study accounting as part of their undergraduate studies in order to gain a better understanding of the field. A law degree is required in order to practice at any level above the rank of intern or summer associate in the US and Canada. In the UK and Australia, offerings such as the Graduate Diploma of Law (GDL) or the Graduate Diploma in Legal Practice (GDLP), respectively, are available, which allow people with virtually any undergraduate degree to move into law. Each jurisdiction has further requirements, including a bar exam and licensure process.
Those who are aware they’d like to enter into a law career should plan early and apply for a summer associate or internship position while still in school, as the experience will help secure a long-term position after graduation.
- Harvard Law School’s “Questions You Should Be Prepared to Answer”
- 10 tips for a strong legal internship interview
Moving into Tax Law from another career
It can be difficult to transition into law, simply because one must pass legal exams and participate in additional coursework. At the same time, some big firms appreciate diversity and take pride in amassing a staff with unique non-legal backgrounds, as these individuals are better prepared to understand the needs of each sector that is being represented by the firm.
Graduate / Associate
Role: Incoming lawyers are referred to as associates. Students who are interning may have the distinction of being called a “summer clerk” or “summer associate,” and those fresh from university will be called “first-year associates,” and so on. Lawyers typically hold the title of associate for somewhere between seven and ten years, depending on the firm. During this time, their job is to support the firm’s partners, generally by handling research and reviewing contracts. It’s worth noting that some firms have an “up or out” policy, meaning that if a lawyer is not on the tenure track and does not become a partner within the allotted time, they are asked to leave the firm.
Role: Generally speaking, the title of senior associate is offered to a lawyer around five years into practice, though each firm will have its own guidelines. During this phase, the senior associate is expected to behave as if he or she is a junior partner. Ownership of projects is expected and the individual should be an expert in the area he or she covers. Tasks of greater importance may be assigned to senior associates by the firm’s partners and senior associates will generally have junior associates they can delegate some of their work to. It’s while working as a senior associate that a lawyer demonstrates to the firm that he or she is an indispensable part of the firm and is already behaving as if a partner.
Role: Associates who have proven themselves and are managing some of their own clients as well as bringing in new clients are typically offered partnerships. The exception to this is firms that have “of counsel” positions, which is a promotion from associate for those not on the partner career track. When a lawyer is offered a partnership role, it’s generally an equity partnership in which the lawyer “buys in” to the practice and then earns a percentage of the profits. As part owner, he also gets a say in the firm’s business decisions. Some firms may offer non-equity partnerships and let their seasoned lawyers take a salary instead of being part owner.
It’s fairly rare for tax lawyers to travel, unless they’re part of a large firm, have a good reputation and are attracting clients from a distance, or represent large companies.
Entry Level: According to data from PayScale, those beginning their careers have salaries of approximately USD $104,000 in the United States, £58,000 in the United Kingdom, CAD$97,000 in Canada, and AU$78,000 in Australia.
Mid-Career: USD$121,077, £70,800, CAD$110,580, AU$113,943.
Experienced: USD$159,040, £74,340, CAD$121,250, AU$145,816.
Naturally, bonuses and profit sharing are a major part of a partner’s income. With additional payments, an experienced attorney can earn more than USD$307,000, £120,000, CAD$156,000, or AU$206,000.
Why Tax Lawyers move on
The burnout rate for tax lawyers is somewhat high for those trying to make it up the ladder in a larger law firm, particularly in the first couple of years. The ongoing stress of the position can also cause people to seek less-demanding careers.
With the right qualifications, tax lawyers can enter into tax accounting or other areas of law quite easily, as their exposure to tax legislations and regulations are relevant to many tax and law-related occupations.