Accountants v. Lawyers. Are We Staying in our own Lanes?

Guest contribution from Sarah Hawco, CPA CA, LLM, CIRP, Q. Arb., CFE

I have been a Chartered Accountant, now a Chartered Professional Accountant (CPA) for about 20 years. In addition to this, I have a number of other credentials and designations, including CIRP (Chartered Insolvency and Restructuring Professional), CFE (Certified Fraud Examiner), Q. Arb., and a Master’s in Law. That is a lot of letters. None of which is JD or LLB. So notwithstanding my “good character and reputation,” I am not welcome to become a member of the Alberta Law Society and, as such, cannot practice law.

The Alberta Law Society, on their website, defines what they consider to be the Unauthorized Practice of Law which they state, as a general rule, includes: giving legal advice, drafting legal documents, negotiating of legal rights, and analyzing and interpreting the law. On the face of it, these seem like reasonable guidelines. Except if one steps into the real world. Or an accounting firm. Or a bank. Or has ever had a business consultant or advisor. This definition of unauthorized practice is broad. Some things will be obvious, but others get quite grey. That said, lawyers, and the Law Society for that matter, may take comfort in knowing that the go-to default answer to almost all professional designation exam questions, accounting related anyway, is… consult legal counsel. Always! No matter what, we will add that tag-on ass saver of a sentence to any and all questions. Truth be told, I still do.

So why do I say that the areas of unauthorized practice of law are grey? Depending on the area of practice, mine having first been tax and then in insolvency, every decision I made was guided by legislation. A good tax practitioner needs to know the Income Tax Act inside out, forwards, and backwards. A skilled tax accountant is aware not only of the legislation but of the case law as well. They are keenly aware of the budgets, proposed changes to the law, foreign jurisdiction laws, and the impact on their clients. This holds for corporate, personal, and estate work. Using a classic butterfly as an example, who is steering the process? Quite likely, it is the accountant who has identified the need or tax opportunity, advised the client on the risks and benefits, and drafted most of the documents (save for setting up the trust, which would almost certainly be the realm of the lawyer), and then effected the transactions themselves. So is the accountant engaging in the practice of law in an unauthorized manner? Does not every tax decision hinge on the interpretation of the Income Tax Act? When someone asks me if they can deduct their golf membership as a business expense, am I violating the unauthorized practice rules when my answer, as opposed to advice because that is a lawyer’s role, is no?

The area of tax, in my opinion, has a higher risk of overlap between lawyers and accountants than other areas of practice. I have often seen lawyers drafting what I would consider “accountant” documents - like CRA compliance forms, and conversely, accountants treading into what I would consider “lawyer” documents - such as Trust Agreements or Shareholder’s Agreements. More often, however, the lanes do get sorted out. At the end of the day, no one wants to get sued, nor do they ever want to give ill-informed advice or misfile compliance documents, thereby putting their clients at risk.

Insolvency is another area that sees the CIRPs, Licensed Insolvency Trustees, and other insolvency practitioners relying upon and referring to the Bankruptcy and Insolvency Act every day. There is not a day I practised that I was not reading the legislation. The Trustees are Officers of the Court. They are steeped in the legislation and well apprised of the case law. Does this mean they are acting like lawyers? No. Insolvency happens to be one of the most collaborative areas of practice I have seen. Moreover, notwithstanding the CIRPs and Trustees being familiar with the law, they seem to be the most eager to engage legal counsel at the earliest stage. In fact, prior to accepting any court appointment, the Receiver, Monitor, or Trustee, as the case may be, will have chosen counsel, as have the debtor and certain creditors. Most of the insolvency process is court-driven; as such lawyers are not only necessary, but they are heavily relied upon to provide counsel. The lawyers and the Court Officers are a true team, and most decisions are collaborative. However, the roles and expertise of each are known and mutually respected.

What about general business consulting? Most industries have their own legislation that they have to be familiar with and competent in navigating. Maybe it is the Residential Tenancies Act, maybe it is the Builder’s Lien Act, maybe there are employee issues, and it is the Employment Standards Act. Of course, in the face of litigation, one knows to engage legal counsel. But what about avoiding conflict? Avoiding litigation? Filing a lien or registering security? Interpreting an employee contract or a credit facility? This is where that handy closer comes in… I am reasonably well versed in many varieties of legislation, and I believe myself to be able to interpret contracts, agreements, and laws. But I am not a lawyer. Nor will I put a client at risk for my possible misinterpretation. Therefore, while I am comfortable identifying what I believe to be an issue, providing my input on what I believe it to mean, and what possible outcomes may be, I will always advise that they seek legal counsel to provide an opinion.

This will hold within your profession as well. When accepting clients or giving advice, is it an area that you are competent in? Moreover, are you the best choice for that client? In order to become a CPA I had to fulfil audit hours, for example. As a CPA, I can therefore conduct audits. It is slightly more complicated than that, thank goodness, as my governing body would have a thing or two to say if I were to try to sign off on audited financials. I also practised tax and completed the In-Depth Tax program, which says, effectively, that I am an “expert” in tax. But I haven’t practiced in tax since 2004: should I be giving tax advice then? Of course not. I will refer that work out to a true expert. The same holds for law. Just because one is legally able to practice in all areas, should one? Do you want a family lawyer running your criminal trial? Probably not. Even within your own profession, you must know when to refer work to others. The best marketing is a job well done. Referrals come around, so be the best at something and word will travel.

Resist the temptation to “know it all” and become comfortable knowing what you don’t know.

Ideally, as lawyers, accountants, and other professionals work with and for clients, each is able to see the value in the other and rely upon their expertise. Resist the temptation to “know it all” and become comfortable knowing what you don’t know. The top priority is meeting the client’s needs in the most efficient and effective manner possible. Let that be the guiding light, not how many hours you can charge.

And when in doubt? Seek legal counsel.