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Accountant Retention Agreement (Kovel Letter) – Karlslunde Tri (triatlon)

Accountant Retention Agreement (Kovel Letter)

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In another example, a lawyer advised a client to consult an accountant on the client`s conviction for wilful non-payment of a Federal Income Tax Return. On appeal, the Ninth Arrondissement refused to extend the privilege to the accountant because there was not enough evidence that counsel had instructed the CPA to support the creation of legal advice (United States v. Gurtner). Therefore, when a practitioner provides counsel with commercial rather than procedural information, there is no privilege. Even process-specific information is not preferred if it is not relevant to business advice. If there is an existing relationship between the accountant and the client, it may be more difficult to support the idea that the accountant was hired by the lawyer to assist the lawyer in his or her legal work. In this case, the lawyer may seek out and hire a new accountant; This helps to ensure that the accountant works for the lawyer and provides clear lines to display the information the accountant learned during the legal representation, instead of information that a long-time accountant might otherwise have known. In addition, the lawyer, in order to prove a Kovel agreement, can pay the accountant`s fees or approve at least all fees before payment. However, in all cases where a client attempts to protect the advice of an accountant under Kovel, such protection is uncertain, even if the parties have entered into a formal agreement.

Members should be aware of the limitations of a proposed agreement. The lawyer should be retained by the client. The lawyer should have the first communication with the accountant to be retained by the lawyer. The lawyer should keep the accountant about a written agreement that sets out the terms of the engagement. This agreement is called Kovel`s letter. DISCRETION AND DUE CARE On behalf of clients, lawyers often place CPAs as non-witnesses or consultants. Federal law does not recognize any accounting-client privileges, but under Kovel`s rule, a lawyer can protect a non-witness accountant under the prerogative of a third party. This rule isolates communication and work products when the lawyer hires an expert to assist in the delivery of legal services.

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