Meeting minutes for the National Conference of Lawyers and Certified Public Accountants, February 9, 1953, and cover let...

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Meeting minutes for the National Conference of Lawyers and Certified Public Accountants, February 9, 1953, and cover letter dated March 5, 1953 (17 pages)
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American Institute of Accountants - Committee on Relations with Bar (Folder 4)
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National Conference of Lawyers and Certified Public Accountants
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Folder: American Institute of Accountants - Committee on Relations with Bar (Folder 4)

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North America -- United States of America -- New York -- New York

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NATIONAL CONFERENCE
OF
LAWYERS AND CERTIFIED PUBLIC ACCOUNTANTS

Representing the JOHN L. CAREY, Secretary Representing the
American Bar Association 270 Madison Avenue, New York 16, N. Y. American Institute of Accountants
JOHN D. RANDALL, Co-Chairman PERCIVAL F. BRUNDAGE, Co-Chairman
Cedar Rapids, Iowa March 5, 1953 New York, N. Y.
THOMAS J. BOODELL, Chicago, Ill. MAURICE AUSTIN, New York, N. Y.
A. JAMES CASNER, Cambridge, Mass. MARQUIS G. EATON, San Antonio, Texas
CHARLES D. HAMEL, Washington, D. C. MARK E. RICHARDSON, Washington, D. C.
H. CECIL KILPATRICK, Washington, D. C. MAURICE H. STANS, Chicago, Ill.


To the, Members of the
National Conference of Lawyers
and Certified Public Accountants

Gentlemen:


I enclose herewith a draft of the minutes

of the meeting of the National Conference, February 9,

1953. I would be pleased to have any suggestions or

corrections at your earliest convenience.

Yours sincerely,



secretary

JLC:d
enc.





NATIONAL CONFERENCE
OF LAWYERS AND CERTIFIED PUBLIC ACCOUNTANTS

Minutes of Meeting, February 9, 1953


A duly called meeting of the National Conference of

Lawyers and Certified Public Accountants was called to order

at 10:00 AM at the Union League Club, New York, February 9,

1953.
Present:

Representing the American Bar Association

John D. Randall, Co-Chairman
Thomas J. Boodell
A. James Casner
Charles D. Hamel
H. Cecil Kilpatrick

Representing the American Institute of Accountants

Percival F. Brundage, Co-Chairman
Marquis G. Eaton
Mark E. Richardson
Maurice H. Stans

John L. Carey, Secretary

It was agreed that Mr. Brundage would preside at

the morning session, and that Mr. Randall would preside at

the afternoon session. Mr. Brundage assumed the chair.

Minutes of the meeting of May 23, 1952 were approved

as circulated.

It was reported that after consideration of a circular

letter referred by the National Conference, in which the Iowa

Bankers Association had offered its members the services of

the Association's certified public accountants in wage and

salary stabilization matters, the American Institute of Account-

ants committee on professional ethics had expressed the opinion





- 2 -


that it would be unethical for a member of the Institute

retained by a trade association or similar organization to per-

mit the association to offer services of the member's firm to

members of the association in respect to their individual

affairs. The ethics committee felt, it was reported, that

there was nothing objectionable in an arrangement where the

individual certified public accountant was retained by the

association to collect and analyze cost, production, sales

and other data, and make available to the individual association

members statements showing their relative position in the

group as a whole. The National Conference received this

report with an expression of approval of the position of the

Institute's ethics committee.

The secretary reported that the pending fee litigation

in the matter of Smith v. Jones in Ottumwa, Iowa, which had

been a subject of consideration by the National Conference,

had been settled October 20 by mutual agreement without resort

to the courts.

The secretary reported that the pending fee litiga-

tion in the matter of Barton Vo DeJean Packing Company in

Mississippi, which it had been hoped would be settled out

of court, now seemed likely to be litigated, since the attorney

for the defendant, who had previously refused to discuss the

possibility of a negotiated settlement of the matter, had

apparently continued to obstruct a settlement. Members of

the Conference inquired whether a cooperative machinery had





-3 -


been established by the lawyers and certified public account-

ants of Mississippi through which an effort t6 persuade the

attorney for the defendant in this case to cooperate in settle-

ment of the matter might be renewed. The secretary reported

that coordinating committees of the Mississippi State Bar

and the Mississippi Society of Certified Public Accountants

held an organization meeting in April, 1952, at which

Thomas R. Ward, CPA, had presided as temporary chairman. The

Conference instructed the secretary to telephone Mr. Ward

to suggest that he discuss the pending case with officials

of the Mississippi State Bar with whom he had met and obtain

their opinion as to whether anything could be done to bring

about settlement of the pending case without litigation.

The lawyer-members of the National Conference offered to

discuss the matter by telephone with any members of the

Mississippi Bar Association who might be interested in pursuing

the matter further. Thereupon the secretary of the Conference

placed a long-distance call and advised Mr. Ward in Meridian,

Mississippi, of the sense of the Conference. Following the

conversation he reported that Mr. Ward would discuss the

matter with officials of the Mississippi Bar Association

with whom cooperative relations had been established, and

would report the result to the secretary as soon as possible.

The secretary reported that, in accordance with the

recommendation of the Conference at the previous meeting, he

had obtained an article from Russell S. Bock, CPA, describing





-4-


how lawyers and certified public accountants had cooperated

effectively in an actual tax case. The article had been

referred to Mr. Boodell for review. It was intended that

it be published in The Journal of Accountancy, and be offered

for publication to the American Bar Association Journal.

Mr. Boodell stated that he had not yet had an opportunity to

read the manuscript, but that he would do so as soon as possible.

Other members of the Conference group expressed interest in

seeing the manuscript, and the secretary was requested to

have it reproduced and send copies to each member. It was

the sense of the meeting that, since the article had been

prepared under the name of an individual author, it would not

be appropriate to suggest changes unless some major difference

of opinion arose. Mr. Boodell requested Judge Hamel to prepare

a similar article from a lawyer's point of view showing how

cooperation between accountants and lawyers had been effective

in a specific case All the members of the Conference present

applauded this suggestion, and Judge Hamel consented to under-

take the task.

It was reported that since the meeting of May 23,

1952 of the National Conference, steps had been taken to

establish cooperative relationships between lawyers and certi-

fied public accountants in the following states:

Georgia
Maryland
Mississippi
North Carolina
South Carolina
Tennessee





- 5 -


making a total of 19 states in which such arrangements had

been completed to date.

The Conference considered a question submitted by

a certified public accountant who was a member of the Virginia

Joint Conference of Lawyers and Certified Public Accountants,

requesting the opinion of the National Conference as to the

propriety of employment as a full-time employee of a licensed

attorney by a firm of certified public accountants, said

licensed attorney being enrolled to practice before the

Treasury Department and the Tax Court as an attorney. Mr.

Brundage read a statement of facts submitted by the Virginia

certified public accountant from whom the question had been

received. There ensued an extended discussion of this matter

in the course of which the following questions arose:

(1) Was the licensed attorney an experienced lawyer who had

previously been engaged in the practice of law or was

he a recent graduate of a law school newly admitted to

the bar, who might be regarded as an apprentice account-

ant in his capacity as employee of a firm of certified

public accountants?

(2) What was the meaning of the statement in the submitted

"statement of facts" that the licensed attorney performed

certain services which he could perform only by virtue of

his license as an attorney? Did this mean only that he

had secured enrollment before the Treasury Department and

the Tax Court by virtue of his license as an attorney,





- 6 -


or that he gave advice or performed services for clients

of the accounting firm which only a licensed attorney

would be authorized to do?

(3) Was the licensed attorney doing anything his employers

were not authorized to do? Specifically, what questions

of general law dealt with by the licensed attorney were

referred to in the "statement of facts"?

(4) Was the "statement of facts" agreed upon by both lawyers

and certified public accountants constituting the Virginia

Joint Conference of Lawyers and Certified Public Account-

ants? Was the statement of facts agreed to by the certi-

fied public accountants who employed the licensed attorney

or by the licensed attorney himself?

It was moved that the secretary request the Virginia

certified public accountant who had submitted this question

to provide a complete statement of facts, including answers

to the abdve questions, agreed upon by both the lawyers and

certified public accountants constituting the Virginia Joint

Conference, and also providing the specific questions on

which the advice of the National Conference was requested.

The motion was seconded and carried.

It was the sense of the meeting that the Virginia

Joint Conference of Lawyers and Certified Public Accountants

be invited to send representatives to the next meeting of

the National Conference to discuss this matter orally, if they

so desired.





- 7 -


After further discussion, it was the general sense

of the Conference that a lawyer who is employed by a certified

public accountant or firm of certified public accountants

cannot properly engage in any professional activity in which

his employer is not permitted to engage; and likewise, that

a certified public accountant employed by a lawyer or firm

of lawyers cannot properly engage in any professional activity

in which his employer is not permitted to engage.

The secretary was instructed to place on the agenda

for the next meeting of the National Conference the question

whether a lawyer employed by a certified public accountant

should be required to relinquish his enrollment to practice

before the Treasury Department and the Tax Court secured on

the basis of his status as a lawyer; and also whether a

certified public accountant employed by a lawyer should be

required to relinquish his enrollment to practice before the

Treasury Department and Tax Court secured on the basis of

his status as a certified public accountant.

It was stated that the present rules of practice

before the Treasury Department apparently provide that an

individual who is both a lawyer and a certified public account-

ant may be enrolled to practice before the Treasury Department

only as an attorney. It was suggested that such an individual

should be permitted to enroll either as an attorney or an agent,

according to his choice, since this would permit individuals

who are qualified in both professions but were employed by or










were partners of firms of certified public accountants to be

enrolled to practice as agents, rather than as attorneys. It

was the general sense of the meeting that there would be no

objection to amendment of the rules of practice before the

Treasury to permit an individual who was both a lawyer and a

certified public accountant to enroll either as an attorney or

as an agent, according to his choice. The expression of a

final opinion by the Conference was deferred pending general

consideration of all related questions. The secretary announced

that the American Institute of Accountants might find it

necessary to request amendment of the rules of practice before

the Treasury Department in this particular, prior to further

consideration of the matter by the Conference.

The co-chairmen were authorized to request represen-

tatives of the ethics committee on the American Bar Associa-

tion and the American Institute of Accountants to meet with

the National Conference at its next meeting for the purpose

of a general discussion of problems of joint practice by lawyers

and certified public accountants. It was suggested that such

a meeting might be arranged at the time of the meeting of the

American Law Institute at Washington, D. C., May 19. It was

later suggested that the meeting might be arranged at the

Farmington Country Club, Charlottesville, Virginia, and that

the members of the Conference might invite their wives to

accompany them.


- 8 -




-9-


The secretary was requested to send to all members

of the National Conference copies of opinions of the ethics

committees of the American Bar Association and the American

Institute of Accountants relating to joint practice of lawyers

and certified public accountants submitted in response to

inquiry of the National Conference of Lawyers and Certified

Public Accountants.

The secretary was requested to draft a memorandum

on joint practice for consideration of all members of the

National Conference as a possible basis for discussion of

the matter with representatives of the ethics committees of

the two national organizations.

The Conference considered a letter dated September

24, 1952, addressed to the co-chairmen by Weston Vernon, Jr.,

president of the New York State Bar Association, replying

to a letter from the co-chairmen of the National Conference

dated March 4, 1952, addressed to state bar associations and

state societies of certified public accountants, in which it

had been suggested that the state conferences should not adopt

statements of principles deviating from the form of the national

statement. Mr. Vernon's letter said that the New York State

Bar Association did not agree that a national statement of

principles was possible without implementation by similar

statements in the several states; and that inasmuch as the

subject of what constitutes the practice of law was dependent

upon the law of the various states, it would not be inappro-

priate for cooperating committees of state bar associations





- 10 -


and state societies of certified public accountants to for-

mulate statements of principles departing in certain respects

from the national statement. This letter was duly noted by

the National Conference and was ordered filed.

The secretary reported that in his capacity as

executive director of the American Institute of Accountants

he had had a conference with Mr. John Cragun, chairman of

the administrative law section of the American Bar Association,

with respect to the Administrative Practitioners Bill. It

had been stated to Mr. Cragun at this conference that the

American Institute of Accountants desired to assist to the

full extent possible in passage of the Administrative Practi-

tioners Bill without substantive change in the form previously

agreed upon by representatives of the American Bar Association

and the American Institute of Accountants. It was the sense

of the National Conference that early passage of the Admini-

strative Practitioners Bill was desirable and that the

Conference should assist in attainment of this objective

in any way possible.

Judge Hamel referred to the opposition of certain

groups of non-certified public accountants to enactment of the

Administrative Practitioners Bill, and expressed the opinion

that it would desirable for the certified public accountants

to cooperate in enactment of state legislation which would

subject all practicing public accountants to regulation and

discipline under codes of ethics.





- 11 -


The Conference next discussed the possibility of

enactment of legislation providing that the Tax Court become

a court of record. Mr. Brundage reported conversations with

a prominent member of the bar in New York, who had expressed

the opinion that it would not be difficult to reconcile earlier

differences of opinion between the American Bar Association

and the American Institute of Accountants on this subject.

Accountant-members of the Conference expressed the

view that so long as the Tax Court was effectively a part of

the machinery of settlement of tax disputes (in that cases

docketed for trial in the Tax Court were frequently settled

with the Bureau of Internal Revenue before trial), certified

public accountants would feel it necessary to attempt to

retain the right of filing petitions with the Tax Court.

It was suggested that if an independent Tax Settlement

Board, as contemplated in the Mills Bill, were created to

provide a forum for informal settlement of tax controversies,

certain changes in procedure might be possible which would

remove the Tax Court from any connection with informal settle-

ments; in which event, the American Institute of Accountants

might withdraw opposition to legislation providing that the

Tax Court be made a court of record.

Mr. Kilpatrick reviewed a memorandum prepared by the

tax section of the American Bar Association in 1949, citing

its objections to the provisions of the Mills Bill to create

an independent Tax Settlement Board.





- 12 -


After discussion, it was the sense of the National

Conference, after having reviewed the earlier objections of

the American Bar Association to the proposal for an independent

Tax Settlement Board, that a reconciliation of viewpoints of

the bar and the American Institute of Accountants would be

possible, and that the tax committee of the American Institute

of Accountants and the tax section of the American Bar Asso-

ciation, or other appropriate officials of the two national

organizations, be requested to endeavor to work out a mutually

agreeable arrangement in this entire area.

Meanwhile, the secretary was requested to send to

all members of the National Conference copies of the 1949

memorandum of the tax section submitted by Mr. Kilpatrick

outlining objections to the Mills Bill.

Mr. Randall suggested that the Conference consider

the propriety of advertising material prepared by certain tax

service organizations, which offered to imprint the names of

practitioners on such material and sell copies for distribution

by said practitioners. It was stated that while the committee

on professional ethics of the American Institute of Accountants

had endeavored to discourage the use of such material, generally

known as "boiler plate," on the ground that it might mislead

recipients into the belief that the practitioner whose name

appeared was actually the author of the material, the committee

had not felt itself empowered to prohibit the distribution

of any material to clients of the practitioner alone. The





- 13 -


question was raised whether the committee on professional

ethics of the American Bar Association had in any way limited

the distribution of printed matter to clients of members of

the bar. It was the sense of the Conference that continuing

education programs to discourage activities of this nature

were desirable.

In order that members of the Conference might be

informed of activities of those professions bearing on the

subject matter with which the Conference was concerned, it

was requested that the lawyer-members of the Conference be

placed on the mailing list to receive The Journal of Account-

ancy and that the accountant-members of the Conference be

placed on the mailing list to receive copies of the Unauthorized

Practice News.

There was discussion of the desirability of distribu-

tion of copies of the Statement of Principles Relating to

Practice in the Field of Federal Income Taxation Promulgated

by the National Conference at tax institutes and similar

meetings at which lawyers, certified public accountants and

others were present. Accountant-members of the Conference

expressed the opinion that it would be proper to distribute

copies of the Statement of Principles at meetings of this

sort, so long as nothing was said by official spokesmen for

the bar in connection with such distribution that might indicate

that the statement was intended to restrict customary and

proper activities of non-lawyers in the field of tax practice.





- 14 -


On motion duly seconded, it was resolved that the co-chairmen

of the Conference should draft a statement to be read by

presiding officers at tax institutes and similar meetings

with reference to distribution of copies of the Statement of

Principles. The secretary reported that 2,700 copies of the

Statement of Principles were on hand and that additional

copies could be provided at nominal cost.

The Conference approved a reply written by the

secretary under date of November 3, 1952 to an inquiry from

Walter S. Calwell Rogers, an attorney of Miami, Florida, as

to whether giving advice on tax matters, including the pre-

paration and time of filing estate tax returns, was a legal

matter or within the field of accounting. It was suggested

that the National Conference should give consideration to

the activities of lawyers and certified public accountants

in the field of estate taxation. It was suggested that Mr.

Casner prepare a memorandum on this subject for future con-

sideration of the Conference.

There was discussion of the possibility of organizing

in the United States a group similar to the Canadian Tax

Foundation, in which lawyers and chartered accountants of

Canada collaborated in forming recommendations for tax

legislation. While it was suggested that closer liaison

between the tax section of the American Bar Association and

the committee on federal taxation of the American Institute

of Accountants was desirable, some doubt was expressed as to





- 15 -


the practicability of organizing a group similar to the Canadian

Tax Foundation at this time. Mr. Brundage was requested to

explore the matter and to submit whatever recommendations he

might care to offer for consideration at the next meeting of

the National Conference.

The Conference considered a question submitted by

the committee on relations with bar of the American Institute

of Accountants as to whether relations between the accounting

and legal professions would be adversely affected if a certi-

fied public accountant wrote an article for a bulletin entitled

"Tax Thought of the Month," to be distributed by a commercial

financing organization to attorneys and accountants in New

York. It was the sense of those present that since the

bulletin was undoubtedly designed to advertise the services

of the financing company which published it, none of the

lawyers or certified public accountants present would care

to prepare an article to be published under his own name in

such a medium. In this connection, reference was made to

Opinion 273 of the American Bar Association's committee on

professional ethics.

The Conference considered a question submitted by

the executive committee of the American Institute of Accountants

as to whether the legal profession would support a recommenda-

tion that state corporation laws be amended so as to require

corporations to furnish financial statements to stockholders.

It was suggested that the matter might be of interest to the






- 16 -


commissioners on uniform state laws, but the lawyer-members

of the Conference individually expressed no enthusiasm for

the proposal.

Accountant-members of the Conference referred to

addresses by members of the American Bar Association committee

on unauthorized practice of law which had been reprinted in

the December, 1952 issue of Unauthorized Practice News,

containing passages which might be construed as derogatory

to the accounting profession. Accountant-members of the

Conference suggested that inasmuch as a Statement of Principles

had been promulgated by the National Conference and approved

by the governing bodies of the two national professional

societies, and as the Conference itself was actively engaged

in an effort to resolve all differences between the two profes-

sions by friendly negotiation, it would be appropriate for

spokesmen of the legal profession to omit reference to the

accounting profession in discussing various groups whose

members were alleged to be generally engaging in unauthorized

practice of law.

The secretary reported that, in his capacity as

executive director of the American Institute of Accountants,

he had accepted an invitation to write an article for a law

review expressing the non-lawyer's viewpoint on the unauthorized

practice of law movement.

The meeting adjourned at 5:30 PM.






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