Editor: Mr. Cohen, please tell us about your tax practice background. How did you come to Coudert Brothers?
Cohen: I graduated from Harvard Law School in 1971 and began my legal career as a corporate associate at Davis Polk & Wardwell. One of my first-year associate colleagues there was engaged in tax work, which, he claimed, was the most challenging and demanding work a lawyer could undertake. I was curious. I managed to obtain a temporary assignment to the firm's tax department, and I have never looked back. In time I realized that I needed to enhance my substantive knowledge of tax law, and I began to take courses at New York University in their LL.M program. After receiving the degree, I stayed on to teach in the program. From 1975 through 1986 I was an adjunct member of the NYU faculty, and it was in that capacity that I gained a real knowledge of tax law.
I joined Coudert Brothers in 1981 and became head of the tax practice in 1986. What I find fascinating about international tax work is its four-dimensional feature. It involves U.S. tax rules as they relate to domestic corporations; U.S. rules as they relate to foreign corporations; tax treaties which serve to amend and revise the U.S. rules governing both U.S. and foreign enterprises; and finally the tax rules of other jurisdictions, where all three of the foregoing intersect. I consider myself very fortunate to be in this area of practice.
Editor: Please tell us about the evolution of the firm's tax practice.
Cohen: The practice of tax law generally, and that of Coudert Brothers in particular, has become much more complicated over the years. When I began in the field the CCH Tax Reporter had six volumes. Now it has 24. Many of the subspecialties that are so important today did not even exist. With this growth in complexity has come a need to simply know more, to have more substantive knowledge at your fingertips.
The tax practice at Coudert began as a service provided for the Firm's corporate and other clients. Over time, the Firm's clients turned to the department for tax advice on an ongoing basis, rather than in connection with a particular project, and today most of its work is generated from within the practice. The evolution of the Firm's tax practice, then, has been from being a service department to being an initiator of work in its own right, and this includes both tax and corporate work, together with all of the ancillary specialties that relate to those practice areas.
Editor: Would you describe your practice?
Cohen: Initially my work involved servicing the firm's corporate clients. Then we began to develop clients with tax-specific concerns. The tax issues relating to investments are an important part of this, and we represent a number of international families with substantial wealth who wish to avoid the pitfalls of U.S. taxation. We also represent a number of investment funds, and much of this work involves the structuring of investments. Our representation of financial institutions involved in transactions designed to increase investor returns is also a significant part of our work in the investing practice area. We are also engaged in operational tax planning, which attempts to minimize tax burdens both inbound, foreign corporations doing business in the U.S., and outbound, U.S. corporations engaged in activities abroad. We are also involved in transaction assistance, which supports the corporate department, and in tax controversy work, where we assist clients in their disputes with the IRS.
Editor: In addition to a very busy tax practice, you have had a parallel career teaching and writing. Would you describe that part of your professional life? How do these aspects of your career fit together?
Cohen: Tax law is one of the most academic of legal specialties. The people who are drawn to it tend to be stimulated by the intellectual challenges it poses and fascinated by how it interfaces with other practice areas. Teaching and writing have enabled me to stay on top of an extremely complicated and difficult body of material, and, at the same time, I try to give the students I teach the benefit not only of an exposure to that material but also - through my eyes - to real issues and real problems in the global business arena. In that sense, these two aspects of my career fit very well together.
Editor: As head of Coudert's Global Tax Practice, you have a responsibility for a practice that literally spans the world. For starters, how is the department structured?
Cohen: There are a number of subgroups, including a mainstream tax practice which involves domestic and foreign income tax, a group which handles trusts and estates taxation, an employee benefits group, a customs department handling indirect taxation around the world, and so on. Whenever a matter crosses borders, these groups are able to draw upon the expertise and skills of tax lawyers practicing at Firm offices across the world. Moreover, we have lawyers in our New York office and in offices abroad who are tax specialists in connection with a particular jurisdiction or region. My partner Deborah Goldstein is extremely knowledgeable about taxation in China. She and Owen Nee, who heads up Coudert's office in Shanghai, are co-authors of the BNA portfolio on doing business in China. Between Deborah in New York and Owen - whom your publication interviewed last year - in Shanghai, we believe our expertise in China-related tax issues is unequaled.
Editor: Can you describe the client base?
Cohen: We represent a number of major financial institutions, including some of the world's largest international banks, with whom we have worked on tax planning projects. We also represent some of the largest investment funds in the U.S. Five of the world's wealthiest families are among our clients, and we represent them in connection with their U.S. investment activities. On outbound tax planning work, we represent several of the largest U.S. corporations, and on inbound tax planning work a similar number of the largest foreign-based enterprises in the world. The client base is very diverse, as is the work. That is one of the most attractive aspects of being a tax lawyer at Coudert.
Editor: Do the lawyers in the international tax practice interact with lawyers from other practice areas in representing the firm's clients?
Cohen: Interaction with other departments and practice groups is essential. When I deal with one of the firm's principal family clients, we invariably call upon the trusts and estates people here. When we are involved in a financial product transaction with one of the banks we represent, we have an impressive array of expertise from the firm's corporate department to bring to bear. Litigation and real estate are also areas with which we interact on an ongoing basis, but there are few, if any, practice groups at Coudert which have not helped us in accomplishing our work, and vice versa.
Editor: Are there areas of the firm's international tax practice that are particularly important at the moment?
Cohen: The most important areas of the firm's tax practice at present are cross-border merger and acquisition planning, financial transactions including derivatives, tax structuring for international families with children resident in the United States and structuring the cross-border operations of U.S. companies doing business abroad and foreign corporations doing business in the United States.
The other important development in the tax field is a change in climate. At present a movement is underway in the tax practice area away from a series of very aggressive tax shelter products, which were widely promoted to major corporations during the late 1990s and up to early 2001. Many of those transactions are now under attack by the IRS and state tax authorities. The corporate scandals, the severely critical approach the commentators - and others - have taken with respect to certain non-accounting services by the accounting firms, and, of course, Sarbanes-Oxley have had a dramatic impact on this type of activity. Corporations are taking a far more conservative line today, as are the accounting firms which advise them. The specter of accounting firms under grand jury investigation is certainly having a sobering effect on the promotion of tax planning techniques that, just a few years ago, were considered quite acceptable.
Editor: Do you think that the pendulum will swing back in the other direction?
Cohen: People's memories are always short, but I suspect that it will be a long time before the pendulum swings all the way back, if ever. Enron, WorldCom and the like have had an enormous impact on the public's awareness of what went on behind closed doors in corporate America. It is going to be some time before all of the grand jury investigations and trials that derive from the corporate scandals are concluded, and, indeed, fallout from the tax shelters may serve to keep this particular pot boiling for some time longer. By the time people are finally ready to forget about these things, legislation will have been enacted to make it difficult for the pendulum to swing back, or at least swing back all the way.
In the present climate, many clients wish to be above reproach. That is all very commendable, but it can be difficult to achieve. As the environment in which they do business becomes more complicated, and the rules governing their conduct more subject to codification, the issue of inadvertent mistakes arises. All of this translates, I think, to a proactive role for the tax practitioner, as opposed to the reactive role that so much of this work entailed in the past.
Editor: Where do you see the firm's tax practice in the future?
Cohen: I think Coudert's tax practice will continue to grow. The 2004 edition of the International Tax Review Comprehensive Guide to the World's Leading Tax Firms, in an independent survey of practitioners and clients, lists Coudert's Tax Practice as one of the leading departments in New York. The quality of tax advice always is the best draw for business. In addition, the fact that the winds of change appear to be blowing in a conservative direction at present means that clients are seeking more, not less, in the way of tax advice.
Editor: What are the implications of globalization for the international tax practice of a firm such as Coudert?
Cohen: In our New York tax group alone we have one partner and a number of associates who were born in an astonishing array of countries, and who have qualified overseas (in Israel, Brazil and Mexico) as well as in the U.S. Not only are these very talented young lawyers whose expertise is available to the Firm's clients, they are connected to jurisdictions in which those clients wish to do business. It is through globalization that they come to us, and to the Firm's clients, and their expertise and their connections are among the factors that permit both the Firm and its clients to move into new jurisdictions and new markets. Coudert Brothers today is both a contributor to the globalization of commerce and a recipient of many of that development's benefits. It is a very good place to be.