Letter From The President Of The New Jersey State Bar Association

2006-08-01 01:00

To The Readers Of The Metropolitan Corporate Counsel :

By now I am sure that most, if not all, of you are aware of the New Jersey legislature's proposal to tax legal (and other) professional services in an effort to close the state's budget gap. The New Jersey State Bar Association is strongly opposed to this proposal and firmly believes that a tax of this kind will raise the cost of legal services, unfairly and inequitably burden the legal profession (and other professions), become an impediment to clients who seek legal representation, infringe the right to counsel and hinder access to the courts. In reality, this is not just a tax on attorneys and other professionals, but also a tax on their clients.

If approved, this seven percent tax would apply to the services provided by attorneys to their clients, as well as the services provided by law firms to corporations, businesses, nonprofit organizations, etc. Stop and consider for a moment the impact such a tax would have on the profession. Not only would legal services cost more from the client's perspective - seven percent more for every single legal service performed - but also the cost of implementing the tax very likely would financially burden the lawyers and law firms themselves. If taxes are due when the client is billed, rather than when the bill is paid, every attorney and/or law firm in the state would have no choice but to pay the tax upfront and then spend countless hours applying, accounting for, collecting and paying this tax, thereby increasing overhead.

And, what of the unforeseen consequences of such a tax? For instance, a seven percent tax on legal services could effectively drive legal jobs and revenue out of the state, as New Jersey businesses seek to escape imposition of the tax by turning to other, more welcoming, states for their legal work.

Since this word of this tax first spread through Trenton, the New Jersey State Bar Association has worked diligently in opposition of the proposal, and we will continue to fight as the voice of the legal profession in our state.

Sincerely,

Wayne J. Positan