No Risk, No Reward

May 19, 2011

As a future tax professional, I don’t know how to feel about Paul Daugerdas and the demise of his firm Jenkins & Gilchrist. To those not familiar, Daugerdas was a tax lawyer who joined Jenkins in 1998 which was forced to close shop in 2007 because of Daugerdas’ tax shelter practice. On one hand, his work “inspires” me…? (I hesitate only because I wouldn’t want a Character and Fitness committee to stumble upon this post and assume I endorse someone who has been indicted for tax fraud). I don’t know. What he did could be deemed unethical (I’ll leave it up to the jury to decide), but tax shelters are extremely complex and require expertise. He was able to use his modest education, hustle, and make $95 million in fees (for himself, in total he billed around $267 million) in four years! There’s something admirable about a non-ivy guy (DePaul graduate) “making it rain.” But he did get caught, brought down an old Texas law firm (est. 1951), and is about to be convicted of tax fraud in a matter of days. However, one reason why I love taxation is its creativity – the challenge of pushing the Code to its limits. But did he go too far? Well, he still maintains his innocence. It seems fitting that I’m writing here right now instead of studying for my ethics exam. After a semester’s worth of Professional Responsibility with Prof. Yarosefsky and two seasons of the Good Wife, I’ve come up with one take away, the ethical practice of law is a give and take between being fair and zealously representing your client. But let’s be honest, ethics practiced in reality is played out differently. It’s like when I first starting learning how to play hockey in middle school. I asked my coach if hitting my opponent with my stick was a foul. He said “Chang, only if you get caught.”


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