NEW YORK STATE BAR ASSOCIATIONCommittee on
Opinion #457 - 01/20/1977
Topic: Public employee engaged in private practice; conflict of
Digest: Rule prohibiting State estate tax attorney from representing
private client in State estate tax matters precludes representation of
client in Federal estate tax matters.
Code: Canons 5 and 9; EC 5-14, 8-8, 9-6; DR 5-105(A), 5-107
May a New York State estate tax attorney represent a private client
in Federal estate tax matters or provide independent tax counsel with
information necessary to prepare the State return?
N. Y. State 392 (1975) discusses the conditions under which State
estate tax attorneys may properly represent private clients in
Surrogate's court. In that opinion, we noted the special restraints
imposed upon "lawyers who accept public employment" and said:
"[T]hey must avoid private employment which might involve or give
rise to suspicion that unfair influence may be involved either in the
securing of private clients or in representing them against the state
agency by which they are employed."
Applying this principle, we found that while it was not necessary to
disqualify these attorneys from representing private clients in all
matters coming before the Surrogate, they should be disqualified from
representing private clients in connection with any matters involving
the agency by which they are employed or otherwise relating to taxes
imposed by the State. Where such attorneys represent private clients in
Surrogate's Court, we insisted that "other counsel [be] retained for all
state tax related aspects, including the preparation and submission of
tax returns," explaining:
"It is not conducive to public confidence in the legal profession to
permit a lawyer to accept any kind of a retainer for one client which
would make it his duty to assert a claim against the interests of a
second client whom the lawyer concurrently represents in other matters.
This is especially true where a public agency like the State Department
of Taxation and Finance is involved. It is not enough that the
regulations of that Department purport to permit such dual
representation. As we have held on many occasions, a public agency,
unlike private individuals, cannot consent to dual representation where
an apparent conflict of interests may be involved. [citations omitted]
Such dual representation would involve a clear appearance of
professional impropriety and would tend to undermine public confidence
in the integrity of the administration of the tax laws."
We are now asked whether or to what extent such attorneys who
undertake to represent private clients in Surrogate’s Court may
properly handle Federal estate tax matters or assist other counsel in
the preparation of their New York State returns.
Our answer to the present question is in large measure dependent upon
an understanding of the manner in which the Federal estate tax return
relates to a determination of the amount of tax imposed by the State.
While, theoretically, the State can make an independent determination,
it is common knowledge that the State authorities frequently, and to a
substantial extent, rely upon the Federal return. See, Tax Law,
§§ 954(a), 961(a)(3) and (c).
Because of this relationship between the State and Federal returns,
as a practical matter, in seeking to minimize the amount of Federal
estate taxes payable, the attorney will of necessity also effect a
reduction of the amount payable to the State. The potential conflict is
real and all but inescapable. Such representation must, therefore,
contravene the provisions of EC 8-8, which states in relevant part:
"A lawyer who is a public officer, whether full or parttime,
should not engage in activities in which his personal or professional
interests are or foreseeably may be in conflict with his official
Also see, EC 5-2, EC 5-14, DR 5-105(A), DR 5-107 and EC 9-6.
Although the attorney may not represent private clients in preparing
either the State or Federal estate tax returns, he may provide
independent tax counsel with certain information necessary to prepare
these returns. Such information must be purely factual and bear upon his
representation of the client in those non-tax related matters for which
he has properly been retained. He may not use tax counsel’s
request for information as an occasion to increase the scope of his
original retainer or otherwise become personally involved in the
preparation of the tax returns and, throughout, must refrain from
offering any legal advice in connection therewith. He should not, in
other words, attempt to accomplish by indirection that which N. Y. State
392 (1975) and this opinion are intended to proscribe.
We do not wish by this opinion to reflect adversely on the good faith
or professional integrity of any attorney employed by the State who
heretofore may have represented or may currently be representing private
clients in contravention of our present ruling. Cf., N.Y. State 419
(1975). Such representation, however, should not be undertaken in the
future. Personal sacrifice is often the price of public office and no
private advantage should ever be gained at the expense of the public's
trust or confidence in the integrity of our profession. See, N.Y. State
323 (1974), N.Y. State 300 (1973), N.Y. State 292 (1973); also see,
Canons 5 and 9.