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Ethics: Black and white morality

Every Issue

Cite as: (2005) 79(11) LIJ, p. 77

Although the issue of tax avoidance may appear to be in shades of grey, the answers are black and white.

In the August issue of the LIJ, Gino Dal Pont wrote about the possibilities for lawyers in giving moral advice to clients, rather than just legal or business advice.[1]

His emphasis was properly on the various justifications for such a course of action. I want to go a bit further and explore, briefly, the real life situation of tax avoidance, an arena where the grey area between legal advice and moral obligation are ever in conflict.

Tax avoidance is not a neutral or academic topic (as shown by the ongoing media coverage of tax avoidance amont members of the Australian legal profession).

US legal ethicist Robert Gordon describes tax avoidance as so significant in his country as to amount to legal terrorism and its practitioners as “legal terrorists”.[2]

UK accountant Prem Sikka describes the practice as a “threat to democracy”,[3] because “unless stopped, the tax avoidance industry will destroy nation states and the very idea of democracy.

“Without adequate tax revenues no government can deliver its legislative program, provide public goods or redistribute wealth”.[4]

Sikka goes on to assert that tax avoidance is such a social evil because governments are eternally in catch-up mode.

For every loophole closed, legal ingenuity is employed to open another and the clients of the avoidance practitioners remain perpetually ahead.

From the point of view of legal ethics, it is not easy to assert in this context, as some commentators do, that we as lawyers can offer as much moral advice as we like, but the decision to accept or reject same remains with the client. Practitioners of tax avoidance only work while they continue to “innovate” in reducing tax revenue. To suggest that they should offer moral advice “not to do it”, is just sad.

They are rewarded for denying any reality other than the law, as it stands at that time, for the implementation phase of their next scheme.

Thus the harder question for practitioners who have little functional autonomy (because they devise methods to get around the law at the implicit insistence of their clients) is to ask themselves: “Who am I?”.

“Am I someone who believes in what I do because my overall confidence in the justice system is strong enough to persuade me that if my actions are not illegal per se, they are not ‘bad’? (known as the liberal or ‘zealous advocate’ position on legal ethics[5]).

“Or am I someone who would like to believe that the justice system is fair and consistent, but nevertheless recognises that while this confidence works for the well off, it is less and less the reality for those who are just poor, or disabled or mentally ill?”

If your answer lies in the former direction, then the rules of conduct (and not just the Tax Act) will need to be very precise, constantly in revision and have very severe financial consequences for breach before you are likely to think that you have over-stepped the mark. You will be inclined to be annoyed with the notion that the law is anything more than a business, but will not necessarily want to say so in print.

If, on the other hand, you lean toward the latter view – that law, morality and justice must intersect more often than not – you will probably be extremely impatient, as I am, with the comfort zone surrounding the notion that if we simply “obey the law” as it is, all will be peachy.

To obey the law implies a bit more than relaxed comfort that law will catch up with social change, that access to the best advocates will always be feasible for both sides and that the courts will always enforce the law promptly and rigorously.

It is possible to consistently argue that as lawyers we can offer moral advice to clients as long as we don’t insist on its acceptance. But if we also know that our clients are nervous of morality, or see it as an impediment to their ambitions, we will need to be clear and confident about our own view of the contrasting approaches to professionalism if we are to continue to practice without adverse emotional and even spiritual consequences, over the long term.

Whether, in answer to the question “who am I?”, your answer is “I am my client’s property” or “I am for moral activism”, either of those options is at least preferable to never asking the question.

ADRIAN EVANS is associate professor in law at Monash University and former coordinator of Springvale Legal Service Inc.

[1] “The moral of the story” (2005) 79(08) LIJ 76.

[2] Robert Gordon, Presentation to the 1st International Conference on Legal Ethics, Exeter, July 2004.

[3] Prem Sikka, “Accountants: a threat to democracy”, The Guardian, 5 September 2005, p15. Prem Sikka is Professor of Accounting at the University of Essex. He is writing about tax avoidance practitioners as both accountants and lawyers and estimates that up to £100 billion is lost to the public revenue in the UK per annum.

[4] Note 3 above.

[5] See for example, Stephen Pepper, Legal Ethics and W Bradley Wendel “Civil obedience” (March 2004) 104 Columbia LR 363. Neither Pepper or Wendel would agree with tax avoidance – they would abhor it – but the liberal position on legal ethics is nevertheless conducive to toleration of artificial structures to avoid paying tax.


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