Current Month (November 2025)
By William E. H. Quick, Outside Inside Counsel, LLC
Small businesses in the United States often rely on outside accounting service providers to assist them or to “take care of” much of their financial, accounting, and tax reporting compliance. Their outside accounting professionals frequently become their “one-stop” source of experienced advice and counsel on a broad range of business topics—some of which may brush up against or cross over into the unauthorized practice of law (“UPL”).
For accountants, much of what they do in this situation fits within their wheelhouse of service offerings. However, advising on laws and regulations may be the unauthorized practice of law when providing legal opinions on regulations, or when certain regulatory exemptions apply in a nuanced client situation.
UPL is a legal doctrine frequently at odds with the day-to-day practice of accountancy. Although accountants have, and frequently rely upon, a limited grant of authority to “interpret” tax law, this grant does not extend to providing technical or interpretive advice on other laws, which may give rise to UPL. Depending on a client’s individual circumstances, regulatory compliance may require such legal advice and analysis.
The UPL analysis is driven by the laws governing accountancy in the implicated jurisdiction of practice as well as the jurisdiction’s definition of “practicing law,” which is usually defined in state’s attorney professional ethics rules and in the state’s criminal code, since UPL can be criminal. In addition to possible state law prosecution, UPL may implicate civil penalty exposure and considerations under the professional licensure of certified public accountants (“CPAs”), as well as the possible voiding of insurance coverages of the implicated individual accountants and their accounting firms. The results cause some accountants and accounting firms to take a completely hands-off approach to their clients’ non-tax regulatory advising and filing needs, while other accountants and accounting firms take a limited approach in assisting their clients with their legal reporting obligations. Still, some accountants go all in when advising their clients on legal requirements.
Other accountants and accounting firms are working together with attorneys and law firms to “bridge the gap” between their clients’ needs for accounting, legal, and reporting compliance. This cooperative approach may include use of so-called Kovel agreements, where a client directly engages an attorney to provide legal advice and counsel, and the attorney then engages an accountant (or other advisor) to support the attorney’s services to the client. This arrangement, when properly structured and executed, may serve to establish and attach the attorney-client privilege to the associated communications among the client, the attorney, and the accountant, as well as the resulting work product and advice generated in their combined activity.
As accounting clients’ needs for legal compliance emerge, expand, or become apparent, a proactive, anticipatory approach to support the clients’ needs in a timely and collaborative manner—whether through cooperative association (including through Kovel agreements) with or referrals to attorneys focused on the implicated area of practice—can best support the client and facilitate the accountants’ and the firm’s compliance with UPL laws.
