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This is a common question that I get asked. Many people have heard of the fact that a CPA cannot give legal advice, but they don’t know why. The truth is that it’s because the CPA code of ethics does not allow for it. There are certain situations where it would be allowed, but this article will discuss those scenarios and answer your question in general.
Why Can’t a CPA Give Legal Advice?
The main reason why a CPA cannot give legal advice is because the CPA code of ethics does not allow for it. According to the AICPA (American Institute of Certified Public Accountants), “No member shall provide any legal advice in connection with any individual or entity’s matters before the SEC, any state securities commission or any federal or state court.”.
This means that they cannot provide any type of legal services (even if they have an attorney on retainer) to their clients, as well as to their friends and family members (although they can offer them guidance on certain things). There are exceptions to this rule, however. For example, in my article How To Contact A Lawyer For Free Advice , I discussed the exception where a CPA can give legal advice if they are a shareholder or member of the corporation’s board of directors.
What Situations Would Allow a CPA to Give Legal Advice?
If you want to know what situations would allow a CPA to give legal advice, there are two different answers. First, let’s look at the circumstances where it is allowed:
A shareholder or member of the corporation’s board of directors who has a business dispute with the corporation. The CPA is allowed to give legal advice because they are an owner and member of the board of directors (as mentioned above). This means that they have an intimate knowledge of how the corporation operates and that they know enough about the corporate laws to be able to provide good advice for their client.
For example, if a shareholder has a dispute with their corporation and wants help from their CPA, then he or she can ask for his or her opinion on whether or not their dispute will be successful in court (for example, whether or not they will win if they file suit against their company).
The CPA can tell them how likely it is that they will win and then suggest different options for resolving their dispute. If he or she decides to go ahead with their plan, then the CPA can help them draft the appropriate documents and help them take other steps that are necessary for their dispute to be successful.
A family member or friend who is going through a divorce or other legal matter. If a family member or friend of a CPA is going through a divorce, then they can ask the CPA for advice on certain aspects of the case. For example, if the client’s spouse does not have a will and is worried about how their assets will be distributed after they die, then they can ask their CPA if he or she has any suggestions on how to create one.
If they do not have a will and want to make one, then they can ask their CPA what form it should take (will vs trust vs joint tenancy). They can also ask him or her for suggestions on whether they should try to negotiate with their spouse in order to reduce their financial obligations in the case of divorce.