## Facts

- Freda and John Joffe incorporated their oil business in 1965; the corporation’s assumption of their personal liabilities led the IRS to assert an $83,399.70 deficiency on their 1965 joint return.
- The Joffes’ regular accountant brought in Saul Wilson, a CPA with tax controversy experience, to handle the matter before the IRS; no fee arrangement was initially made.
- Wilson represented the Joffes before the IRS at administrative levels, including an appeal, but the IRS ultimately issued a statutory ninety-day letter.
- After John’s death, the parties entered a written contingent arrangement: Wilson received $1,000 for past services and would receive 25% of any “savings” achieved thereafter, with no further charges for expenses or services.
- Wilson arranged for an attorney to file a federal refund suit; Wilson assisted by organizing materials, advising on tax matters, and testifying as an expert witness.
- After an adverse district court result and during an appeal, Wilson used a favorable intervening decision in negotiations, leading the IRS to withdraw the deficiency so that nothing was due.
- Wilson took a fee equal to one-third of the savings rather than the 25% stated in the letter agreement.
- Freda Joffe sued to rescind and recover payments, alleging Wilson’s conduct constituted unauthorized practice of law.

## Issues

1. Whether the CPA’s handling of the tax controversy and involvement in the related federal litigation constituted unauthorized practice of law barring any fee recovery.
2. Whether, if any services were unauthorized, Massachusetts law required complete forfeiture or permitted compensation in quantum meruit for permissible services.

## Decision

- The Supreme Judicial Court affirmed judgment for Wilson.
- The court held that Wilson’s work before the IRS was largely within permissible nonlawyer tax representation authorized by federal practice rules.
- The court concluded Wilson’s litigation-related role was principally support for retained counsel (e.g., analysis, organization of financial data, expert testimony), not substitution for an attorney.
- Even assuming marginal encroachment into legal practice, the court declined to impose total fee forfeiture on these facts.
- The jury’s quantum meruit award—set at the reasonable value of services and equal to 25% of the savings—was upheld.

## Legal Principles

- Nonlawyers such as CPAs may represent taxpayers in IRS administrative proceedings and negotiations where permitted by federal regulations, without necessarily engaging in the practice of law.
- A nonlawyer may assist a licensed attorney in litigation (investigation, factual and financial analysis, preparation of schedules, expert testimony) without practicing law, provided the attorney controls pleadings and courtroom advocacy.
- A service contract tainted by unauthorized practice does not invariably require denial of all compensation; courts may allow quantum meruit recovery where services are largely permissible, clients were not exploited, and total forfeiture would be disproportionate.
- The presence and responsibility of retained counsel in court proceedings is significant in determining whether a nonlawyer crossed into impermissible legal representation.

## Conclusion

The court allowed a CPA to recover the reasonable value of extensive tax controversy services where most work was permissible IRS practice and litigation support under an attorney’s direction, and where full forfeiture of compensation was unwarranted despite questions about enforcing the contingent fee arrangement.


Joffe v. Wilson, 381 Mass. 47, 407 N.E.2d 342 (1980)