How Much Does a Criminal Tax Attorney Cost?
As with any criminal charge, fee structures and pricing can vary across firms and regions. There are some firms that treat each case like a cash cow; maximizing bills to the client to squeeze value. On the other end are firms that are volume based. Their business model requires the influx of numerous cases to meet their revenue goals. While these firms are cheaper, it is unlikely they can provide the attention necessary to defend complex white-collar cases. Nestled between the two extremes are quality firms that handle multiple criminal tax cases without absurd volume. Our firm is certainly structured in the middle, and this post will be written from that vantage point.
The reality of white-collar crime is that it costs significant resources to properly defend the case. All criminal tax cases require a criminal tax lawyer, expert witnesses, and numerous man hours to review discovery, build a defense, and get results for the client. Good white collar defense counsel does not come with a $10,000 price tag. Any firm charging these sorts of fees should be viewed with skepticism.
This post will lay out the common fee structures and case needs for a criminal tax case. The hope is this post will provide a foundation for criminal tax clients to set expectations when hiring a legal defense team.
Attorney’s Fees in a Criminal Tax Case
Nearly all criminal tax cases begin with government contact with the taxpayer. This contact comes in one of two ways: 1) the taxpayer receives a target letter from the United States’ Attorney’s Office in their local district advising them to obtain counsel or 2) an agent with the IRS’ Criminal Investigation Division (CID) visits the target at their home (more on the structure of a criminal tax investigation can be found in a prior post here). One of these two tracks will alert the taxpayer to the ongoing investigation.
When government contact is made, the taxpayer needs to start looking for representation immediately. When a criminal tax case reaches this stage, the government is serious about moving forward with an indictment. Steps need to be taken to try to push the case back into the civil division of the IRS. The most crucial time in a criminal tax investigation is right after contact is made. It is at this point where defenses needed to be developed, tax calculations need to be made, and a competent criminal tax attorney needs to begin punching holes in the government’s case. There is a window for negotiating a civil resolution on these matters. This window closes once the government has expended substantial resources in the investigation.
Criminal Tax Investigation Fee
Most of our clients come to us following this initial contact. This reality requires firms to split their attorney’s fees into two categories: 1) investigation fee and 2) post-indictment litigation fee. The investigation fee is normally structured on an hourly basis. Early in the investigation, it is impossible for the criminal tax attorney to accurately calculate the man hours required to represent the client. This makes it difficult to negotiate a flat fee in the early stages of the process. Our firm has successfully represented clients during the investigation stage for as low as $5,000. Other cases take a large effort in this phase and result substantially higher bills. The investigation fee will be directly tied to the hours of work performed at contracted hourly rates.
A criminal tax defendant can expect to pay a retainer in the $20,000 to $50,000 range during the investigation. This retainer will be billed against hourly as the investigation progresses. In some cases, the hours performed will require a refund to the client. In others, the initial retainer will be insufficient to get the client across the finish line.
When interviewing attorneys, the taxpayer should gauge the billing practices of the firm. If a firm has four or five associates working on the case, the taxpayer should expect some significant billing monthly. Likewise, client’s can analyze the size of the staff and the office to gauge the overhead needs of the firm. As a general rule, the larger the staff and office, the more likely the firm is to bill aggressively.
The right fit for a criminal tax defendant depends on their financial resources. While white-collar counsel is never cheap, there are certainly firms that will charge $250,000 retainers for work equal to a firm that charges far less. Some defendants want to spend that money for the comfort of knowing that a legal machine is churning the file. While that is not necessary in most cases, the right fit depends on how much money the client wants to throw at the problem.
Post-Indictment Litigation Fee
If the criminal tax attorney is unsuccessful in the investigation stage, it is common for the attorney to switch to a flat fee following indictment. At this stage, most legal teams can accurately calculate the hours they expect to spend on a case and charge accordingly. This fee is broken down into two distinct categories: 1) pretrial and 2) trial. The pretrial fee will retain the firm for all matters leading up to trial. The trial fee will retain the attorney for the actual trial of the case.
Under the flat fee structure, the criminal tax defendant can expect to spend between $100,000 and $500,000 for a full trial. The fee may be less if the case results in a plea before trial commences. A case that results in a plea will inherently involve less attorney hours. Trial is by far the most time consuming and expensive endeavor in the criminal tax arena.
In summation, the attorney’s fees for a criminal tax case will largely depend on the complexity of the case and outcome at each stage of the litigation. We have handled matters that were successfully sent back to the civil division early in the investigation. The client’s fee in those cases was minimal. We have also taken numerous complicated tax cases to trial. The fees for that endeavor often touch the larger figures outlined above.
Expert Assistance in Criminal Tax Cases
In addition to attorney’s fees, criminal tax clients should be aware of parallel case expenses. These case expenses are often necessary components of criminal tax defense. The two main defensive paths in criminal tax involve a challenge to the tax loss (the importance of the tax loss is analyzed further here) and/or a defensive theory to the willfulness element (a full breakdown of willfulness and ignorance of the law can be found in a prior post here). Both defensive routes require the assistance and opinions of an expert witness. This expert should be retained early in the case to assist at each stage of the process.
In most of our cases, we retain a CPA and/or a forensic accountant to run tax calculations or opine on the reasonableness of a specific interpretation of the tax code. This expert assistance is invaluable as it allows the client to push back against the CID agent’s version of the case. The work of an expert witness will assist the defense team at every stage of the process. Retention of an expert is often necessary for a positive result.
The cost of expert assistance varies with the tasks that are needed. If the expert is merely recalculating the tax loss under the Internal Revenue Code, the fee may be as small as $5,000 to $10,000. If the expert is needed during the investigation and trial, this fee can go up considerably. All expert witnesses charge the client at their hourly rate.
A criminal tax defendant should inquire about expert costs before retaining counsel. A competent criminal tax attorney should have connections with experts and be able to outline that process during the initial consultation.
Case Expenses in a Criminal Tax Case
In addition to the expert fees, criminal tax cases often involve case expenses. These expenses can include travel costs (for out of town cases), hotel stays during trial, costs for creating large trial exhibits, and underlying staff costs. These expenses vary wildly with each individual case. In some cases, our firm charges no case expenses under this section. In a complicated trial case, these fees can run in the $10,000-$20,000 range.
How Much Does A Criminal Tax Attorney Cost?
A criminal tax defendant can expect to pay between $10,000 and $500,000 for competent representation. Where a client falls within that range depends on 1) whether the case is closed during the investigation, 2) if indicted, whether the case goes to trial, 3) the complexity of the case, 4) the cost of experts, and 5) case specific expenses.
For most taxpayers, an initial retainer of $20,000 will get the firm moving on the case. However, the client should always be made aware of the potential financial hits that could come later in the case. There is never a guarantee that even the best representation can derail a criminal tax investigation before trial. Taxpayers should be prepared for the possibility that their case can only be resolved with a trial on the merits.
For more information, please visit our page devoted to criminal tax.