We have written before on beneficial ownership, the Corporate Transparency Act, and the American Bar Association’s revision to ABA Model Rule 1.16 regarding engagement and maintenance of the attorney-client relation, and the grounds for mandatory and permissive withdrawal. As many will know from the flurry of client alerts and other pieces in the legal media, the new beneficial ownership reporting requirements are now in effect as of Jan. 1. This is not just a “big firm” issue; solo and small firm practitioners may not think their practice implicates the CTA, but law firms themselves are not automatically exempted from the reporting requirements as well. Their clients also may be covered under the definitions, whether as beneficial owners themselves or the actual entities.
Without going into the reporting requirements and exemptions, we caution those lawyers who think this will not affect them to think again, either regarding their own corporate firm structure or their advice and services to clients in the formation and registration of corporate entities. The act applies to entities formed or registered to do business in the United States, both before and after Jan. 1, with different periods for filing the report. The role of the lawyer in formation of a company and the advice given may or may not trigger implications for the lawyer or legal staff, depending on the level of function, in terms of identification in the report. For example, by filing the formation or registration documents on behalf of the client, the lawyer may be deemed an “applicant” for reporting purposes. Consideration should be given to the language in the engagement letter for each client and matter, and communication with the client should make clear what is in, and outside, the scope of the lawyer’s services, and exactly who the client is.
