How it works
Named for United States v. Kovel (1961), the arrangement has the attorney, not the client, engage the accountant, so the accountant’s work is done to help the attorney render legal advice and falls under the attorney’s privilege. The engagement letter must make the structure explicit, the accountant must work at the attorney’s direction, and the work must be for the legal advice rather than routine return preparation.
Why it matters
In a crypto cleanup or an offshore disclosure, reconstructing records is often the most sensitive part of the matter, because it reveals what was omitted and when. A Kovel arrangement keeps that reconstruction protected while the legal strategy is decided.
Example
Before filing a voluntary disclosure, counsel engages an accountant under a Kovel letter to reconstruct six years of foreign account activity. The reconstruction is privileged; the returns eventually filed are not.
Related: attorney-client privilege, crypto reconciliation.
