By one measure, Thomas Linguanti is among the most valuable lawyers in Big Law.
Consider this: Last year, he slashed a tax bill from $1.36 billion to $14 million for medical device manufacturer Medtronic plc.
As Linguanti prepares to brief the U.S. Court of Appeals for the Eighth Circuit on an Internal Revenue Service appeal on that big tax deduction decision, he is moving from one global law firm with an elite tax practice to another.
Morgan Lewis, a firm that has made headlines this year for its lateral raids and links to the Trump administration, announced last week that it had brought on Linguanti as a partner in Chicago. Linguanti had previously been the head of Baker McKenzie’s North America tax practice, a group that he will continue to be co-counsel with on the Medtronic case.
Linguanti himself made headlines in 2013 when he represented pro golfer Sergio Garcia in a dispute with the IRS over how the 2017 Masters champion’s revenue from sponsorships should be taxed.
By joining up with Morgan Lewis’ tax practice and high-profile tax controversy partner John Magee, Linguanti finds himself on a team that over the years he often competed against for work. Magee is no stranger to winning big-dollar tax controversy cases for clients. He represented Amazon.com Inc. in a March victory that the online retail giant said slashed its tax bill by $1.5 billion.
Magee previously led the tax practice at Bingham McCutchen before Morgan Lewis acquired the bulk of that firm in late 2014. Before that Magee worked at McKee Nelson—a firm known for its tax expertise prior to its 2009 acquisition by Bingham McCutchen—where he developed a reputation as one of the nation’s top tax lawyers, advising clients like The Boeing Co., The Coca-Cola Co. and Dow Chemical Co.
Linguanti has worked on behalf of companies like Abbot Laboratories, Microsoft Corp. and Seagate Technology Inc. Linguanti said he, Magee and others at Morgan Lewis have traded attempts to recruit each other to their respective firms. This time Linguanti was drawn to Morgan Lewis, he said, because of the firm’s range of practices outside of tax that “are at the top of their games.”
“From IP to litigation to corporate securities, [Morgan Lewis] is just pound-for-pound an elite law firm in the U.S.,” Linguanti said. “So in addition to being able to come and practice with this group of friends in the tax practice, I was excited to be part of a firm that is playing at the highest levels across disciplinary practices.”
Baker McKenzie said last week that Dallas-based partner Melinda Phelan would take over as chief of the firm’s North America tax practice. The firm’s global tax practice has more than 1,000 practitioners and brings in more than $500 million in revenue a year, a firm spokeswoman said. Baker McKenzie promoted 12 tax lawyers to partner in June and the firm has recruited 10 lateral partners in the past 12 months, including a pair of trusts and estates partners in Chicago and three recent partner hires in London.
“We wish Tom well and thank him for his years of service,” the firm said in a statement.
As for how Linguanti’s and Magee’s clients come to be at such great odds with the IRS over their tax bills, most of these cases are known as transfer pricing disputes. They often involve sales or intellectual property licensing agreements between the same company’s subsidiaries in different countries.
For tax purposes, companies are required to report those sales at the same price they would pay or offer to a company that wasn’t owned by the same parent. Disputes over what that price should be can lead to huge differences, as the accounting being challenged often dates back years.
For instance, a 2006 settlement between the IRS and Glaxosmithkline plc for $3.4 billion, which was the largest transfer pricing dispute settlement ever at the time, involved a dispute running from 1989 through 2005. Magee, Linguanti’s former competitor and new colleague, handled that case for GSK.
“It’s a valuation fight, ultimately,” Linguanti said. “And sometimes, frankly one side or the other gets it flatly wrong.”