Tax Shelters Paid Off Until IRS Took an Interest

By NATHAN KOPPEL
May 17, 2007

In 1998, Chicago tax lawyer Paul Daugerdas approached a Dallas law firm, Jenkens & Gilchrist, with a proposition. He said he sold tax shelters and advice to wealthy clients, charging them, in part, a percentage of their tax savings. If Jenkens brought him aboard, he said, he could generate as much as $6 million a year in revenue, according to three former Jenkens partners.

To Jenkens, a medium-size firm with big growth plans, that was serious money, much more than any of its lawyers were then bringing in billing by the hour. And the overture came at the right time. Jenkens had recently lost some tax lawyers, and Mr. Daugerdas was offering to bring several others with him.

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