It’s been going on for more than a decade: the lobbying to let lawyers filing contingency-based lawsuits deduct fees and expenses immediately from tax returns. Such expenses have long been treated as loans to clients, recoverable at settlement – or, in case of a loss in court, deducted from tax returns at the conclusion of a case.
Twelve years ago, the value of this special tax break to lawyers on the prowl was estimated at $1.6 billion. The cost to society would have been incalculable.
“Everyone wants to do it, but the problem is there is not a tax vehicle yet,” said American Association for Justice Senior Vice President of Public Affairs Linda Lipsen at the trial lawyer trade group’s annual meeting in 2009. “You cannot have a standalone bill to help lawyers … so we have to tuck it into something.”
If it was such a good idea that everyone wanted to do, why the need to “tuck it into something”? Maybe because frivolous lawsuits had been driving thriving businesses into bankruptcy for years, and openly supporting legislation incentivizing more predation might have adversely affected the reelection prospects of mostly Democrat congressmen receiving generous campaign contributions from members of the trial bar .
In short, it wasn’t a good idea, and still isn’t, but it keeps coming back like a bad penny, whatever that is.
Now, it’s back again, tucked into the Democrats’ spending bill.
Not surprisingly, Republican Rep. Kevin Brady of Texas’ 8th Congressional District opposes it, as he made clear in a recent tweet.
“Tax breaks for trial lawyers?
“Democrats sneaking into tax/spending bill a huge $2.5 billion tax break for wealthy trial lawyers...a decade-long dream.
“Deduct expenses for contingency lawsuits up front, lowering costs.
“Expect more speculative lawsuits. Less job creation.”
Trial lawyers contribute more to election campaigns than any other professional group, they expect something in return, and they get it – government contracts, favorable legislation, tax advantages, etc.
It’s time to take this bad penny out of circulation.