Trial lawyer tax break heads for Senate vote
WASHINGTON (Legal Newsline)-Federal legislation that would afford trial lawyers a special tax break is headed for a vote in the U.S. Senate.
Inserted into the Energy and Tax Extenders Act of 2008, is a $1.6 billion tax break for class-action plaintiffs' attorneys.
The proposal would allow class action attorneys to deduct fees and expenses up-front for filing contingency-fee lawsuits.
Currently, the expenses are considered, under tax laws, loans to clients that are to be repaid from ultimate awards if they win or deducted on their income filings in the event of a loss.
Critics say the tax break to offset the cost of filing high-dollar lawsuits would act as an incentive to file more class action suits because attorneys could write off the up-front costs to pursue them.
The proposal, outlined in H.R. 6049, passed the House on May 21 by a 263-160 vote.
The plan cleared the House two days after disgraced class action lawyer William Lerach, 62, reported to federal prison for his role in a multi-million dollar conspiracy scheme involving illegal kickbacks to plaintiffs at his former law firm, Milberg LLP.
"Once you start looking at the big picture, it is clear there is solid evidence that the culture of greed and corruption is growing within the plaintiffs' bar," Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, wrote in an op-ed published last week on Townhall.com.
"Now is the time for Congress to begin investigations to expose the abusive and fraudulent practices of some of America's most powerful plaintiffs' lawyers and take action to enact reform - not give them a $1.6 billion bonus," Rickard wrote.
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From Legal Newsline: Reach reporter Chris Rizo by e-mail at firstname.lastname@example.org.