Republicans thwart $1.6 billion tax break for trial lawyers

Chris Rizo Jun. 10, 2008, 1:58pm

WASHINGTON (Legal Newsline)-Federal legislation that would afford trial lawyers a special tax break Tuesday failed to muster the support needed to end debate and move to a vote.

By a margin of 50-44, senators decided not to vote on the Renewable Energy and Job Creation Act of 2008, where a $1.6 billion tax break for class-action plaintiffs' attorneys is outlined.

Sen. Chuck Grassley of Iowa, the ranking Republican member on the Senate Finance Committee, urged lawmakers not to advance the bill by invoking cloture.

He said the legislation does not include offsets for the revenue loss associated with extending the tax relief proposals included in the bill.

Among other things, the proposal would allow class action attorneys to deduct fees and expenses up-front for filing contingency-fee lawsuits.

The expenses under current tax law are considered 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.

Legal reformers say the tax break 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, 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.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at

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