No New Litigation Finance Tax
An earlier version of the BBB included a punitive tax on litigation finance companies. Especially when plaintiff firms oppose wealthy corporate defendants, access to litigation finance can be critical. Many opposed the new tax, which was removed from the final version of the BBB. Unsurprisingly, many believe it will be proposed again.
The change would have imposed a tax equal to the highest individual rate, plus 3.8 %, or 40.8 %, on“ qualified litigation proceeds received by a covered party.” A covered party was“ any third party to a civil action which receives funds pursuant to a litigation financing agreement and is not an attorney representing a party to such civil action.”“ Qualified litigation proceeds” were“ realized gains, net income or other profit received by a covered party during the taxable year which is derived from, or pursuant to, any litigation financing arrangement,” and could not be reduced by“ any ordinary or capital losses.” This is all to say— it would have obstructed most litigation finance.
Says University of Chicago Law School Lecturer Michael Kelley,“ The proposed litigation finance tax would have had the most negative impact on individuals and small and medium size businesses, which would lose access to funding necessary to litigate meritorious claims against much larger and wellfunded tortfeasors and infringers. The bill would also have stifled technological innovation, resulting in tax revenue losses far exceeding any projected tax revenue gains payable by litigation funders under the proposed bill.”
No AI Regulation Moratorium
Artificial intelligence(“ AI”) is making it easier for bad actors to engage in
14 The Trial Lawyer