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Lobbyist: Sneak trial-lawyer tax break through Congress
By: David Freddoso
Online Opinion Editor
07/30/09 4:52 PM EDT
"You cannot have a stand alone bill to help lawyers … so we have to tuck it into something."
This is the sort of thing lobbyists usually keep private when they discuss legislation in Congress. But according to Legal Newsline, Washington's top lobbyist for trial lawyers said it in a public forum while discussing a billion-dollar tax break she wants Congress to pass on behalf of her industry.
Linda Lipsen, senior vice president of public affairs for the American Association of Justice (formerly the Association of Trial Lawyers of America), was in San Francisco addressing a group of trial lawyers at an AAJ conference when she outlined this strategy of attaching the tax break to some other piece of important, must-pass legislation.
The tax break in question would allow plaintiffs' lawyers to deduct right away on their taxes the money they invest in filing speculative lawsuits. When plaintiffs' lawyers take cases on contingency -- that is, when they sue in exchange for a percentage of the settlement or judgment -- the IRS treats the expenses involved in the suit as a loan to the client. Lipsen and AAJ would like to change that tax treatment so that lawyers can simply write off their costs in the same year they are incurred.
Legal Newsline reports that the tax break is worth about $1.6 billion to trial lawyers. They quoted Lipsen yesterday describing the difficulties of getting it through Congress.
"It costs a couple billion," she said. "So we're going to have to find what they call a 'pay-for' so that we can make it budget neutral and get it passed. This is going to be tough because there is no money."
Still, she told the forum that there exists bipartisan support for this in some quarters of Congress. "Right now all these senior Democrats and some Republicans are saying, 'Let's do it,' so again let's cross our fingers," she said.
Historically, trial lawyers are extremely politically active. Since the 1990 election cycle, lawyers and law firm PACs have contributed more than $1 billion to politicians, about three quarters of that going to Democrats.
Lipsen did not respond to The Examiner's request for comment about the bill and the members of Congress who support it.
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