Democrats have tucked a lucrative $2.5 billion tax break inside President Biden’s multitrillion-dollar social welfare bill that would benefit the trial lawyers lobby, spurring Republican accusations of political backscratching.
The tax break allows trial lawyers working on a contingency basis, meaning they are paid only if a case is settled in their favor, to deduct expenses immediately. Such expenses include hourly labor fees and the expenses associated with waging a lawsuit, such as filing and deposition costs.
On average, according to the American Bar Association, the fixed rate for contingency cases is anywhere between 33% and 40% of the total settlement payout. In some instances, the contingency fee can range upward of 50%.
Given that legal costs have soared in recent years, the Joint Committee on Taxation estimates the write-off would cost taxpayers $2.5 billion over the next decade.
Republican lawmakers argue the lucrative write-off is nothing more than a giveaway to the trial lawyers lobby, which heavily underwrote Mr. Biden’s presidential bid.
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