What's Happening?
The litigation finance industry, valued at approximately $16 billion, recently faced a significant threat from a proposed tax measure by Senator Thom Tillis (R-N.C.). The measure, which sought to impose a 41% tax on litigation finance profits, was nearly included in a major tax and spending package. Although it ultimately did not pass, the proposal alarmed many within the industry. In response, two attorneys have established the American Civil Accountability Alliance, a lobbying group aimed at countering legislative efforts that target litigation funding. Erick Robinson, a Texas patent attorney and co-founder of the group, expressed surprise at how close the measure came to being enacted. The industry is now taking steps to ensure it is not caught
off guard by similar legislative attempts in the future.
Why It's Important?
The potential imposition of a 41% tax on litigation finance profits could have severely impacted the industry, which plays a crucial role in enabling smaller parties to pursue legal action against larger entities. This development highlights the ongoing tension between litigation financiers and powerful opponents, such as large insurance and tech companies, who may prefer to avoid lawsuits. The creation of the American Civil Accountability Alliance signifies a strategic move by the industry to protect its interests and ensure continued access to justice for individuals and smaller entities. The outcome of such legislative battles could influence the availability and cost of litigation funding, affecting the broader legal landscape and access to justice in the U.S.
What's Next?
The American Civil Accountability Alliance plans to actively engage in lobbying efforts to prevent similar legislative measures from advancing. The group is also monitoring state-level legislation, which may pose additional challenges to the industry. As the alliance gains momentum, it is expected to expand its board and potentially hire lobbyists to strengthen its advocacy efforts. The industry will likely continue to face scrutiny and opposition, necessitating ongoing vigilance and strategic responses to legislative developments.
