An amazing story from Legal Newsline, the U.S.-Chamber backed publication, reporting on the hush-hush discussions at the American Association for Justice convention in Vancouver, B.C., “Sources: Trial lawyers expect tax break from Treasury Department“:
VANCOUVER, Canada (Legal Newsline) – The nation’s trial lawyer group, the American Association for Justice, revealed Tuesday that it expects the U.S. Department of Treasury to soon give its members a tax break on contingency fee lawsuits.
The tax break could be similar to proposed legislation that didn’t make it through Congress last year. That proposal, sponsored by U.S. Sen. Arlen Specter, D-Pa., would have allowed attorneys to deduct fees and expenses up-front for filing contingency fee lawsuits.
John Bowman, the Director of Federal Relations for the AAJ, said in response to a question from a state delegate regarding recruiting new members that an administrative order from the Treasury Department could come as soon as tomorrow, sources told Legal Newsline.
If so, it’s outrageous, using the taxpayers to subsidize speculative lawsuits to the tune of $1.6 billion. A revenue ruling or new guidance from Treasury would also represent yet more of the current Executive Branch’s disregard for the policymaking branch of government, Congress.
Congress has had ample opportunity to vote on legislation to change tax law as desired by the trial lawyers. Sen. Arlen Specter (D-PA) introduced S. 437 in February 2009, and Rep. Artur Davis (D-AL) introduced H.R. 2519 in May 2009. The committees of jurisdiction did not take up the legislation because it’s political poison and bad policy — stimulating more economy-sapping litigation. As the American Association for Justice’s top lobbyist, Linda Lipsen, told trial lawyers at the AAJ’s convention last summer in San Francisco, “You cannot have a stand alone bill to help lawyers … so we have to tuck it into something.”
Or go the administrative route, circumventing Congress all together. On March 1, the Washington Tax Group, a specialized lobbying firm, filed its lobbying registration form with the American Association for Justice listed as its client. (See this Point of Law post.) The firm’s expertise would certainly be helpful in appealing to the Treasury Department for the trial lawyer tax break.
And what about the Obama Administration’s claimed devotion to transparency? From the Legal Newline story: “The Treasury Department cautioned the AAJ not to go public with the information yet, according to Bowman, sources also said.”
You can understand the strategy of silence and stealth. After all, it’s public attention that helped extinguish the first attempts to push the tax deduction through Congress. A public outcry could cause the Treasury to think twice about handing out this $1.6 billion favor to the trial lawyers.
At the very least, this news should inspire members of Congress of both parties to insist that the Executive Branch respect the legislative branch’s constitutional duties, which include the writing of fiscal policy.
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