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Mike Bryant
Mike Bryant
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More U S Chamber Hypocrisy

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The question of whether trial lawyers should be able to deduct case costs hasn’t been a thing I’ve gotten real excited about. I agree with one of the writers who suggested that with the economy the way it is, now just isn’t the right time for any kind of tax decreases. But, looking at the issue, there is no question that the relief is no different then any other business out there. This idea isn’t any special favor being asked, other than something that Big Business doesn’t let the Republicans agree with.

A great example is Lisa A. Rickard’s piece at Townhall.com. Say NO to Government Subsidies For Frivolous Litigation.

Now let’s first start with the straw man. No one is asking to fund frivolous litigation. They do have a different definition of frivolous: They usually call frivolous any case that they don’t bring. Frivolous is really a case with no merit. Who would want to put the cost into that case to begin with? So the bias starts with the headline .

But, getting away from their goal to close the courthouse to most consumers, let’s look at a couple of other statements:

some politicians have proposed raising taxes on individuals and businesses

This is the hypocrisy right off the bat. See law firms are businesses and attorneys pay taxes. If you take the silly belief that the U S Chamber loves to claim about all the money trial lawyers make, we must pay lots of taxes. But remember the U S Chamber really has nothing to do with small businesses. So when they are concerned about taxes they don’t mean trial lawyers or even small businesses.

some in Washington are actually considering the creation of a new special interest tax break that will hurt economic growth, increase the deficit and fuel increased civil litigation.

What is being considered is that Plaintiff firms would be allowed to deduct their upfront costs on a case the way most any business can. But, that might actually help plaintiffs and take away another of the advantages that Big Business and insurance companies (the real U S Chamber constituents) have right now. The result would be fairness. They instead claim a cast of horrors which they found in one of their U S Chamber website polls. We’ve looked at those before: Do you believe that all trial lawyers should be:

  • a: Killed
  • b: left to bleed to death
  • c: skinned

Oh look a majority of those that took the poll consider trial lawyers to be the biggest problem in America.

The tax deduction would impose direct costs on the federal government and American taxpayers. According to the Congressional Budget Office, this trial lawyer subsidy would cost nearly $1.6 billion over ten years, all during a time of record federal deficits.

A direct cost would depend on how you view tax deductions. But, sure if you give a deduction then that tax amount isn’t collected. The quoted amount really isn’t that much when you see that it’s spread over 10 years. But, the funny part is the sudden concern about the deficit. If they really cared about the deficit why aren’t they really looking at ways to reduce it? Why is their campaign money going to the party that built that deficit back up after the Clinton Administration got it paid off?

the tax deduction could subsidize as much as 40 percent of the initial plaintiffs’ expenses for certain cases. With the federal government paying for such a large percentage of the up-front costs of lawsuits, plaintiffs’ lawyers will be emboldened to take on the most speculative and frivolous litigation.

I’m not even sure what this means? I think the argument is that the trial lawyer will take 40% of everything. It is their usual support for why plaintiffs shouldn’t hire lawyers (because we take so much). No, it is just the money used for costs that would be the tax reduction. We still get taxed on the attorney fee. But, beyond that, their claim is that we are suddenly going to take a case because of the deduction. That’s ridiculous. I would just keep the money I have already and explain to the person they don’t have a case.

As a percentage of gross domestic product, the United States spends more than twice as much on litigation as any other industrialized nation, a cost that reached $254.7 billion in 2008 according to a report by Towers Perrin.

This is really where they get into funny numbers. So the cost’s deduction over 10 years would be $1.6 billion, and that would subsidize 40% of the litigation, and the overall cost of litigation for one year was $254.7 billion????? How does that add up? I think maybe they are paying their defense attorneys way too much. Even if they get too deduct that. Maybe , if they gave up that deduction, we might really cut down on frivolous defenses.

Actually, I think they may just be making these numbers up. Google "Towers Perrin" and see what you think.

the vast majority of lawsuits result in some sort of settlement – even if the defendant has done nothing wrong.

Most cases do settle, but with defendants who did nothing wrong? Really, where are those cases? What lawyers are those defendants hiring to give them that advice? Let’s see one settlement of any value were the defendant did NOTHING.

This article is just another anti lawyer spiel growing out of the Bush/Rove playbook. From that unbiased source : the President of the U.S. Chamber Institute for Legal Reform (ILR). Just a little more hypocrisy from the U S Chamber.