ABA addresses regulatory and legislative challenges
As the national voice of the legal profession, the ABA has long worked to preserve the profession’s independence and ensure legislation and regulations do not undermine lawyers’ ability to represent clients or interfere with courts’ authority over the practice of law.
In collaboration with state and local bars, the ABA consistently has advocated for policies that preserve judicial regulation and oversight of the legal profession, protect the confidentiality of the lawyer-client relationship and avoid imposing undue regulatory burdens and costs on lawyers and law firms.
That commitment remains just as strong today as the ABA monitors and responds to developments in Washington, D.C.’s turbulent environment.
In June, for example, the ABA sent a letter to Senate and House leaders expressing concerns about key provisions in the House-passed version of the One Big Beautiful Bill Act. The provisions would have prevented law firms and other professional service businesses from deducting their state and local taxes at the entity level and continued to limit their owners’ ability to claim the full qualified business income deduction while allowing other pass-through entities and their owners to fully claim both deductions.
The ABA also sent a grassroots action alert to thousands of ABA members and to the managing partners of almost 150 law firms in its Full Firm membership program, resulting in over 425 additional letters to Congress.
Most U.S. law firms are small pass-through businesses; more than 75% of practicing lawyers in the nation work as solo practitioners or in small law firms.
“Both provisions would be fundamentally unfair and further widen the tax parity gap between professional service businesses and other pass-through businesses and corporations,” the ABA said in the letter.
After weighing concerns from the ABA and others, Congress revised and passed the One Big Beautiful Bill Act in July. The new law preserves the existing SALT deduction for law firms and other pass-through businesses, thus avoiding any large tax hike. It also modestly increases the limits on income that owners of law firms and other professional service businesses can earn and still claim some of the QBI deduction before it completely phases out, allowing more of those owners to claim the deduction.
Judicial oversight
The ABA also has urged Congress to pass the Restoring Court Authority Over Litigation Act, which was introduced by Rep. Scott Fitzgerald (R-Wis.) in May. The bill says attorneys engaged in litigation should be regulated and disciplined exclusively by the courts, with no federal agency authority over attorney litigation activities. The legislation, endorsed by the ABA and the Conference of Chief Justices, emphasizes that courts—not federal agencies or opposing parties in lawsuits—are the proper authorities to regulate and discipline attorneys engaged in litigation.
For years, the ABA has also spoken out against federal agency proposals and proposed rules that undermine the attorney-client privilege, lawyers’ ethical duty to preserve client confidentiality and judicial authority. In 2024, it urged the Treasury Department’s Financial Crimes Enforcement Network to exempt lawyers from provisions in the agency’s proposed anti-money laundering rule for nonfinanced residential real estate transfers that would require them to report confidential information about clients’ real estate transactions to the government. The ABA maintained the proposed rule would undermine lawyers’ ethical duty to preserve client confidentiality, the attorney-client privilege, the right to effective assistance of counsel and state supreme courts’ authority to regulate and oversee lawyers and the practice of law. Although the rule was adopted, legislation pending in Congress—Senate Joint Resolution 15, sponsored by Sen. Mike Lee (R-Utah); and House Joint Resolution 55, sponsored by Rep. Andrew Clyde (R-Ga.)—would nullify the rule under the Congressional Review Act.
In recent years, the ABA and its allies have successfully blocked or modified other proposals that threatened the courts’ primary authority to regulate lawyers engaged in the practice of law, interfered with the confidential lawyer-client relationship or imposed other excessive federal agency regulations.
For example, the ABA persuaded Treasury to modify its final rule on Customer Due Diligence Requirements for Financial Institutions to protect the confidentiality of law firm clients. The final rule, effective in May 2018, included ABA-proposed language clarifying that when law firms open escrow or client trust accounts at financial institutions on behalf of their clients, the law firms will have to disclose only their own beneficial ownership, not the identity or beneficial ownership of their clients for whom the accounts were established.
The ABA remains committed to ensuring the legal profession’s independence to serve clients effectively and uphold the rule of law. The association will continue to closely monitor proposals that could threaten that independence, and it will advocate for policies that respect the unique role of lawyers and the courts in our democratic system—protecting not just the legal profession but the public it serves. n
This report is written by the ABA Governmental Affairs Office and discusses advocacy efforts by the ABA relating to issues being addressed by Congress and the executive branch of the U.S. government. Follow @ABAGrassroots on social media.
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