Litigation finance tax, limits on contempt power dropped from Senate's version of budget megabill
Two proposals of concern to many lawyers are being dropped in the U.S. Senate’s version of a budget megabill, known as the One Big Beautiful Bill Act. (Image from Shutterstock)
Two proposals of concern to many lawyers are being dropped in the U.S. Senate's version of a budget megabill, known as the One Big Beautiful Bill Act.
A proposal that would have taxed earnings from litigation finance contracts at 31.8% can’t be included in the bill, according to the Senate referee.
Bloomberg Law has the story.
“Though lawmakers may still try to reinsert the provision, its failure to be included in the bill would be a huge relief for litigation funders,” Bloomberg Law reports. “They warned the provision could destroy the growing business of financing litigation, in which capital providers pay fees in exchange for a slice of court winnings or settlement proceeds.”
The Senate version of the tax bill also dropped a provision that would have limited federal courts’ ability to hold government officials and other litigants in contempt for disobeying their orders, HuffPost reports.
The provision had said federal courts can’t use appropriated funds to enforce a contempt citation for failing to comply with an injunction or a temporary restraining order “if no security was given.”
Security refers to a money bond that would cover potential costs and damages from a wrongly issued injunction.
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