Law360 Quotes James Salles: Tax Bill's Legal Fee Provision May Burden Attorneys


Some attorneys are reeling from a provision inserted in the House and Senate’s tax plans that would effectively erase a Ninth Circuit decision allowing attorneys to deduct expenses advanced to clients in contingent-fee cases, potentially placing a burden on practitioners and affecting the availability of legal services.

The Joint Committee on Taxation has estimated that the change in the tax treatment of legal fees would raise some $500 million in revenue over 10 years. That may account for why the provision is included in the legislation, according to James E. Salles, a [M]ember of Caplin & Drysdale, Chtd.

“The bottom line is that I suspect Congress is just looking for a short-term revenue raiser," Salles said. “Someone just thought that they’d raise a little revenue and create a uniform national rule and short-circuit gritty factual issues.”

Salles said the impact of the timing issue was likely to be relatively limited, but if he were a plaintiffs lawyer in California, he would not want that portion of the bill to pass.

For the full article, please visit Law360’s website (subscription required).

Excerpt taken from the article “Tax Bill’s Legal Fee Provision May Burden Attorneys” by Amy Lee Rosen for Law360.


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