Tax,
Law Practice
Jun. 30, 2025
Litigation funding deals could get uglier under 'Big Beautiful Tax Bill'
Litigation funding, already complex and tax-sensitive, faces a seismic shift under the Senate's pending tax bill, which would impose a sweeping 40.8% excise tax on virtually all litigation financing profits--foreign or domestic--without offsets, exemptions for most existing deals, or regard for how the funding is structured, alarming funders, lawyers, and law firms alike.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Litigation is expensive, with experts, court reporters, travel, consultants and lawyer time. Law firms must pay their staff, rent and other expenses, and keep funding case costs until they win. Bank loans may be possible, but many banks won't lend big dollars, especially not on a non-recourse basis. Litigation funders make nonrecourse bets on cases or a law firm's case portfolio. If the case pays off, the funders do well. If the case craters, the funders collect nothing.
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