We are asking today for your help contacting Republican Senators to keep Third Party Litigation Funding (TPLF) reform in the One Big Beautiful Bill Act this week. In the coming hours, Senators will determine whether this critical legislation will be included in the larger reconciliation bill. Your outreach could move the needle to make this reform effort a success.
As many of you know, The Council is working with industry colleagues on legislation to curb the abuse of third-party funders in our legal system. Senator Thom Tillis (R-NC) is championing our cause but needs help addressing concerns raised by his colleagues. Time is of the essence, so we encourage you to send the following letter on your company letterhead to your Republican Senator. The reconciliation process is a partisan exercise and only Republican Senators can determine the fate of the TPLF language.
Below is draft text that you can email to your Republican Senator, and you can find it here if you wish to download it. You can find your Senator’s contact information here. If you live in North Carolina, you do not need to contact Senator Thom Tillis as he has been our champion and worked to get the TPLF language included. If you have Democratic Senators, no outreach is needed.
For background on Third Party Litigation Funding, here is a one-pager from Americans for Litigation Tax Fairness (A4LTF) and here is a detailed overview of how the system currently works from the Washington Legal Foundation. Additionally, Senator Tillis’ office has prepared a FAQ that would be helpful to include in your communications.
If you want to see the bill text, you can do so here.
Thank you in advance for your efforts, and please reach out with any questions.
Best,
Joel Kopperud
SVP, Government Affairs
SAMPLE LETTER TO SEND TO YOUR REPUBLICAN SENATOR:
The Honorable [Senator’s Full Name]
United States Senate
Washington, DC 20510
Dear Senator [Last Name],
I am writing to urge your support this week for The Tackling Predatory Litigation Funding Act when Senators consider its inclusion this week in the One Big Beautiful Bill Act. We’re grateful to Senator Tillis for his leadership on this important issue addressing third-party litigation funding challenges in our judicial system.
[INSERT YOUR COMPANY NAME AND PROFILE]
One of the most troubling and under-discussed developments in our legal system is the explosive rise of third-party litigation funding for profit — a novel and rapidly growing practice that has been perversely incentivized by our current tax code. Under existing law, foreign investors — including sovereign wealth funds and unsavory actors — are able to fund lawsuits against U.S. companies and then reap massive financial returns without paying a dime in U.S. taxes. These investors, often with no connection to the underlying disputes, exploit our legal system for profit. There is no justifiable reason why these uninvolved funders should receive better tax treatment than the actual parties to the case.
The Tackling Predatory Litigation Funding Act represents a critical policy win for the American middle class. Today, the tax code’s silence on the treatment of investment returns from litigation funding encourages investors in litigation to claim their returns as capital gains and enables foreign investors to avoid U.S. tax obligations. Meanwhile, plaintiffs and their attorneys pay at the ordinary income rate for any litigation awards – up to 37 percent.
By closing the loopholes that enable tax-free litigation windfalls, the legislation will help end the billions siphoned out of our economy each year — a hidden “tort tax” that every American consumer pays in the form of higher prices and reduced economic competitiveness. The Joint Committee on Taxation estimates this change would raise roughly $3.5 billion over ten years that could be used to fund other priorities in the pending reconciliation package that would increase domestic economic growth and job creation. Maintaining the status quo means continuing to allow foreign interests to manipulate our court system, extract wealth from U.S. companies, and walk away tax-free.
This issue is extremely important to our industry. Thank you for your consideration.
Sincerely,
[Your Name]