Keller
WASHINGTON - Trial lawyers are hoping to blend into the Make America Great Again crowd to save their access to controversial funding - months after backing President Donald Trump’s opponents.
Law firms and litigation funders that have historically supported Democratic campaigns are struggling to convince Republican lawmakers to drop a new tax in the Senate version of President Trump’s “Big Beautiful Bill” that could decimate third-party litigation funding.
TPLF companies provide law firms with big bucks to pursue both lawsuits and advertising to find thousands of clients to sue over issues like contaminated water at Camp Lejeune. In exchange, the funder gets a percentage of the winnings.
Keller Postman founding partner Ashley Keller appeared on MAGA podcaster Laura Loomer’s show on June 22, making a plea to eliminate the tax, asking “how do the flesh-and-blood little people get access to justice?”
The appeal to a right-wing personality said to have influence over Donald Trump was striking. Keller started by praising Loomer for her “brand of investigative journalism and what you’re doing to help President Trump make America great again.”
Not only is Keller Postman a leading mass-tort law firm that gave the majority of its money to Democratic candidates in congressional 2024 elections, but Keller and law partner Adam Gerchen founded one of the top litigation-finance firms, Gerchen Keller Capital, which was purchased by industry leader Burford Capital in 2016. The firm gave the failed campaign of Ron DeSantis $9,900.
According to OpenSecrets.org, lawyers at the firm spent two-thirds of their money on Congressional candidates on Democrats. Most of it was given to Rep. Wesley Bell, a Missouri Democrat, and lawyers at the firm gave Trump’s general election opponent Kamala Harris nearly $2,500.
The tax on TPLF, originally proposed by Sen. Thom Tillis in a separate bill, would double the tax rate on litigation funding profits to 41% and subject currently exempt offshore investors to taxes as well. It is still in the Senate version being debated this week, although House lawmakers would have to vote to keep in when it returns to their chamber.
“There are so many MAGA Republicans in the Senate who if they are only made aware of this issue are going to come around to the right side,” Keller said.
The current proposal exempts most forms of consumer litigation finance, such as loans secured by personal-injury claims, from the tax.
On the Loomer show, Keller derided one of the main GOP justifications for the tax, which is to discourage foreign interests from meddling in the U.S. economy by investing in destructive lawsuits like the climate cases against the oil industry.
"Senator Tillis' legislation is premised on the idea that the Chinese Communist Party is investing in these lawsuits,” Keller said. “I've never heard of a single example of the CCP investing in U.S. litigation."
In a hearing last week, however, Sen. Ted Cruz named the Energy Foundation of China, which funds groups active in environmental litigation including the Natural Resources Defense Council and the Rocky Mountain Institute.
“We’re witnessing right now a systematic campaign against American energy,” said Sen. Cruz at last Wednesday’s hearing. “There is a coordinated assault by the radical left backed and paid for by the Chinese Communist Party.”
The U.S. Chamber of Commerce has long pushed for litigation finance disclosure and other measures to discourage investment in lawsuits. Litigation funders provide funding for lawyers, experts and other costs in exchange for a percentage of any money won in settlements or judgments and recover nothing if the cases fail, which helps them avoid laws regulating interest rates on loans.
But Burford Group and other litigation funders also supply cash to businesses by purchasing individual lawsuits or entire litigation portfolios, taking on the risk of failure and relieving the companies of management distraction. Big plaintiff law firms like Keller Postman, meanwhile, rely on litigation funders to finance mass tort lawsuits that can cost tens of millions of dollars before producing any returns.
Keller Postman is the lead firm in lawsuits over Camp Lejeune water contamination and is also pushing claims against Zantac and baby formula. It has been accused of filing massive amounts of arbitration claims against Tubi to hide frivolous ones.
Sen. Tillis, the original sponsor of the TPLF tax, recently announced he won’t run for reelection after angering President Trump over his opposition to other parts of the Big Beautiful Bill. But he has plenty of support for the TPLF tax from Trump loyalists and groups opposed to litigation finance.
Americans for Limited Government urged Republicans to close what it calls a “loophole” that allows offshore investors to avoid taxation on litigation funding profits. That same tax exemption is available to offshore investors in U.S. hedge funds and private equity funds, but TPLF opponents say it is a threat to national security when it comes to investing in lawsuits here.
“Hostile foreign organizations, including those from China and Russia, are giving billions of dollars for lawsuits against American companies and get access to American trade secrets during the legal process,” said ALG in a recent release. “Worse still, they’re doing it with what amounts to a taxpayer-funded subsidy.”
Yaël Ossowski, deputy director of the Consumer Choice Center, called the tax and transparency measures “sound methods to rein in the excesses of this new industry.”
“The opposition to third-party litigation funding reform efforts has mostly been a smokescreen,” with misleading narratives about companies trying to avoid liability, Ossowski said. “Litigation funders would like to continue their investment plays unabated, but lawmakers know this will only raise prices for consumers and further shroud parts of our justice system in obscurity.”
The TPLF industry is currently valued at more than $16 billion and some analysts expect to grow to $26 billion over the next five years. Foreign investors aren’t taxed on TPLF profits because they are considered capital gains and offshore entities are exempt from such taxes. The new tax would cover any investment in litigation, including contracts that provide the outside financier an interest in contingency fees.
Consumer lawsuit financiers that charge more than double the 30-year Treasury bond rate – currently 4.9% -- also could get hit with the tax. Lawsuit funders frequently advance money to personal-injury claimants at far higher rates.
