Litigation costs may be currently deductible.The Ninth Circuit has held in Boccardo, 5/26/95, that a cash-basis law firm could currently deduct litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. costs (amounts paid for filing, witnesses, travel, medical consultation, etc.) paid by the law firm, even though recovery of these costs could be obtained only from the firm's fee, which was contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the outcome of the case. Several cases have held that litigation costs advanced under contingent fee Payment to an attorney for legal services that depends, or is contingent, upon there being some recovery or award in the case. The payment is then a percentage of the amount recovered—such as 25 percent if the matter is settled, or 30 percent if it proceeds to trial. arrangements were not currently deductible, because the law firm had the right to be reimbursed from the recovery. Under the typical "net fee contract," the law firm receives a portion of the recovery after first being reimbursed for litigation costs. In Boccardo, the law firm's fee arrangement provided that the firm would receive a percentage of the recovery, but contained no provision for reimbursement of litigation costs. The court distinguished this "gross fee contract" from a "net fee contract," stating that under the former there was no contractual right to reimbursement and that the law firm was no more reimbursed for its expenses than a self-employed commission salesman is reimbursed for travel costs incurred in making a sale when he receives his commission check. The court observed that, under a gross fee contract, a law firm, like any other business, could only make a profit if it succeeded in deriving gross fee revenues that exceeded its own expenses. The court also held that the gross fee contract did not make the litigation costs illegal payments under Sec. 162(c). The California Rules of Professional Conduct permitted lawyers to pay litigation costs, even though repayment was contingent on the outcome of a matter. The court noted that no Federal or state statute had been violated. Boccardo held that litigation costs paid by a law firm under a gross fee contract could be currently deductible. While a gross fee contract may provide income tax advantages, law firms This list of the world's largest law firms by revenue is taken from The Lawyer and The American Lawyer and is ordered by 2006 revenue:[1]
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