Congress Should Reform Tax Breaks for Foreign Third-Party Litigation Funders

Last month, at a House Financial Services Committee hearing on international finance, Treasury Secretary Scott Bessent made a striking criticism. Asked about third-party litigation funding, in which outside investors, many of them foreign, bankroll lawsuits against American companies for a share of the proceeds, Bessent called it a “malignancy within our legal and financial system.”

That language deserves serious attention. Nobody asked Bessent to call it a malignancy. He chose the word. A Treasury secretary with a crowded agenda doesn’t reach for it unless the problem runs deep.

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David Malpass

JC

About the Author

James Carter

James Carter is a former deputy assistant secretary of the treasury. He previously served as a senior tax adviser to the Senate Budget Committee.

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Scott Bessent

Last month, at a House Financial Services Committee hearing on international finance, Treasury Secretary Scott Bessent made a striking criticism. Asked about third-party litigation funding, in which outside investors, many of them foreign, bankroll lawsuits against American companies for a share of the proceeds, Bessent called it a “malignancy within our legal and financial system.”

That language deserves serious attention. Nobody asked Bessent to call it a malignancy. He chose the word. A Treasury secretary with a crowded agenda doesn’t reach for it unless the problem runs deep.