Minimum Competence - Daily Legal News Podcast
Minimum Competence
Legal News for Tues 1/16 - Litigation Financing Up Up Up, Trump Due in Court, Trump Down an Attorney, Ban on Guns in Post Office Unconstitutional and Column Tuesday on Intuit R&D Tax Credits

Legal News for Tues 1/16 - Litigation Financing Up Up Up, Trump Due in Court, Trump Down an Attorney, Ban on Guns in Post Office Unconstitutional and Column Tuesday on Intuit R&D Tax Credits

Litigation financing growth, Trump due in court and down an attorney, ban on guns in post offices unconstitutional and Column Tuesday on Intuit tax credits and expenditure transparency.

Prohibition era, pencil sketch.

This Day in Legal History: Prohibition Begins 

On this day in legal history, January 16 marks a significant moment in the United States with the enactment of the Eighteenth Amendment to the U.S. Constitution in 1920. This amendment, ratified a year prior, initiated the era of Prohibition, a nationwide ban on the production, importation, transportation, and sale of alcoholic beverages. The move was largely driven by the temperance movement, which argued that alcohol was responsible for many societal problems, including poor health and moral decay.

Prohibition represented a major shift in American legal and social policy, reflecting the growing influence of advocacy groups in shaping federal law. However, this era also witnessed the unintended consequences of such a sweeping legislative change. The ban led to the rise of bootlegging, illegal speakeasies, and a surge in organized crime as underworld figures like Al Capone capitalized on the lucrative illegal alcohol market.

The enforcement of Prohibition posed significant challenges for the government, stretching the resources of law enforcement agencies and leading to widespread corruption. The federal government found it increasingly difficult to enforce the ban amidst public disregard for the law and the growth of an extensive black market.

The legal and social experiment of Prohibition also sparked a national debate on individual rights, government intervention in private life, and the effectiveness of legislation in enforcing moral standards. This debate highlighted the complexities of legislating personal behavior and the limits of legal prohibitions.

Despite its intentions to improve society, Prohibition had a paradoxical effect. It led to an increase in alcohol consumption in some areas, and the quality of available alcohol decreased, often with dangerous health implications due to unregulated production.

The era of Prohibition also had a significant impact on the American legal system. It led to a substantial increase in court cases related to the enforcement of the Eighteenth Amendment, burdening the judiciary and reshaping legal practices and policies.

Ultimately, the widespread opposition to Prohibition and the issues arising from its enforcement led to its repeal in 1933 with the ratification of the Twenty-first Amendment. This made Prohibition one of the most notable examples of a constitutional amendment being entirely overturned, reflecting a profound shift in public opinion and policy.

Today, the legacy of Prohibition continues to influence American legal and cultural landscapes. It serves as a reminder of the complexities involved in regulating personal behavior through law and the dynamic nature of societal values and legal norms. The Eighteenth Amendment's enactment on January 16, 1920, thus stands as a significant historical milestone in the ongoing dialogue between law, society, and individual freedoms in the United States.

Parabellum Capital, which emerged from Credit Suisse 12 years ago, has recently closed a $754 million litigation fund, one of the largest in the private sector for litigation finance. This third and largest fund by Parabellum has two-thirds of its capital already committed to 50 commercial lawsuit investments, though specific details about the investors and the lawsuits remain undisclosed.

This development underscores the growth and maturation of the litigation finance industry, which is increasingly seen as a lucrative investment avenue, separate from traditional equity markets. In the U.S., the industry managed $13.5 billion in 2022, marking a 9% increase from the previous year. This trend is driven by large players like Parabellum, overshadowing smaller firms in the space.

Parabellum's inception goes back to 2006 at Credit Suisse, where it started as the first institutional commercial litigation finance business. Since its spinoff, Parabellum has expanded significantly, now managing $1.45 billion in assets with 18 employees. Their previous $465 million fund, raised in 2020, is now in the final stages, focusing on case management rather than new investments.

The first fund of Parabellum, which closed at $166 million, led to substantial secondary market transactions, showcasing the firm's success and the growing interest in litigation finance. Additionally, Parabellum's latest fund includes insurance protection for a portion of the investment, illustrating the synergy between insurance markets and litigation finance. This protective measure also facilitates leveraging opportunities, attracting more investors to this burgeoning field.

Parabellum’s New $754 Million Litigation Fund Is Among Largest

On January 16, Donald Trump is set to defend himself in a Manhattan court against defamation charges brought by writer E. Jean Carroll, who accuses him of rape. Carroll, seeking at least $10 million in damages, alleges Trump defamed her in 2019 by denying he attacked her in a New York department store dressing room. Jury selection for this civil trial is beginning, with Trump planning to testify, requiring him to return from campaigning in Iowa.

This court appearance is one of several legal challenges Trump faces. He's pleaded not guilty in four criminal cases, including two related to the 2020 election, and is involved in at least two other civil cases. Trump, leading in the Republican presidential nomination race, has integrated his legal troubles into his campaign narrative, criticizing the judicial system.

In a previous trial, a jury awarded Carroll $5 million for Trump's sexual abuse and defamation in 2022, a decision Trump is appealing. In the current trial, U.S. District Judge Lewis Kaplan has limited Trump's defense options, including barring him from denying the sexual assault or Carroll's account. The judge has also prohibited discussions of DNA evidence, Carroll's sexual history, or suggestions of Democratic funding for her case.

The trial's outcome will determine additional damages owed to Carroll. Kaplan's rulings, including the recognition of Carroll's rape claim as "substantially true," may pose challenges for Trump's defense. The 2005 "Access Hollywood" tape, which Trump did not retract in a 2022 deposition, will also be presented as evidence, potentially offering insight into Trump's attitude toward Carroll.

Donald Trump due in court for second E. Jean Carroll trial | Reuters

Joseph Tacopina, a member of Donald Trump's legal team, has announced his withdrawal from representing the former U.S. President in two significant legal cases. Tacopina confirmed he would no longer be involved in a criminal case in Manhattan, where Trump faces charges of falsifying business records related to a hush money payment to a porn star before the 2016 presidential election. Trump has pleaded not guilty to these charges.

Additionally, Tacopina will step down from Trump's appeal in a civil case brought by writer E. Jean Carroll, who accused Trump of rape. In this case, a jury previously awarded Carroll $5 million after finding Trump liable for sexual assault and defamation, claims which Trump also denies.

This change in Trump's legal representation occurs as the 2024 presidential campaign heats up, with Trump being an early favorite in the Republican primary. Tacopina, known for representing high-profile clients and appearing as a cable news commentator, is one of several attorneys who have recently ceased representing Trump in ongoing legal matters. This includes members of his Florida legal team who stepped down following Trump's indictment on charges related to national security documents.

Trump lawyer Tacopina withdraws from Manhattan legal team | Reuters

A recent ruling by U.S. District Judge Kathryn Kimball Mizelle in Florida declared that the U.S. law prohibiting firearms in post offices is unconstitutional. This decision, part of a case involving postal worker Emmanuel Ayala, aligns with the 2022 U.S. Supreme Court ruling in New York State Rifle & Pistol Association v. Bruen, which expanded gun rights. Judge Mizelle, appointed by former President Donald Trump, found that the charge against Ayala for possessing a gun in a federal facility violated his Second Amendment rights. 

Ayala, a postal service truck driver, had a concealed weapons permit and carried a Smith & Wesson 9mm handgun for self-defense. He was indicted after bringing the gun onto Postal Service property in 2012 and fleeing federal agents. While the charge for forcibly resisting arrest remains, the firearm possession charge was dismissed due to the ruling.

Judge Mizelle's decision reflects the Supreme Court's establishment of a new test for firearms laws, requiring consistency with historical traditions of firearm regulation. She noted that while post offices have been around since the nation's founding, the federal prohibition of guns in government buildings only began in 1964 and extended to post offices in 1972. Mizelle argued that no historical practice dating back to the 1700s justified this ban, and that such restrictions could lead to the practical non-existence of the right to bear arms.

Ban on guns in post offices is unconstitutional, US judge rules | Reuters

In my column, I discuss the need for tax expenditure transparency, highlighted by Intuit Inc.'s request for $94 million in research and development tax credits in 2022. This request coincided with the IRS receiving funds to develop a public tax preparation option, Direct File, creating a paradox where tax expenditures and revenue spending support both Direct File and Intuit, which opposes it. This was revealed in a Form 10-K financial summary report by Intuit, leading to Senator Elizabeth Warren's unfulfilled request for detailed accounting of these expenses.

I argue that such tax expenditure information often surfaces only incidentally, preventing taxpayers from understanding where their money is allocated. Despite the US ranking sixth in the Global Tax Expenditures Transparency Index, the lack of clarity in expenditure data indicates a worldwide issue of transparency in tax spending.

The column also highlights Intuit's extensive lobbying efforts, spending millions annually to oppose the public free-file option. It points out the irony of public funds being used to develop free tax services while simultaneously subsidizing private companies like Intuit, who seek to hinder these public initiatives.

I compare the situation to running heating and air conditioning simultaneously, with public and private interests in direct competition. This raises questions about the fairness of allocating tax credits to private entities like Intuit, which could undermine underfunded public services.

The column suggests that increased transparency in tax expenditures is akin to patent law, where disclosure benefits society. Entities seeking R&D tax credits should disclose the nature and impact of their research, aligning public funding with public interest. Although companies might resist this on privacy grounds, the overall benefit would be greater market sector intelligence and accountability.

Finally, I underscore that Intuit's actions against the backdrop of government and public unawareness illustrate the need for reform in tax expenditure allocation. Increased transparency would serve taxpayers and the economy, ensuring funds are used effectively for societal benefit.

Intuit $94M R&D Funding Request Shows Need for Tax Transparency

Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at