3 Key Considerations before Structuring your Attorney Fees

Want to make the best out of your Attorney Fees?

Then you’re in the right place.

Below we will go over 3 key considerations you must keep in mind before moving forward with Structuring your Attorney Fees.

• Make sure that the attorney elects to defer his/her fees before settlement.



By doing this, the attorney will avoid any constructive receipt issues – and in doing so, will have a peace of mind regarding any tax concerns. As the attorney, if you are thinking about structuring your fees on a case – you should stay ahead of settlement and make sure you bring this up.





Tip: A great way to be proactive in this regard is to simply have, within your fee agreement, something of the nature saying that the attorney may receive his/her fee in cash or as periodic payments.




• Pay special attention to how the attorney’s firm is arranged.



It is usually the case that structuring the attorney fees for solo practitioners is relatively simple. However, depending on if the attorney is a partner or not, if the firm is an S-Corp, LLP, etc. – there are further legal & tax matters to address.

• Consider the choice that an attorney has in the vehicle that they decide to go with when structuring their attorney fees.



Traditionally, an Attorney Fee Structured Deferral would be placed via a fixed annuity product through a Life Insurance Company. However, with different products and providers out there – there is a market for alternative options, where trust & investment companies take the place of assignment/life insurance companies (discussed above). Because of this, attorneys now have the option of an Attorney Fee Structured Deferral that can either involve traditional life insurance products or a portfolio investment model that is tied to the market. Depending on one’s risk tolerance & goals, one option may be better than the other for a particular attorney. (See article # 2 for a case analysis).




Utilizing Attorney Fee Structured Deferrals should be a no-brainer, tax-planning strategy for attorneys that are paid on a contingent-fee-basis.




For more in-depth information on Structured Attorney Fees, visit our blog or contact us for a free consultation.