Attorney Fee Structures
Most plaintiff attorneys are aware that their fees can be structured in personal injury cases. Less known is that structured fees, using a life insurance annuity, can also be created in non-injury (non-qualifying) cases.
Many large life insurance companies write attorney fee structured annuities in personal injury cases. A handful also write attorney fee structured annuities for just about every type of non-qualified case–as long as the attorney fee agreement meets with the insurance company’s specific criteria. This means fees generated from class action settlements, cases involving environmental claims, construction defect, age, sex and employment discrimination, property damage, fraud and non-physical injury cases–in addition to personal injury cases–can all qualify for fee structuring.
Advantages of Structuring Fees
While structured attorney fees do not enjoy the same generous tax benefits as those of structured settlements in personal injury cases, there are still attractive advantages. If properly executed and documented, the income is not taxable until received. Instead of accepting a lump sum fee upon settlement and the elevated tax consequences, deferring income over a number of years or to later years with a structured fee schedule can reduce the tax obligation.
Other advantages include the ability to fund pension plans, stabilize firm revenues and create tax-deferred reserves for case opportunities. For sole practitioners and members of small firms, a steady, reliable income stream from a structured fee schedule allows for planning such life events as education expenses and retirement.
The Fine Print
Fees that are billed and paid hourly cannot be structured. Timing is important. The decision to structure a fee must be done early in the settlement negotiations. Once attorneys sign an agreeable settlement for their clients (qualified or non-qualified), the fee is considered earned and fully taxable.
Patrick C. Farber
Structured Settlements Broker
With more than 30 years experience, Pat has placed over $1.5 billion in annuity premiums and U.S. Government notes. His structured settlement expertise and dedication to helping create the best structured settlements for injured parties is acknowledged and valued by attorneys around the country. He specializes in settling physical and non-physical injury cases and attorney fees–all at no cost to his clients. E-mail Pat personally at email@example.com or call 800-734-3910.