Structured attorney fees can play a significant role in your practice’s financial planning. The ability to create a guaranteed income stream through structuring offers financial security and stability, while the income’s tax-deferred status can reduce your overall tax burden.
Here are two quick videos about structuring attorney fees. The first is from Pacific Life and the second is from attorney Virginia Nelson..
Consult with your tax professional to see if a full or partial tax-deferred fee structure can help meet your practice’s financial needs.
Sample Attorney Fee Structures:
43-Year-Old Male Attorney Structures $150,000 From His Fees – A 43-year-old male attorney structured $150,000 from his fees with a non-qualified, tax-deferred, monthly lifetime annuity commencing at age 55.
60-Year-Old Female Attorney Structures $250,000 From Her Fees – A 60-year-old female attorney structured $250,000 from her fees with a non-qualified, tax-deferred, monthly lifetime annuity commencing immediately.
46-Year-Old Male Attorney Structures $100,000 From His Fees – A 46-year-old male attorney structured $100,000 from his fees with a non-qualified, tax-deferred, lump sum payments at age 60, 65 and 70.
Attorney Fee Structure Articles & Links
RICHARD A. CHILDS, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE View information on Childs v. Commissioner, the case that the U.S. Court of Appeals for the 11th Circuit affirmed that attorneys may structure their fees.
The Trial Lawyer – “Attorney Fee Structures” (An article by attorney Thomas Girardi of Girardi | Keese, and Patrick Farber on attorney fee structures.)
The business model for a litigation law firm is often fraught with uncertainty — periods of big wins and big payouts as well as slow times with little or no income. One tool to even out cash flow, better manage the ups and downs of a litigation practice and prepare for an attorney’s future financial needs is structured attorney fees. >> Read Full Article
The Gavel – “Do Structured Fees Make Sense For Your Practice?” (Q&A with Mark Simurda, a CPA and tax partner with Lesley, Thomas, Schwarz & Postma, Inc., in Newport Beach, Calif.)
Structuring attorney fees is increasingly becoming part of a law firm or sole practitioner’s financial planning strategy. Not every fee is eligible and certain initial steps must be taken so the fee qualifies for its preferred tax status. >> Read Full Article
The Bottom Line – “Structuring Fees–Latest Financial Planning Technique?” – Law Practice Management Section, State Bar of California
Structuring attorney fees is playing a larger role in law firm and sole practitioner financial planning. Receiving a fee over the course of years instead of in a single lump sum payout can help manage firm cash flow and have positive tax ramifications. Not every fee is eligible, however, and certain initial steps must be taken so the fees qualify for preferred tax status. >> Read Full Article