At Byrd Settlements, we work with plaintiff attorneys and their firms to create fee deferral strategies through structured attorney fees and more traditional retirement planning resources. When you defer and reduce your tax burden it should provide long-term financial stability personally and to your practice by smoothing and strengthening what can be an unpredictable rise and fall of case cycles.
Structured Attorney’s Fees
There are several advantages to structuring attorney fees, including delaying or changing your tax burden and providing long-term financial stability personally and to your practice. We find that fee deferral strategies are often the first step for an attorney achieving a new level of freedom in firm management and case selection. This is made possible by smoothing and/or bolstering what is usually an uneven ebb and flow of case cycles.
We look at structured attorney’s fees as an important piece of both your operations planning, firm stability and hopefully your retirement plan. For many attorneys, a windfall in a large case in any context can have enormous impacts combined with major tax implications. This is especially true for solo practitioners and attorneys in smaller firms. Structuring fees is a commonsense first step in a larger solution for those who want to provide for their families and themselves in the future.
It’s not something that needs to happen all at once, or is dependent upon one or multiple huge cases. Rather, like other savings strategies, little by little and case by case, compounding interest and tax deferral can enhance your practice and retirement in a big way.
Mitigating Tax Burden/Impact
As many attorneys are aware, large settlements take time and effort to come about, and while you are focused on a specific case, there are only so many settlements and verdicts one can have in a year. For this reason when large settlements are achieved, they can have a significant tax burden that is not comparable to previous taxable income.
By structuring legal fees, attorneys spread out the taxable income and reduce the tax burden in a given year. This also allows you to provide for retirement and plan for the future.
Providing for Your Future
Structuring attorney’s fees is guaranteeing yourself income in your retirement years. Structured Fees are a practical choice and alternative to paying a large tax on a lump sum. They also provide for your family in the future and mitigate financial risk. The strategic combination of a structured settlement and cash balance or other 401k instrument should not only reduce your tax burden and provide retirement income, but can also do the same for employees in an industry where these benefits are less common, making your firm an even better place to work.