Attorneys Structure Their Fees
Tom and Art's Solution
Attorneys Tom and Art settled a big case for a woman who was seriously injured in a fluke accident. While counseling her and her family on the benefits of a structured settlement, they decided to take a closer look at structuring their own attorney fees.
These long-time law partners wanted to devote the final years of their practice to the cases they both enjoyed most. But first they needed to figure out how they would cover office overhead and other expenses.
Tom and Art don't stop caring about their clients after a case closes, which is why they often recommend the protection and security of a structured settlement. So, they were all ears when asked if they knew they could structure their own attorney fees. Our Ringler consultant filed this report:
RE: Tom and Art's Fee Structure
This case involved a woman who was seriously injured in a fluke accident when she was struck by debris from a gas explosion. Tom and Art called on us to design a structured settlement that would help this woman's family provide lifelong care, as the client was disfigured and suffered a brain injury. Throughout our planning discussions, I heard both attorneys talk about how much they would like to devote all their energies to cases like this one. But given how unpredictable income can be in a law practice, they felt they had to keep taking as many cases as possible to pay the bills. It was at this point that I asked them if they had considered structuring part of their own attorney fees. Like a lot of plaintiff attorneys I've worked with, they were surprised to learn that they could enjoy long-term financial protections and tax benefits similar to those achieved by their clients in a structured settlement.
To make a long story short, Tom and Art decided to take only a small portion of their fees in this case at the time of settlement, choosing to receive the majority of it in the future. After considering their options, they decided to defer receipt for five years and then take monthly payments during a 15-year period starting at age 55. Structured in this fashion, the fees from this case covered their overhead and provided a solid base income. It was kind of an "early semi-retirement."
I still talk to both Tom and Art. They've been receiving payments for a few years now, and they are very pleased with the outcome of their fee structure. More attorneys should seriously consider this option, especially given the income ups and downs common to this type of legal practice.
Sincerely, Ringler Consultant
Editor's Note: The case described above was a large one, plus Tom and Art structured a sizable amount of their fees. To accomplish the same outcome, attorneys can structure fees on a number of smaller cases. If an attorney structured a third of his/her fee on every case over a particular size, the result would be quite a nest egg – all growing on a tax-deferred basis. Learn more about attorney fee structuring.