Let's face it!  Plaintiff attorneys ride a roller coaster when it comes to cash flow.  When cases settle, the money can be very rewarding.  When a dry spell hits, the cash flow stinks!  Especially when handling class action and similar cases where the costs associated with developing and trying the case can be high and the time until settlement long. 

 

When cases do settle, attorneys get paid an appropriate contingency fee.  Quite often though, they end up giving a bunch of it, unnecessarily, to Uncle Sam.  Proper planning can help mitigate this tax bite ensuring attorneys pay no more in taxes than they need to and keep more of what they earn. 

 

The Los Angeles Daily Journal recently featured an excellent article on the subject of Structured Attorney Fees written by a nationally recognized expert in the field.  Robert W. Wood, Esq. literally "wrote the book" on this particular topic.  As author of "Taxation of Damage Awards and Settlement Payments" and many other articles relating to this subject matter, Rob frequently consults for clients who need legal guidance on tax matters involving pending settlements.  His article, attached here for your convenience, can serve as a primer for plaintiff attorneys seeking to add a level of financial certainty to their otherwise feast-or-famine practice.

 

 

The popularity of Structuring Attorney Fees has increased dramatically in recent years.  So much so that it now constitutes nearly 25% of my personal practice.  Many plaintiff attorneys for whom I helped structure portions of their fees years ago consider this choice to have been one of the smartest financial decisions they've ever made.  And who can blame them for feeling so satisfied?  After all, a tax dollar not-paid that earns interest over time can end up being much more than a dollar earned. 

 

So as the rest of us wait for the return of the $11 trillion of wealth we collectively lost in our 401(k) and home equity accounts, attorneys who structured their fees are secure in the knowledge they are benefiting from wise decisions made years ago.  They earned guaranteed interest on pre-tax money they otherwise would have paid out in taxes long ago.

 

With year-end tax planning just around the corner, practitioners are invited to call anytime I can answer any questions about structured attorney fees and show you how valuable this tax advantage can be.

 

Thank you for the opportunity to be of service!  I look forward to helping.