Attorneys dedicate their careers to helping clients achieve justice and financial security. The same strategic foresight can be applied to your own income. Student debt, variable caseloads, office overhead, and retirement planning all place demands on attorneys’ finances.
Attorney fee deferrals offer a smarter way to keep more of what you earn: steady income, reduced tax exposure, and lasting financial stability.
The Case for Fee Deferral
A fee deferral gives an attorney flexibility in when and how fee income is received. Through deferral, attorneys can:
- Reduce current tax liability by shifting income into years when applicable tax rates may be lower.
- Stabilize irregular income from large or small settlements and verdicts.
- Create future liquidity at specific intervals by aligning payments with life milestones, including paying for college or purchasing a home, so your fees support your goals when they matter most.
- Build long-term wealth through diversified, market-based investment options.
- Supplement retirement income by deferring a portion of a substantial contingency fee rather than accepting the full amount up front and incurring a significant tax bill, with funds invested and paid in annual installments beginning at a chosen age.
- Establish predictable annual cash flow by deferring a portion of fees from several cases, creating the flexibility to reinvest in the practice, add staff, and plan with confidence.
Fee deferrals are available to plaintiff attorneys in contingency fee cases, provided the election is made before the settlement funds are received. Timing is essential.
Fee Deferral Options
Deferred fees may be placed in a fixed annuity, a market-based structured settlement, or a combination of the two.
Fixed annuities carry a locked-in interest rate, which offers protection against market volatility and provides guaranteed payments over a set period.¹
Market-based structured settlements offer greater growth potential and may be managed by your financial advisor. Portfolios can be aligned with your risk tolerance, and a “laddering” approach distributes payments at pre-set intervals to spread risk over time.
Steady Income with Tax Advantages
Case flow and annual revenue can be difficult to forecast. A fee deferral can be paid to a single attorney or divided into separate payment streams for multiple attorneys or the firm itself, creating a financial safety net for your practice. Rather than paying taxes up front, you invest your pre-tax fees and pay income tax only on the payments received in a given year, which may reduce your annual tax liability.
Partner with Sage
With decades of experience in structured settlements and fee deferrals, the Sage Settlement Consulting team helps attorneys design compliant, personalized strategies aligned with their goals and timelines. Do not wait until your next significant case closes. Contact your Sage consultant today to review your options.
¹ Guarantees are subject to the claims-paying abilities of the issuing insurance company.