Attorney Fee Deferrals

Personal injury attorneys have the unique ability to defer the receipt of their legal fee to future tax years to reduce taxable income.

Tax deferral of attorney legal fees

A Tax Planning Tool for Personal Injury Lawyers

Personal injury attorneys have the unique ability to defer the receipt of their legal fee to future tax years. We specialize in creating customized strategies for attorneys to minimize income taxes, fund retirement or other future goals, normalize firm cash flows, and retain key employees.

Watch our videos below to discover some of the unique applications and planning strategies available through attorney fee deferrals. 

overview of attorney fee deferrals

A Quick Primer on Fee Deferrals

When you defer the receipt of a legal fee, you also defer the income tax from that fee to a future tax year. As a result, the income taxes that would normally be due in the current tax year are deferred to future tax years when you actually receive distributions.

In this video, Greg Maxwell provides a brief overview of what an attorney fee deferral is and explains some of the more common types of attorney fee deferral vehicles. Greg also outlines some basic use cases for attorney fee deferrals.

fee deferral use case: golden handcuffs

Retain Key Employees with Deferred Fees

Your firm can use fee deferrals to fund a retention plan for key associates and employees. This can mitigate the risk of important employees or associates leaving the firm and taking valuable skills, cases and other employees with them.

By using a vesting schedule, key members of your staff can only collect their bonus payments if they stay with your firm for a defined period of time. If the employee leaves before their funds are vested, that money instead can go to you/your firm.

With deferred bonuses, key employees become more aligned with the firm’s long-term success — without you having to give up equity interest. (The “Golden Handcuffs” strategy starts at 4:40.)

webinar on using Fee deferrals to lower taxes AND BUILD WEALTH

Using the Deferred Compensation Plan Approach

If you’d like to dive a bit deeper on deferring legal fees, make sure to click the button below to watch a 45-minute training titled: “How to Reduce Your Income Taxes and Build Wealth Using Your Contingency Fees.”

In the training, Greg Maxwell shares a powerful (and underutilized) income planning strategy unique to plaintiff attorneys.

Highlights of the training include:

  • How attorneys can use the same tax-planning strategy as Fortune 500 CEOs to significantly reduce (and control) their income tax bill
  • Why this strategy is the most effective way for attorneys to save on income taxes and build wealth (and why other options pale in comparison)
  • How this strategy will help ensure an attorney’s future needs and goals are met

additional resources

Learn More About Income Tax Planning for Attorneys

We know that attorneys have questions about deferring their contingent legal fees. That’s why we’ve published dozens of videos and blog articles on this topic.

To view all our content on attorney fee deferrals, click the button below.

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Our goal at Amicus Settlement Planners is to be the premier, comprehensive resource for plaintiffs and plaintiff attorneys for all of the financial and legal issues that arise at the time of settlement.

We’d love to explore how we can help you and your clients.