Plaintiff attorneys are often interested in deferring their contingent legal fees. However, many do not like how involved the defense has to be in the traditional annuity-based contingency fee deferral.
For example, just like when you set up an annuity for a client, if you want to defer your own fee using an annuity, the defense has to send the check directly to the annuity company. There is a specific language that needs to be in the release. There is also a qualified assignment document.
In short, if you defer your contingent legal fees using an annuity, the defense attorney and the defense liability carrier will be involved in your business and in what you are doing with your fees. A lot of plaintiff attorneys understandably don’t like that.
Good news! If you don’t want the defense to be involved in the process to defer your fees (or even know that you will be deferring your fees), there’s another option. You can establish your own private, deferred compensation plan.
The defense has zero involvement when you defer fees into your own deferred compensation plan. The defense can pay the funds directly to your firm’s IOLTA, and you can fund your private, deferred compensation plan straight from your IOLTA.
In order to fund the deferred compensation plan from your IOLTA, there are a few things you need to do before settling the case and before signing the release agreement. We can walk you through these steps to make sure that you have protected your right to be able to defer from your IOLTA.
A private, deferred compensation plan allows you to defer your contingent legal fees with zero defense involvement. The defense does not have anything to do with your personal financial decisions (And the deferred compensation plan approach is a simpler, cleaner, and more straightforward process in terms of paperwork than using an annuity).
If you are having second thoughts about deferring legal fees because of the cumbersome process or because of how involved the defense must be in your personal business, give us a call. We’d love to talk to you about the deferred compensation plan approach and how you can defer fees without any defense involvement at all.