Here at Amicus Settlement Planners, we have worked with hundreds of contingency fee-based plaintiff attorneys over the years. In working with attorneys all over the country, we’ve been able to help attorneys utilize attorney fee deferrals to successfully grow their wealth.
Plaintiff attorneys often tell us that they like the idea of deferring legal fees, but they want to wait until they get a “big case” before they defer fees into a deferred compensation plan. While this option works for many attorneys, often times when the big case comes along, the attorney already has plans for the funds — and they delay deferring their fees to the next big case.
In some instances, we’ve seen a couple of years go by and the attorneys still haven’t deferred anything into their deferred compensation plan.
A Consistent and Disciplined Approach to Deferring Fees is the Key
What we found effective for many of our attorneys — regardless of the size of their practice — is that they set aside a set percentage on every single case to defer into their deferred compensation plan. We’ve seen attorneys defer an amount as low as 5% or as high as 50%.
Regardless of the set amount, the important thing we see in our most successful attorneys is that they defer a set percentage on every case. So, they can arrange with their bookkeeper to defer that set percentage into their deferred compensation plan from every case.
We can help establish the setup with the plan administrator, so it will be a hassle-free and straightforward process that won’t take up much time. Typically, the attorneys we work with inform their staff person or bookkeeper that a percentage goes into the deferred compensation plan in every case that comes in. The rest goes into the operating account like usual.
With this disciplined approach, the deferred compensation plan grows slowly but surely over the years, all the while saving on income taxes, and getting all of the benefits of a fee deferral.
Dollar-Cost Averaging as an Effect of Consistently Funding the Deferred Compensation Plan
Another advantage of this strategy is that by placing funds over time into the deferred compensation plan, the attorneys benefit from the dollar-cost average approach to the investments inside the deferred compensation plan.
Not only does the attorney get the advantages of dollar-cost averaging, but attorneys also benefit from this disciplined approach to funding your deferred compensation plan, which works well when planning for your retirement.
If we have one suggestion for attorneys interested in deferring fees, it’s that the most successful attorneys we work with defer a percentage of their fee from every case to fund their deferred compensation plan.
Since the process can be arranged to fund the plan automatically, you don’t have to think about deferring fees each time you settle a case. You are able to defer a set percentage every single time, and you have the benefit of cost-averaging the funds in your investment portfolio.
If you have questions about funding a deferred compensation plan, give us a call. We can discuss the process and design that best fits your goals and help set up that plan for you.