Without a doubt, there are multiple fundamental financial disparities between class action lawsuits and individual cases. For one, class action lawyer fees do not come from a contingency agreement and are instead ordered by the court. Because of these and other differences, there is a common misconception that class action attorneys can’t defer their fees.
Fact: Class Action Lawyers Can Defer Fees
Class action fees can still be structured into periodic payments, and the attorneys can receive the same deferment benefits other trial lawyers have. These advantages include:
- Accumulating wealth on a pretax basis,
- Deferring income to yield a lower tax bracket,
- Creating a steady flow of income in an unpredictable field,
- Replacing buy/sell partnership insurance with pretax dollars, and
- Building a generational strategy toward gifting, philanthropy and family.
There are some considerations and technical nuances involved in establishing periodic payments – about which Robert W. Wood’s article has long-standing precedence. It’s important for any attorney to be well-informed about these factors before deciding if deferring fees is the right tool for his or her own situation.
To Defer or Not to Defer? Factors for Class Action Attorneys
Historically, deferring lawyer fees is a financial planning tool that mass tort and individual case attorneys have used to build wealth. Deciding whether to elect a periodic payment obligation comes down to three factors:
- Evaluating whether deferment is possible based on the attorney’s and firm’s financial needs
- Deciding on the best product for the payment stream, such as a private wealth portfolio, permanent insurance, or equity or fixed annuities
- Planning and customizing the distribution plan so wealth can accumulate and become available at an optimal time
As long as the court orders a qualified settlement fund into existence, class action attorneys can elect periodic payment obligations as their distribution of choice. If the choice is right for them, structured fees can be an exceptionally useful tool to accumulate wealth and financial success.
Get the Information You Need to Make a Sound Decision
John Bair has guided many attorneys through the deferment process as co-founder of Milestone Consulting, LLC, a broad-based settlement planning and management firm. Milestone’s approach is comprehensive and future-focused. John’s team assesses the best outcome and finds the path that enables each client to manage their many needs. Read more about Milestone Consulting at http://milestoneseventh.com/.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).