Many attorneys are missing out on the outstanding benefits of deferring their fees. Why? They think they have to wait for a massive fee to come along – one that isn’t already spoken for before it arrives.
Simply put, trial lawyers — partners, associates, and those who just passed the bar — should start planning their wealth accumulation strategies immediately. In addition to putting in the hours of tireless legal work, financial success comes from having an overall plan in place for building wealth and managing cash flow. It should start at the beginning and grow alongside your professional success. It’s also important to note that there is no minimum amount to be deferred.
For many trial lawyers, deferring attorney fees can be one effective piece to the overall plan. In a previous post, I outlined the major factors attorneys should know about deferred fees including:
- Deferred compensation can be considered an extension to your savings plan.
- The IRS limits how much a person can defer in any one tax year, unless he or she is a trial lawyer working on contingency (then it’s unlimited).
- Not all partners in a firm have to participate in fee deferrals.
- Structured fees operate outside of 409A.
When considering these factors, it’s important to remember that a consistent and well-planned approach to deferral and accumulation can make a big difference over a decade. Of course, before planning, implementing, and sticking to a plan in the long-term, a trial attorney must be financially ready.
Deferring fees could be the answer to your long-term financial planning as a trial lawyer, but it’s important to speak with an expert before making a move. To explore your options, I welcome you to contact Milestone Consulting to get started.
Contact Milestone Co-Founder John Bair
John Bair is 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 has guided thousands of clients by taking the time to understand the complexities of each. They assess the best outcome and find 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).