A substantial qualifying contingency fee is expected and counsel wants to coordinate current liquidity with future income.
For plaintiff attorneys
Make the fee decision before the fee is received.
Contingency fee planning can convert a single year of income into a deliberate future payment strategy. The key is starting before settlement documents are final and before counsel has an unrestricted right to the fee.
Discuss your situation ↗Private briefingDecision guideEarly coordination
At a glance
For contingency fee attorneys considering tax timing, future income, firm planning, or the administration of complex settlements.
How much to receive now, how much to defer, when payments should begin, and whether fixed, market based, or blended funding fits.
A documented election and payment schedule completed before the fee is available to counsel.
Protect these choices early01 Final settlement language02 Constructive receipt timing03 Tax reporting and advisor review04 Liquidity and firm obligations
How it works
Understand the facts, compare the choices, coordinate the professionals, and complete the election before rights become fixed.
01
Start before settlement
Identify the potential fee, anticipated resolution date, immediate cash needs, and professional advisors before final settlement language is circulated.
02
Choose the portion
The attorney can evaluate receiving cash now, directing a portion to future payments, or using a combination that supports current obligations and future goals.
03
Compare payment paths
Fixed annuity payments, market based arrangements, and hybrid designs can be compared by timing, risk, liquidity, cost, and tax reporting.
04
Coordinate documents
Counsel and independent tax advisors confirm the election, assignment mechanics, payee information, and required language before the fee becomes available.
05
Fund and administer
After settlement, funds move directly through the selected assignment arrangement and payments are made according to the chosen schedule.
Product paths
Benefits, implementation steps, and practical examples for every available path.
01For attorneys prioritizing dependable scheduled income.Fixed fee structure
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Fixed fee structure
Uses a structured settlement annuity to deliver predetermined future payments.
Expected benefits
- Defers recognition until payments are received
- Creates predictable monthly, annual, or future lump sum income
- No ongoing investment management is required
How it is carried out
- 01Preserve the election in settlement documents
- 02Direct the selected fee to an assignment company
- 03Select a carrier and payment schedule
- 04Receive payments and applicable reporting as scheduled
Example in practice
An attorney expecting a large fee receives enough cash for current taxes and firm expenses, then schedules annual payments over ten years to create dependable future income.
02For attorneys comfortable with investment risk and seeking growth potential.Market based fee structure
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Market based fee structure
Directs eligible fees into a professionally managed portfolio with future distributions.
Expected benefits
- Spreads taxable income across selected years
- Offers market participation and professional management
- Allows flexible future distribution dates
How it is carried out
- 01Complete the election before the fee is available
- 02Use the required assignment and custody documents
- 03Select the investment manager and allocation
- 04Establish the future payment schedule
Example in practice
A midcareer attorney directs part of a qualifying fee to a diversified portfolio and schedules distributions to begin when the attorney expects to reduce trial work.
03For attorneys seeking guaranteed payment support with index linked upside potential.Index linked fee annuity
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Index linked fee annuity
Uses a structured settlement annuity whose credited payment growth is linked to an external market index under the contract terms.
Expected benefits
- Preserves a structured payment framework
- Offers potential payment increases tied to index performance
- Avoids direct ownership of the underlying index
How it is carried out
- 01Review the contract crediting method, cap, and guarantees
- 02Choose the eligible fee amount and payment dates
- 03Complete the assignment before constructive receipt
- 04Fund the annuity through the settlement documents
Example in practice
An attorney schedules annual payments that have a guaranteed base and may increase when the referenced index produces positive credited performance under the annuity terms.
04For balancing present liquidity, certainty, and long term opportunity.Hybrid strategy
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Hybrid strategy
Combines immediate cash, fixed payments, and market based payments in one coordinated election.
Expected benefits
- Keeps cash available for current obligations
- Creates a dependable income floor
- Adds measured growth potential
How it is carried out
- 01Calculate immediate liquidity needs
- 02Allocate the remaining eligible fee between fixed and market based paths
- 03Coordinate all elections in the settlement documents
- 04Fund each component directly at closing
Example in practice
Counsel takes forty percent in cash, directs thirty percent to guaranteed annual payments, and places thirty percent in a market based arrangement for later career income.
05For complex, multi claimant, or administratively demanding matters.Qualified Settlement Fund
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Qualified Settlement Fund
A court established fund can receive settlement proceeds and create time for allocation, liens, and claimant administration.
Expected benefits
- Separates defendant funding from final claimant distribution
- Creates time for allocation and lien work
- Centralizes documents, accounting, and payments
How it is carried out
- 01Obtain the appropriate court or governmental order
- 02Establish an independent fund and administrator
- 03Receive settlement proceeds into the fund
- 04Resolve conditions and distribute under approved instructions
Example in practice
A multiple claimant matter funds one court established account while individual allocations, liens, releases, and payment elections are completed for each claimant.
Product questions
Answers specific to this service. Final recommendations depend on the facts, documents, governing rules, and advice of the appropriate independent professionals.
01When must an attorney fee deferral be elected?+
Before the attorney has an unrestricted right to receive the fee. The settlement agreement and related documents must preserve the election before the settlement becomes final.
02Can counsel defer only part of a fee?+
Yes. A qualifying attorney may receive part in cash and direct part to future fixed or market based payments, subject to the arrangement and independent tax review.
03Does the claimant also have to structure proceeds?+
No. The claimant’s allocation and the attorney’s fee election are separate decisions, although both must be coordinated in the settlement documents when used.
04When is tax generally recognized?+
Income is generally recognized as each deferred payment is received, rather than when the fee is originally earned. Because tax treatment and reporting depend on the specific arrangement and circumstances, counsel should confirm the approach with an independent tax advisor.
05What payment schedules are available?+
Depending on the selected product, payments may be monthly, quarterly, semiannual, annual, or future lump sums, and may begin immediately or on a selected future date.
06What is the difference between fixed and market based deferral?+
Fixed arrangements provide predetermined payments backed by the issuing company’s claims paying ability. Market based arrangements introduce investment risk, fees, and growth potential.
07Can the payment plan be changed later?+
Many fixed payment schedules cannot be changed after funding. That is why present liquidity, taxes, firm obligations, and future cash flow should be modeled carefully in advance.
08What is a Qualified Settlement Fund used for?+
A Qualified Settlement Fund can receive settlement proceeds while allocation, liens, releases, claimant elections, and distributions are completed under independent administration.
09Who needs to review the arrangement?+
Settlement counsel, the consultant, the assignment provider, and the attorney’s independent tax or financial advisors should review the parts relevant to their roles.
Sage resource library
Original guides covering product mechanics, timing, coordination, and related planning considerations.
01
Source guide
Attorney Fee Deferral Strategies
Fixed, market based, and hybrid approaches for receiving qualifying fees over time.Open PDF ↗02Source guide
United Fee Advantage
An overview of a market based attorney fee strategy and its payment mechanics.Open PDF ↗03Source guide
Qualified Settlement Fund Overview
How a qualified fund can separate settlement funding from final claimant distribution.Open PDF ↗04Source guide
Qualified Settlement Fund Administration
Administrative responsibilities, coordination, and common uses of a settlement fund.Open PDF ↗05Source guide
Employment Claims
Planning considerations for taxable employment settlements and attorney fees.Open PDF ↗06Source guide
Tax Reform and Legal Settlements
General tax issues attorneys and clients should raise with independent advisors.Open PDF ↗General education only. Product availability, tax treatment, legal requirements, and benefit rules vary. Consult qualified independent advisors about your circumstances.
Bring the whole picture