In our latest video, Laura Baroudi (Fetto), settlement expert at Milestone, explains how attorney fee deferrals can provide contingency fee attorneys with greater control, spread out tax burdens, and create a clear financial roadmap for their law firm’s future.

Watch the video now. Click the video at the top of the page.

Trial Lawyers: Are You Making the Most of Your Fees?

For contingency fee law firms, courtroom success often brings a significant challenge—managing large settlements without losing hard-earned revenue to hefty tax liabilities and unpredictable cash flow cycles. Many trial lawyers overlook a critical financial tool that can transform their firm’s financial health: attorney fee deferrals.

The Problem: Unpredictable Income and Tax Burdens

Winning large settlements can lead to uneven income cycles, with significant tax consequences. Without proper planning, trial lawyers may face steep tax bills in a single year while leaving limited capital for reinvestment.

Attorney fee deferrals offer a strategic solution by allowing you to spread income across multiple years. This approach not only mitigates immediate tax burdens but also converts lump-sum settlements into steady, flexible payments that align with your long-term financial goals.

The Solution: Predictable Payments to Fuel Growth

Attorney fee deferrals provide law firms with the predictability needed to fund growth and operational priorities, from hiring top talent to investing in technology, marketing, or even planning for retirement. Whether you’re stabilizing cash flow or reinvesting in your firm, deferred fees offer a clear path toward financial stability.

“Fee deferrals allow you to control when you take income and how much you take in any given year, so you’re not hit with a massive tax burden all at once.” — Laura Baroudi, Settlement Expert at Milestone

Avoiding Common Pitfalls: Protect Against Constructive Receipt

When implementing fee deferrals, it’s essential to follow IRS regulations and most importantly, avoid constructive receipt, as a taxable event can occur if fees are paid directly to an attorney or to their firm’s operating account.

To ensure compliance and maximize the benefits of attorney fee deferrals, trial lawyers should:

• Work with post-settlement experts who understand the nuances of attorney fee deferrals.
• Use a Qualified Settlement Fund (QSF) to protect deferral opportunities and structure payments strategically.
• Plan early to align settlement processes with your firm’s growth milestones, personal goals, and tax strategy.

Working with experienced settlement professionals and utilizing Qualified Settlement Funds (QSFs) safeguards your ability to defer income effectively. QSFs allow attorneys to defer fees while retaining flexibility to design a payout schedule tailored to their specific needs.

“It’s crucial to work with experts and use tools like a Qualified Settlement Fund to avoid constructive receipt and preserve your deferral options.” — Laura Baroudi, Settlement Expert at Milestone

Why Fee Deferrals Matter to Your Firm’s Future

By leveraging attorney fee deferrals, contingency fee law firms can strengthen their financial foundation, stabilize income, and unlock the resources needed to scale operations. Whether you’re preparing for retirement, managing tax burdens, or reinvesting in your firm’s success, fee deferrals provide the control and flexibility trial lawyers need to thrive.

Ready to Learn More?

Watch our video featuring Laura Baroudi to discover how attorney fee deferrals can help your law firm achieve financial stability and plan for the future. For additional insights, read our blog “Understanding The Benefits of Deferring Contingency Fees”.

Watch the video now. Click the video at the top of the page.

Meet with Esquire Bank

Choose Esquire Bank for your next Qualified Settlement Fund.

Discuss your settlement and distribution needs with an Esquire Bank Expert today at a time convenient to your schedule.

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The information provided in this blog is provided for general informational purposes only and is not intended as, and should not be relied on for, law firm operations, tax, legal or accounting advice. Some of the information may not be applicable or appropriate for all law firms. Please consult your own tax, legal and accounting advisors as appropriate.