Deferred Fees
Structured Attorney Fees
A Structured Attorney Fee is like a Structured Settlement Annuity in which your physically injured plaintiff client may participate. It is an insurance product offered by a highly-rated life insurance company to defer your fees to future years. Backed by the financial strength of the insurance carrier, these payments are outlined in the annuity contract and are fixed and determinable.

Market-Based Structured Attorney Fees
As the name implies, these are essentially market-based structured settlements.  The fee deferral is funded directly by the defendant or a qualified settlement fund (QSF) as you would with a traditional attorney fee structure. Your fee is then converted from dollars into units, and you elect to have the units paid at certain times in the future. The value of the fee deferral will fluctuate over time due to the market rate of return, but the units and payout dates always stay the same. 

These products will have a stated investment objective at inception that you may be able to change at certain times in the future. This differs from your traditional attorney structure, which is an insurance product with a fixed payout determined at the beginning. 

These products will have an offshore component where they utilize an assignment company in a jurisdiction that has a strong tax treaty with the United States, such as Barbados or Ireland. These jurisdictions do not recognize the funding as immediate taxable income since it is a contractual liability with uncertain income not determined until it is paid because of the market-based component.

Non-Qualified Deferred Compensation
This is a similar program that Fortune 500 companies use today to incentivize their executive teams and retain talent. It is now available to contingency-based attorneys as well. These programs are governed under Section 409A of the tax code. They function like an unlimited 401(K) or IRA but without RMD at 59½. They typically have more flexibility in the withdraw period, like a market-based solution; you can establish a line of credit, and you may be able to utilize your outside investment manager. 

Contributions are made on a pre-tax basis (so you reduce your current tax liability and have more to invest). Gains on investments are tax-deferred (so you do not pay income taxes on your fee until you withdraw funds from the account). The pre-tax and tax-deferred basis allows for greater accumulation which can be significant overtime.
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