How a 40-Year-Old Plaintiff Attorney Creates Tax-Free Income with Attorney feeSaver™
This case example is for illustrative purposes only. Actual results vary based on each attorney’s age, health, income, firm structure, funding strategy, tax assumptions, and plan design.
Meet Mike: A 40-Year-Old Plaintiff Attorney
Mike is a 40-year-old plaintiff attorney with a strong practice, substantial earning potential, and a long planning horizon ahead of him.
Like many contingency fee attorneys, Mike faces a familiar problem: when large fees are received in high-income years, a significant portion can be lost to taxes before those dollars ever have the chance to work for him.
Mike wants to do more than defer taxes. He wants to create long-term flexibility, position himself for potential early retirement, and protect his family if something happens to him.
Attorney feeSaver™ Outcome
With Attorney feeSaver™, Mike defers an average of $100,000 per year for 10 years, for a total of $1 million in deferred fees. He plans to begin receiving lifetime income at age 55, giving the strategy 15 years from the start of the program before income begins.
Using Attorney feeSaver™, Mike receives:
That’s a total of $18,346,586 in after-tax benefits
Comparing Traditional Tax Planning Options
Option 1: Taking the Fees as a Lump Sum
If Mike takes the fees as a lump sum, pays taxes, and invests what remains, the immediate tax cost significantly reduces the capital available to grow.
In this example, the lump sum approach produces:
This approach gives Mike immediate access to the money, but it also creates the greatest upfront tax drag. For a high-income attorney, that can materially reduce long-term wealth accumulation.
Option 2: Structured Settlement Annuity
A structured settlement annuity can help defer taxes and create a predictable future income stream. For many attorneys, this may be a useful planning tool. However, it generally delays taxes rather than eliminating them.
In this example, the structured settlement annuity approach produces:
Compared to taking a lump sum, this strategy improves the long-term result. But Mike’s distributions are still taxable, and the strategy does not provide the same projected tax-free death benefit available through Attorney feeSaver™.
Option 3: Deferred Compensation Plan
A deferred compensation plan with market-based performance may provide more growth potential than a fixed-rate annuity. However, future distributions are still generally taxable as ordinary income.
In this example, the deferred compensation approach produces:
This option may offer stronger growth potential than a fixed-rate deferral, but the tax issue remains. Mike still owes taxes when income is received, and future tax rates could affect his actual net income.
The Attorney feeSaver™ Difference
Annual Tax-Free Income
With Attorney feeSaver™, Mike receives $234,672 per year in tax-free income beginning at age 55 and continuing through age 90 — effectively for the rest of his life.
That compares to
This difference matters because Mike is not just comparing investment returns. He is comparing after-tax outcomes.
If tax rates increase in the future, traditional taxable deferral strategies may become less attractive. With Attorney feeSaver™, Mike’s projected income is designed to be tax-free, helping reduce uncertainty around future tax rates and preserving more of the benefit for him and his family.
Tax-Free Death Benefit for Family Protection
Attorney feeSaver™ also provides Mike with a projected $10,130,066 tax-free death benefit, assuming death at age 90.
That death benefit is a major distinction from the traditional strategies shown in this comparison. The lump sum, structured settlement annuity, and deferred compensation approaches focus primarily on income or investment value. Attorney feeSaver™ adds a legacy and family protection component, helping Mike use his legal fees not only to create income during life, but also to provide a substantial tax-free benefit for his loved ones.
When Mike’s projected $8,216,520 in tax-free lifetime income is combined with the projected $10,130,066 tax-free death benefit, Attorney feeSaver™ produces $18,346,586 in total after-tax benefits.
Why Attorney feeSaver™ Is Especially Powerful for a 40-Year-Old Attorney
For attorneys in their 40s, the value of Attorney feeSaver™ is not limited to tax deferral. Traditional fee deferral strategies can delay taxation, but future distributions are still generally taxed as ordinary income.
Attorney feeSaver™ is designed to go further by combining attorney fee deferral with executive benefit planning. The goal is to help eligible attorneys reposition qualifying legal fees into a structure that can support future tax-free income and provide a tax-free benefit for loved ones.
For Mike, the strategy is not only about reducing taxes in the year fees are earned. It is about using today’s high-income years to create long-term personal liquidity, retirement flexibility, and family protection.
Could Attorney feeSaver™ Work for You?
This case example shows what may be possible for a 40-year-old plaintiff attorney with substantial income, the right ownership structure, good health, and a long-term planning horizon.
Every attorney’s situation is different. Your actual projection will depend on your age, income, health, firm structure, fee timing, funding strategy, tax assumptions, and planning goals.
To see what Attorney feeSaver™ could look like for your situation, schedule a consultation.
Disclaimer
This case study is a hypothetical example provided for illustrative purposes only. Mike is not a real attorney, and the figures shown do not represent the results of any individual attorney or law firm. Projections are based on assumptions regarding age, health, funding, plan design, tax treatment, income timing, and other factors. Actual results may be higher or lower and will vary based on each attorney’s specific facts and circumstances. Attorney feeSaver™ does not provide legal, tax, investment, or accounting advice. Attorneys should consult their own tax, legal, financial, and insurance advisors before implementing any planning strategy.