Attorneys have benefited from structuring fees to accomplish some of the following goals:
Plan for College
The flexibility inherent in structured fees allows an attorney to receive scheduled payments when needed most. Unlike most institutionalized or state-sponsored college plans, structures have no restrictions on how the money is spent, how much money can be set aside, or the school selected.
As tort reform has become more prevalent across the country, it has become even more difficult to secure successful settlements. A plaintiff attorney’s income may dramatically fluctuate predicated upon many factors. With that in mind, structuring a fee can provide a dependable, fixed future income for routine expenses like office overhead or funding for lengthy cases. Best of all, a fee structure provides reliable payments regardless of market conditions.
Goals Within the Firm
A structure fee can help a firm with planning for a partner’s retirement, a partner buyout and bonus plan for an associate within the firm. With the last, tying future compensation to continued employment and can help keep that associate with the firm. Most important, attorneys or law firms can effectively achieve the results of a qualified pension plan without the annual administrative and regulatory burden required of employee benefit plans.
Structuring an attorney fee can create a source of supplemental retirement income for a plaintiff attorney that can provide an additional measure of security. Because there are no restrictions on when a structure can begin to make payments, an attorney can opt for early retirement. Last, a fee can also assist with estate planning, providing a guaranteed source of income for a spouse or family members upon death.
Dollar Cost Averaging
A structured attorney fee can be a great tool for funding an equity account. Structuring a fee to pay into a brokerage account on a regular basis can allow a plaintiff attorney to invest in a consistent and disciplined manner.
This concept, called dollar cost averaging, helps to mitigate the adverse effects of market volatility. If the market increases steadily, it is possible to invest at a lower cost per share than the average price per share. Since the monthly investment stays constant, more shares are purchased at lower prices and fewer shares at higher prices.
Structuring the fee allows a plaintiff attorney to reduce tax exposure, while at the same time securing an extremely competitive rate of return on a guaranteed basis.
Dollar cost averaging does not assure a profit and does not protect against a loss in declining markets. This strategy involves continuous investing; an attorney should consider her or his financial ability to continue purchases no matter how prices fluctuate.