Friday, July 29, 2005
Robert W. Wood (Robert W. Wood, P.C., San Francisco) has published Structuring Attorney Fees: Kingdom of Heaven?, also available on the Tax Analysts web site as Doc 2005-15920, 2005 TNT 142-28. Here is the Conclusion:
Properly constructed attorney fee structures are unlikely to be struck down. Not only do they serve many tax and financial goals, they offer the beauty of tax-deferred investing, the tax and nontax benefits of income averaging, and even serve asset protection goals. Most plaintiffs' lawyers understand the dynamics of a structured personal physical injury settlement for a client. It's not a big leap from that kind of structure to an attorney fee structure.
I believe there will still be cases dealing with IRS assertions of constructive receipt and economic benefit arising out of attorney fee structures. However, I think they will probably be the marginal cases in which documents are poorly done or in which the realities of the arrangement are not respected.