The process for deferring fees is straightforward and includes the following steps before final settlement or verdict in the case:

  • Enter into an agreement to defer the contingent fee in return for future period payments.
  • Include language in the settlement/release agreement and/or in the fee agreement with the client, providing the client’s consent to the fee deferral.
  • Facilitate the transfer of the deferred fee amount to the trust account with BNY Mellon.

For more details, please contact the team at JurisPrudent.


The right for a lawyer to defer fees has been around for three decades, established by the U.S. Tax Court in Childs v. Commissioner (1994) and reaffirmed two years later by the 11th Circuit U.S. Court of Appeals. While the IRS did not formally accept the Childs ruling, they did effectively acknowledge its validity by incorporating it into their guidance and citing it favorably on several occasions (See, e.g., FSA 200151003; ILM 200110319; LTR 200836019).  The only exception is the Generic Legal Advice Memorandum (GLAM) AM 2022-007, but a GLAM lacks binding authority on any taxpayer and may not reflect the IRS’s collective stance on attorney fee deferrals.  It serves primarily as an internal research document, compiled by IRS attorneys, to articulate their perspectives on a specific topic. Unlike revenue rulings or tax cases, GLAMs cannot be used as legal precedent. 

Per tax lawyers specializing in tax-deferred compensation, the legal basis for attorney fee deferrals, if structured properly, is firmly established. The Childs ruling is a precedent and the tax rules governing attorney fee deferrals, namely the constructive receipt and economic benefit doctrines, remain the same. 

We’d be happy to assist you and your tax advisor in reviewing relevant authority and tax opinions.


Your will have access to your account 24/7 through the JPDS online platform. Through this site we will provide tools to guide you on how to allocate your portfolio based on personal preferences, and allocations can be changed on a monthly basis.


Let’s take an example. Say in 2023 you want to defer $1,000,000. To maximize liquidity, you can split the $1,000,000 into 20 quarterly payment buckets over 5-years. Thirteen (13) months prior to a scheduled payment bucket, you may elect to withdraw it. However, if you don’t need the payment as scheduled, the payment bucket will automatically roll forward to the end of the payment stream.