Who structures fees,
and when it stops being academic.

Three rules of thumb to know in 30 seconds.

• Under $250K of fee: the friction (structure design fee inside the carrier's pricing, the paperwork, the CPA learning curve) usually outweighs the win. Unless it's the first of many similar cases, just take the cash.
• $250K-$500K: sometimes yes, sometimes no. Depends on your other income that year and how lumpy your case pipeline is.
• $500K-$1M: almost always worth a 30-minute look. The bracket-stacking against a single big year is severe enough that a 3-5 year deferral usually nets meaningful after-tax dollars.
• $1M+ of fee: not structuring is a planning failure. The combined federal 37% + state (up to 13.3% in CA) + NIIT + state add-ons stacks past 50% effective on the marginal dollar. Spreading the income across 5-15 years drops the effective rate materially.

The exact threshold depends on what else is on your return that year. A solo practitioner with $400K other income who hits a $400K fee is in a very different bracket position than one with no other income. Run the numbers, that's what the calculator is for.

Plaintiff personal-injury firms.

The original Childs fact pattern. Contingency fee on a PI settlement, single defendant or small number of defendants, the defense is an insurance carrier or a well-financed self-insured. This is the bread-and-butter use case for structured fees, and the one defense brokers are most comfortable with.

Why it fits cleanly:

• Defense already has a structured-settlement consultant at the table for the plaintiff's recovery, adding the lawyer's fee structure is incremental work.
• The case mechanics (qualified assignment under §130 for the plaintiff's tax-free §104 recovery) are well-rehearsed; the lawyer's fee structure rides alongside.
• Many PI firms see multi-year clusters of similar settlements, a structured fee on one year's case can offset a leaner year coming up.

Class action lead and liaison counsel.

Class action common-benefit fees and lead-counsel awards often arrive as a single large payment in a single year, exactly the lumpy-income profile structures are built for. Notable mechanics:

• The court approves the fee. The fee award order can specify that the fee will be paid through a structured arrangement to a designated assignment company. This is increasingly common in MDL and large state-court class settlements.
• Multi-firm fee allocations (lead, sub-class, liaison, contributing firms) can each be structured independently. One firm structuring doesn't force the others to do so.
• Settlement administration timelines often give 60-180 days between approval and disbursement, plenty of time to design and place a structure.

If you're class lead or liaison counsel on a case approaching final approval, the structure design needs to happen before the fee award order is entered, with the assignment language in the order itself.

Mass tort common-benefit fees.

Multi-district mass tort plaintiff steering committees and common-benefit fund participants face similar lumpiness, with the added complication that fee distributions can stretch across multiple years as different settlement tranches close. Structures can be designed in tranches, each tranche of distributed common-benefit fee gets its own assignment and its own schedule.

The §409A analysis here can be more nuanced because the lawyer's right to a portion of the common-benefit fund is often vested before any particular settlement closes. Working with experienced tax counsel on the §409A overlay is essential.

ERISA §1132, civil rights §1988, and statutory fee awards.

Statutory fee awards, under ERISA §1132(g)(1), 42 U.S.C. §1988(b), Title VII, the ADA, the FLSA, and a long list of fee-shifting statutes, are a special category. The fee is awarded by the court against the defendant; the underlying recovery may go to the client (or may be entirely a fee case). Whether these can be structured under Childs depends on the case posture:

• Pre-judgment settlement of a statutory-fee case: structurable like any other contingency fee, assuming the design is pre-settlement.
• Post-judgment fee award: harder, once the court has entered judgment, the lawyer may already have a fixed right to the lump sum, raising constructive-receipt risk. Sometimes solvable through the satisfaction-of-judgment papers; sometimes not.

Note the post-Banks tax mechanics: in employment and civil rights cases, IRC §62(a)(20) provides an above-the-line deduction for the attorney fee portion paid by the client. That changes the client-side math substantially. The lawyer's Childs-based deferral question is independent of that client-side fix.

Solo and boutique litigators with lumpy years.

A solo with a $300K-$500K base income who hits a $1.5M contingency win sits in the most painful bracket-stack profile in this entire writeup. The federal-plus-state-plus-NIIT-plus-state-add-on combined marginal rate on the next $1M of income can be over 50%. A 10-year structure spreading the $1.5M into $150K/year on top of base income drops the effective rate by something like 8-12 percentage points, that's $120K-$180K in real after-tax dollars.

For the next-case-might-be-five-years-away solo, the smoothing also functions as informal retirement security: a 20-year structure on a single big win can effectively self-fund a retirement.

When NOT to structure.

• You need the cash this year, to retire a partnership note, fund a large purchase, or recapitalize the firm. Deferral defeats the purpose. Take the cash.
• The fee is under ~$250K and you're already at moderate income, the bracket smoothing isn't large enough to justify the friction.
• You're approaching retirement and your tax rate is going UP, not down, rare, but it happens (e.g., spouse going back to work post-COVID, large IRA distributions about to start). Run the projection.
• You don't trust insurance carriers as long-duration counterparties, fair concern. The answer is multi-carrier splits and state guaranty coverage, but if it doesn't sit right after that conversation, this isn't your tool.
• The case is already settled with a lump-sum line, retroactive structuring is a different (and weaker) legal posture. Possibly not zero, but materially harder.