Selling Your Plaintiff PI Firm: Different From Deferring Attorney Fees
A note: this page is for selling the firm as a going concern. Deferring individual contingent fees on specific cases uses a different structure (*Childs v. Commissioner*; see [attorney fee deferral](/attorney-fee-deferral/)). The two structures stack.
If you're retiring from a plaintiff PI / mass tort practice, and you've built referral networks, case files in WIP, and a book worth $2M-$15M to another firm, §453 defers the capital gain on the firm sale across years.
Go deeper: how the taxes work when you sell a law practice on Big Sale Tax.
The math: $5M plaintiff firm sale (going concern)
Assumptions: $5M sale, mostly goodwill + case WIP. (PI firms aren't depreciated heavily, so §1245 recapture is minimal.)
Plaintiff-firm tax wrinkles
- Cases in WIP (contingent fee inventory). Work-in-progress on contingent cases is NOT a fully valued asset for tax purposes (no fee earned until contingency met). Valuation methodology matters.
- Co-counsel / referral receivables. Separately tracked.
- Mass tort book. Bellwether case posture, MDL position and settlement-fund-share entitlements all call for sophisticated valuations.
- Going-concern vs partner buyout. Solo selling out vs partner-buyout has different structuring. Equity vs asset deal.
- State bar rules on firm sales (e.g., ABA Model Rule 1.17, California Rule 1.17, similar). Practice purchase must comply.
- Open Childs deferrals at time of sale. Seller can structure their last contingent fees at exit. §453 firm sale + Childs fee deferral stack.
What is the tax bill on your sale going to be?
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
When this fits
- $1.5M+ firm sale
- Identifiable acquirer (another firm or entity)
- Book transferable without losing material value
When it doesn't
- Solo without transferable book
- Sale under $1.5M
How I work
Hans Goldstein, EA, IRC §453 specialist. Admitted to practice before the IRS. I work with plaintiff PI attorneys on both firm sales and individual fee deferrals.
Frequently asked
Q: Can I structure both the firm sale AND my last big contingent fee? A: Yes. Two separate §453 structures, two separate deferral streams. Common combination at retirement.
Q: What about state bar rules on firm sales? A: Most states have analogues to ABA Rule 1.17 governing sale of a law practice. We comply; the §453 mechanic is separate from the bar-compliance side.
Find out what your sale is really going to cost you in tax, and what you can do about it
No retainer. On a funded structure, the insurer pays a one-time commission of about 4% of the amount structured to the brokerage firm that places it (Hans’s share is about 2.4%; no trail). It is built into the annuity pricing, not a separate fee.
Find out what your tax bill actually looks like before you sell, including the parts your CPA may not raise until the return is already being prepared.
Most people find out what they owe after the sale closes, when nothing can be changed. A short conversation now tells you the number, which layers apply to your situation, and which options are still open while the sale is still in front of you.
- What you will actually owe: federal, the 3.8% surtax, recapture and your state
- Which of those layers you can still do something about
- Whether spreading the sale changes the number in your case
Hans Goldstein · 213-414-2808 · Hans Goldstein: Tax & Exit Planning · This is an educational conversation, not tax advice. Bring your CPA in before you file.
Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Educational. Not tax or legal advice.
Run your specific numbers
The calculator runs your sale through real 2026 federal + state tax brackets and shows §453 savings vs lump sum side-by-side.
Run the calculator → 213-414-2808