Benefits of qualified settlement funds for personal injury lawyers
If you’re a trial lawyer representing injured plaintiffs, no one needs to tell you that catastrophic injury litigation is complex — from the initial consultation to long after a case settles. After representing a client, often for years, reaching resolution is not the end of the task. To continue protecting a client’s future as settlement is distributed, trial lawyers are also expected to intimately understand government benefits, as well as liens, workers compensation offsets, and so on. Over the past two decades of helping attorneys at settlement, we’ve found that those who practice law tend to appreciate tools that are simple and efficient. A qualified settlement fund is one that personal injury lawyers should know about.
What is a Qualified Settlement Fund?
A qualified settlement fund (QSF) is a settlement procedure that extends the amount of time available to plan for settlement. The fund releases the defendants from the litigation as soon as they pay cash to the QSF. Attorneys then have the time they need to thoughtfully address each decision involved at this stage of a case.
The benefits of a QSF for an attorney include:
- More time to plan for settlement with the client
- Tax planning by spreading taxable income over many years
- Potential for tax deferred growth
- Ability to earn pre-tax income or tax exempt earnings
In addition to personal injury attorneys, QSFs are useful for mass tort lawyers and those who work on cases involving sexual harassment, wrongful death, and many others.
How a QSF Helps Personal Injury Lawyers
Even as they take the time to counsel clients on their settlement and future, attorneys can take their fees sooner — as soon as the defendant makes the payment to the QSF. In addition, having this fund affords an attorney the time to speak with an expert about wealth management options and the possibility of deferring his or her fee. More on attorney fee deferrals here.
QSFs come with a helpful expert. When establishing the fund, attorneys hire a professional administrator. This expert knows all aspects of the QSF, including full accounting of the fund, attorney fees and tax deferral options, plaintiff payout options, and more. The administrator can also source lien negotiators and assist in the evaluation of whether a medicare set-aside is necessary — so the attorney doesn’t have to.
After months or even years of litigation, a tool to help streamline and improve the disbursement of settlement funds can make a huge difference in efficiency during settlement. Finding the proper administrator is critical. Be sure to work with one who understands the many facets of the settlement process to be the partner you need.
Interested in learning more about how QSFs can work for your practice? Let’s talk.