Single Owner PI Firm

We work with numerous PI firms that are often owned by a single individual. These firms have relatively low overhead, but generally have “up and down” income. Some months, there are no settlements while other months see a rash of settlements, and income.

It is difficult for these firms to defer income, because “you never know when you are going to hit a dry spell and need a cash reserve.” As a result, many smaller firms tend to recognize too much income and pay too much in taxes.

One of our clients in Florida established a deferral program and deferred a portion of every fee in excess of $25,000. As a result, he was able to reduce his taxable income and very quickly built up a sizable deferral account, thanks to investing on a pre-tax basis.

We also established a Line of Credit for the client to cover operating expenses during times he doesn’t have many settlements. Typically, the line of credit is repaid when a case settles.

By combining the deferral plan and a loan program, the firm was able to manage taxable income more efficiently and have funds available in the event of a “dry spell.”

If you would like to learn more about how you or your firm can utilize Optcapital’s CaR® Trust Program, please email and someone from our Law Firm Team will respond.

High Volume Firm

One of Optcapital’s clients is a high-volume firm with 5 offices located throughout its State. The firm occasionally earns large fees, but the majority of its income is from smaller fees. The firm was looking to address two challenges:

  1. Without large fees, the firm was unable to utilize structured fees to defer taxes, and was looking for an alternative.
  2. The firm must attract and retain highly proactive attorneys at all locations, but did not want to dilute ownership.
    Optcapital’s deferral program addressed both needs.

Because Optcapital’s program does not utilize an offshore assignment company, settlement agreements do not need to be altered to allow for deferral. Also, all deferrals are commingled in a single account with Optcapital’s deferral plan. As a result, the program can be used to defer multiple smaller fees efficiently.

Our client identifies a bundle of cases (sometimes as many as several hundred cases) and makes an irrevocable election to defer the first $250,000 received from those cases. By doing this a couple of times throughout the year, the firm can manage the amount of taxable income each year.

This would not be possible with structured attorney fees because the firm would end up with hundreds of small structures, which would be inefficient, expensive, and time-consuming.

Optcapital’s deferral program allows the firm to grant employee bonuses, with a vesting schedule. For example, the firm can offer an attorney an annual bonus of $100,000 that vests over a three-year period. If the employee were to leave, they would forfeit any unvested compensation. As a result, the firm provides the employee with a tax-advantaged investment account (valuable to the employee) and an incentive to remain with the firm (valuable to the firm.)

If you would like to learn more about how you or your firm can utilize Optcapital’s deferral program, please email, and someone from our Law Firm Team will respond.

Mass-Tort Firms

We work with numerous mass tort firms and are familiar with the long waits for fees, the expense associated with managing hundreds or thousands of case files, and the limited access to, and high cost of, financing.

Optcapital worked with several firms involved in surgical mesh litigation. They had a substantial number of cases against multiple manufacturers and, a couple of the firms borrowed from a case financing firm. Collecting their fees was a long, drawn-out process. Meanwhile, interest accruing on the case loans was eroding the value of the fees.

Optcapital entered into two transactions with the firm; a deferral program and a loan program.

Optcapital provided the firm with a Line of Credit with an annual interest rate that was substantially less than what they were paying the case financing lender.

The deferral program allowed the firm to invest fees on a pre-tax basis, which increased the amount of investable fees by over 40% (accounting for both state and local taxes that otherwise would have been paid). This significantly increased the value of the fees.

The combined result of pre-tax, tax-deferred investing along with lower cost of borrowing increased the value of the fees significantly.

If you would like to learn more about how you or your firm can utilize Optcapital’s CaR® Trust Program, please email and someone from our Law Firm Team will respond.