A plaintiff attorney who earns a substantial contingent fee faces a choice that most professionals never encounter: take the full amount in the year it's earned, absorbing a tax hit that can push a significant portion past 40 percent of combined federal/state tax…, or defer it.
Fee deferral arrangements have existed for decades precisely because that choice matters. By deferring the right to receive fees, attorneys can spread income across future years, align it with lower-tax periods like retirement, and allow those deferred assets to compound without current taxation. That is, they can invest their fees pre-tax.
The tax math is the easy part to understand. A fee that might be taxed at 40 percent if taken today could be taxed at 25 percent if distributed during lower-income years. Apply that difference across a large fee, compound the investment growth over a decade or two, and the financial benefit of a well-structured deferral is substantial. What most attorneys haven't had, until recently, is the ability to put that deferred money to work in the full range of asset classes available to other long-term investors.
How Bitcoin Enters the Deferral Picture
Traditionally, fee deferrals were backed by annuities from life insurance companies. While predictable, these are conservative instruments with limited upside. More flexible modern arrangements expanded the menu to include market-based options like mutual funds, with some programs even permitting investment in customized and managed stock portfolios.
For the first time, Bitcoin is now accessible as an investment option within fee deferral structures thanks to the partnership of Structures Inc., a fee deferral provider, and DAiM, an SEC-registered investment adviser specializing in cryptocurrency management.
The mechanics of the deferral itself don't change. The fee agreement, the defendant's obligation to make future payments, and the provider assuming that liability at settlement, all remain intact. What changes is that deferred fees can now be invested in Bitcoin and managed like other deferral investments.
"The legal structure of a deferral is separate from how the deferred assets are invested," said Bryan Courchesne, CEO of DAiM. "What's changed is that attorneys now have the same access to Bitcoin within a deferral plan that institutional investors have had in other long-term accounts. The investment decision is theirs to make, but the option didn't previously exist."
What the Investment Decision Actually Involves
Adding Bitcoin to a fee deferral isn't simply a matter of electing a different checkbox. It's an investment decision, and the factor that matters most is time horizon.
A deferral structured to pay out over twenty-five years can absorb Bitcoin's volatility in ways that a shorter deferral cannot. And that distinction should drive how much of the deferred assets are allocated to it. The longer the horizon, the more runway the allocation has to recover from drawdowns and benefit from the long-term return profile the asset has historically delivered.
The attorney's existing portfolio is the second consideration. An attorney who already holds substantial equities and fixed income elsewhere is in a different position than one whose deferred fees represent the bulk of their long-term savings. Bitcoin's low historical correlation to traditional assets can contribute meaningfully to a diversified portfolio but that benefit depends on how the overall picture is constructed.
For attorneys who have watched Bitcoin's long-term performance while their deferred fees sat in conventional instruments, the question worth asking is whether any portion of those deferred assets belongs in an asset class with a fundamentally different return and risk profile. That's not a question with one right answer. But it's now a question the deferral structure can accommodate and one worth examining seriously rather than by default.
Working With the Right Advisers
Settlement planners have begun incorporating crypto into conversations about fee structures. Amicus Settlement Planners—whose team includes attorneys, CFPs, and an in-house CPA—advises plaintiff lawyers on fee deferrals alongside the full scope of post-settlement financial planning: structured settlements for clients, lien resolution, government benefits coordination, and trust planning.
"The question of whether to invest deferred fees in crypto is one that attorneys haven't typically engaged with because the option wasn’t there," said Greg Maxwell of Amicus Settlement Planners. "When the menu was annuities and bond funds, there wasn't much to discuss. Now there is. Bitcoin adds a dimension to those conversations that requires advisers who understand both the tax structure of the deferral and the investment characteristics of the asset. Those two things can't be evaluated in isolation."
The practical implication is that attorneys considering this option should work with advisers who have experience on both sides: the legal and tax mechanics of the deferral structure, and the investment management of crypto assets. Fee deferrals structured incorrectly fail. Bitcoin managed poorly—oversized, undiversified, or held without a clear long-term framework—can destroy value rather than build it. Getting both right requires the right professionals in the room.
The IRS has identified specific ways the arrangement can collapse, including inadvertently triggering the constructive receipt doctrine. The IRS has also increased its scrutiny of fee deferral arrangements in recent years, making the case for working with advisers who structure these arrangements regularly even stronger than it was a decade ago.
The availability of Bitcoin within attorney fee deferral plans represents a genuine expansion of what plaintiff lawyers can do with their contingent fees. Whether it's the right choice for a given attorney, in a given amount, within a given deferral structure, is a question worth examining with qualified guidance because the answer depends on factors that are specific to each attorney's situation.
Disclaimer: Cryptocurrency investments, including Bitcoin, involve substantial risk and volatility and may result in significant financial loss. This article is provided for informational purposes only and does not constitute investment advice, legal advice, or tax advice. The views expressed are general in nature and may not apply to individual circumstances. Readers should conduct their own due diligence and consult qualified professionals before making any financial decisions.
