Contingency Fee (for attorneys only)

Report an interest in contingency fee cases in Schedule A. Also, report your continued interest in any recovery in such cases in Schedule C, Part II. Report your spouse’s contingency fee interests in Schedule A only. 

Contingency Fee: An Example

For You

Schedule A

Report an interest in contingency fee cases if the value of the interest was more than $1,000 at the end of the reporting period.

Block A: Provide the name of the law firm through which you acquired your interest in the cases and write “contingency fee case” or “contingency fee cases.”

Block B: Mark the column that corresponds to the value of the interest. If you cannot ascertain the value, which will usually be the case if you have not set a cap on your fee, leave Block B blank and write “value not readily ascertainable” in Block A.

Block C: Mark the column labeled “None (or less than $201)” since you have not yet received the payment. If the payment has been received, the exact amount of the payment is reportable in the column labeled “Other Income” on the right side of the page.

Schedule C, Part II

You also need to report the agreement regarding your contingency fee interests.

Terms: Describe what will happen to this interest when you leave your employment with a law firm or terminate your practice. Specifically, report such details as whether you have an agreement with another lawyer or a firm, such as a buy-sell or partnership agreement, that covers what happens to your interest in a contingency fee case upon your departure from the firm. Indicate whether you will retain an interest in any recovery obtained in a contingency fee case.

Parties: Provide the name of the firm or the attorney as well as the city and state in which the firm or attorney is located.

Date: Provide the month and year in which you made the arrangement or agreement regarding your case(s).

For Your Spouse

Schedule A

Report your spouse’s contingency fees in the same manner as described in the section titled “For You” above, except when reporting cash payments. The dollar threshold for reporting a spouse’s cash payment is $1,000 rather than $200. In addition, you do not need to provide the actual amount and may simply write “spouse’s cash payment” in the “Other Income” column.

Schedule C, Part II

Do not report agreements or arrangements related to your spouse’s contingency fee interests in Schedule C, Part II.

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This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.