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The structure of fee agreements plays a significant role in the taxation of attorneys’ fees. The Supreme Court has held that traditional contingency fee agreements constitute impermissible assignments of taxable income (“fruit”) from clients to their attorneys. The NACA Tax Initiative, however, has been exploring an as-of-yet untested theory that a nontraditional structure for fee agreements—transfer of the income-generating asset (“tree”) rather than the income itself (“fruit”)—may eliminate clients’ tax liabilities on attorneys’ fees paid under fee-shifting statutes.

What You Will Learn

  • How to understand this nontraditional structure for fee agreements
  • How you may be able to address clients’ tax liabilities using a draft of model language for fee agreements
  • What NACA’s Tax Initiative is doing next to test the new fee agreement


Ayalon Eliach is the director of NACA’s Tax Initiative. Prior to beginning his work with NACA, Mr. Eliach practiced tax law with the law firms Roberts & Holland LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP. In his practice, Mr. Eliach has advised public and private companies, investment funds, and individuals regarding complex financial transactions and represented them in controversies with federal and state taxing authorities. Mr. Eliach holds a J.D., cum laude, from Harvard Law School and a B.A., summa cum laude, from Yale University.