023 | Tax Strategy: Niche Deferred Compensation Solution for Law Firms

Curious about the role of innovative financial solutions in empowering plaintiff contingent fee law firms to grow their businesses?  


In today’s episode, we explore the fascinating world of tax strategy and financial planning with our special guest, Mike McGarry. As the Managing Director at Optcapital, Mike brings a wealth of expertise in crafting innovative solutions tailored to the unique needs of plaintiff contingent fee law firms.  


Mike sheds light on the complexities of tax strategy surrounding the huge swings in income for contingent fee law firms. He explores the intricacies of deferral programs versus structured fees, offering insights into how both solutions aim to address the challenge of managing large contingent fees and timing income recognition.  


Key Takeaways:  

  • Tax strategy and financial planning is vital for plaintiff contingent fee law firms  
  • The deferral program tackles managing large fees and the timing of when the income becomes taxable  
  • The plan streamlines complex transactions with flexible contributions and withdrawal rights  



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Sponsored by Vital Wealth    

Music by Cephas    

Audio, video, and show notes produced by Podcast Abundance   

Research and copywriting by Victoria O’Brien 

[00:00:00] Patrick: Hello, and welcome back to another episode of the Vital Strategies Podcast. I’m your host, Patrick Lonergan, and today we’re diving into a niche, but incredibly vital topic, tax strategy and deferral for plaintiff contingent fee law firms. Joining us is a true expert in the field, Mike McGarry from OptCapital.

[00:00:18] Patrick: Mike is going to walk us through the intricacies of tax strategy around deferral for plaintiff contingent fee law firms, comparing deferral programs to structured fees. Something that’s not just complex, but crucial for these firms facing the challenge of managing large sums of income. We’ll dive into real life examples to showcase how this strategy can benefit firms of various sizes and the individuals within them.

[00:00:40] Patrick: Plus, we’ll explore how it forms a crucial part of the financial infrastructure, providing attorneys with the flexibility they need to manage taxes effectively. But that’s not all. Mike will also shed light on how OptCapital, Eases the tension for high-performing attorneys seeking fair compensation, offering not just tax management, but also investment opportunities and even a loan program to navigate fluctuations in income.

[00:01:03] Patrick: So if you have wide swings in your income and are fascinated by how a deferred compensation plan can work for your business, this episode is packed with insights you won’t want to miss. Stay tuned as we unravel the complexities and unveil the opportunities with Mike McGarry of OptCapital. We’ll see

[00:01:24] Patrick: We’ve got Mike McGarry on the show today from Opt Capital. I’m excited. You’ve got a very unique offering. We think niches are very important and you’re not just niched, you’re like a super niche, which I think is fantastic. You’ve got a tax strategy around deferral for law firms and not just any kind of law firm, but plaintiff contingent fee law firms.

[00:01:46] Patrick: And so I’m excited to get into this discussion and hear how this works for the attorneys that you work with. Mike, thanks for joining us here today. Thanks for having me. Before we get into all of the details, I would really like to know how you got started in this arena, providing this program for attorneys.

[00:02:01] Mike: Well, I’d love to say we had a master plan, but as with most things, business opportunities come along and you harvest what you can. But our firm started, we turned 25 on December 1st of last year, and we were originally doing generic design of corporate deferral plans. But our niche was that we had our own admin platform, so we could do things that were a little more flexible or funky or out of the box.

[00:02:26] Mike: And so we got a little bit of a reputation of, you have something odd called OpCapital. And sure enough, somebody had something odd. They had the attorneys that were involved in the multi state tobacco litigation were looking for a tax strategy. And that ended up in front of us. And we looked at that as an opportunity.

[00:02:43] Mike: I thought it would be a one off and we work with Ernst and Young’s national tax practice in D. C. to design a program that was suitable for those. We had a mandate that it had to have certain things, including the ability to pass on to your next generation. 100 percent U. S. based. Highest tax opinion available and the ability to invest in the broad market.

[00:03:03] Mike: And so that was our mandate. And we built a program. We thought this would be great for these attorneys in this situation. And we went around and marketed that for took about a year and a half. And then it turned out that. Other attorneys could utilize it to the attorneys we started working with, had friends and introduced us to other people and their financial advisors introduced us to other clients.

[00:03:24] Mike: And we spent about 15 years knocking on doors and talking to everybody we could to build it out. And now for the last five years, we’ve been fortunate enough to mostly be in a referral type scenario, but we basically brought a new product to market because there was a need for it. And we’ve stuck to doing that.

[00:03:43] Mike: And pretty much only that.

[00:03:45] Patrick: That’s fantastic. And I love when entrepreneurs go out to the marketplace and find a tax problem that they want to solve. We’ve seen this before, and then they come up with a unique solution and you’re the only one offering this, which we think is wonderful. Mike, if you don’t mind, can we get into the difference between the deferral program versus structured fees?

[00:04:04] Patrick: I know structured fees are fairly complex thing and it seems like you make it simpler and create a lot more flexibility. So can you just walk us through the difference between those two?

[00:04:14] Mike: They’re both seeking to solve fundamentally the same problem and that is contingent fees come in in large chunks and you don’t have much control over the timing.

[00:04:23] Mike: So the ability to control the timing of when you actually recognize the income is, is very valuable. We offer a non qualified deferred compensation plan. Insurance companies offer what’s known as a structured fee. It’s an insurance program. It is very closely analogous to an annuity in that you put money in and you are on the front end, determine how long it’s going to stay in the program.

[00:04:46] Mike: How it’s going to be invested and when it gets paid to you. What we offer is very analogous to an investment account, where you have the ability to make multiple contributions to an investment account, have it invested in the market, and have certain withdrawal rights. They both get to the same end, but one substantial difference is that a structured fee requires assigning the income to an offshore assignment company.

[00:05:09] Mike: So that language has to be included in the settlement agreement and has to be a fixed dollar amount. And then the payment has to be made in a certain way. And so it requires the involvement and the cooperation of defense insurance and defense counsel. And the non qualified deferred comp plan does not require an assignment to an offshore entity.

[00:05:27] Mike: So the payment is made the normal way and the requirement to get permission of the defense or defense insurers doesn’t exist. So it’s a simpler, there’s no assignment fees associated with it. So a large, medium or small fee doesn’t matter. Establish the account, make contributions when you have excess income, and then let it accumulate.

[00:05:49] Mike: And later on, you’ll have the ability to determine when to take the funds out. I

[00:05:53] Patrick: love it. I just want to summarize what I think I heard there. So in the deferral program, I’ve got control over my investments where in the structured fee, I really don’t, I’ve sort of bought an insurance product. And then there’s this offshore element that Hardy makes, we’ll call it a complex transaction between plaintiff and defense, a little more complicated, trying to get them to sign off on adding this additional party to the equation.

[00:06:17] Patrick: You

[00:06:17] Mike: have control in that you have a financial advisor that you hire, you get to decide where it goes, and then you have the ability to set an investment policy and that policy can change over time. So you have control over where it’s held, what the investment policy is, and it doesn’t have to be one thing for the entire duration.

[00:06:35] Mike: So yes,

[00:06:36] Patrick: that’s clarification. Thank you. I appreciate that. The details really do matter. So if somebody thinks they can day trade this thing, that’s different.

[00:06:44] Mike: No. And when it comes to a tax deferral, getting everything right is important because two programs can look relatively similar. One be compliant and one not be compliant based upon

[00:06:56] Patrick: the specifics.

[00:06:57] Patrick: 100%. And nobody wants the Department of Justice knocking on your door with your plan that’s not compliant.

[00:07:02] Mike: I think it’d be the IRS, but yeah, DOJ,

[00:07:05] Patrick: we would really be in a problem. Yeah. I think we’ve seen some firms that have got themselves in trouble sort of through that IRS and the Department of Justice shows up and it’s like, this is no fun.

[00:07:15] Mike: Yeah. In our 22 years of doing this, we have not had any issues similar to that. So, uh, I hope we have another 22 in the

[00:07:22] Patrick: same. Absolutely. How about the ability to transfer my benefit? Does that option exist in the deferral program as well?

[00:07:30] Mike: Not while you’re living, but upon your death, you have the ability to have, uh, designated heirs or beneficiaries.

[00:07:37] Mike: And non qualified deferred comp is largely used by corporate America. And so this is the same as if you were working for a large corporation and you passed away and you had an executive benefit, you could designate a beneficiary and heir. Same rules apply here. So yes, you can. And that’s a great point for a lot of our clients.

[00:07:55] Mike: They have accumulated enough wealth that they will be in a position to leave a remainder behind, whether it’s in this account or another account that they have. So that’s a very active conversation. We have all of our clients is. If you do pass and you have a remainder, where do you want it to go? How do you want to deal with that?

[00:08:10] Patrick: Absolutely. So I would just assume when the fees are paid out, then the firm can just defer those directly from their trust account.

[00:08:17] Mike: Correct. So it depends and there’s different types of torts. And if you’re in a personal injury, typically an insurance company is going to write a single check to your trust account.

[00:08:26] Mike: And then the client and liens will get paid. And then at some point in time, it’ll be the appropriate time to distribute fees to attorneys involved. And that’s when money would be distributed to the deferral account for mass torts and class actions and national type litigation. It typically goes to a QSF and then a QSF administrator would distribute it.

[00:08:46] Mike: So, in that case, we would typically get the fees directly from the QSF. So, a little bit tort specific, and over time, we work with a personal injury, we work with class action, mass tort, intellectual property, eminent domain, whistleblower, key town litigation. Anything that’s taken on a contingent basis, that’s our client and we are relatively familiar with the payment patterns

[00:09:09] Patrick: of each.

[00:09:09] Patrick: That’s great. Now that we’ve talked about the structure and how it works, can we walk through a few examples, maybe talk through like a small firm and how they’ve got a, let’s say a big case coming through and how this can work for one owner shop.

[00:09:21] Mike: Yeah, and that’s fairly typical that we start working with somebody when they have a firm, a fee that is large enough that they recognize.

[00:09:28] Mike: Yeah. It’s finally time for them to do something fiscally responsible and not just take the income. So it often is a larger fee that is the one that triggers them to call us. In that case, we talk about how much income is efficient for you to recognize in a given year. So they might write a deferral agreement before the fee settles, because you have to execute the deferral before you’re entitled to payment.

[00:09:53] Mike: That would say, I’m going to defer everything that I receive as a fee in excess of a certain amount, because it’s often easier to define how much you need, because you may not know what your final settlement amount is going to be. And so what that does is it caps their income for that year, and then whatever they end up settling for, everything above that goes in.

[00:10:11] Mike: That’s one example. But then if we follow through that same firm the next year, which start the year and say, Okay, what is an appropriate amount of income for you to recognize this year? And what does your inventory look like? And what does it look like your settlements are going to be? And over the course of the year, as they approach the point in time when they had recognized enough income for the year, Then we might start putting in deferrals for other cases to add to it.

[00:10:34] Mike: And then my point is, it doesn’t really matter the size of the settlement because it’s an easy process to get funds from settlement to your deferral account. We are typically busier the second half of the year than the first half of the year. But that being said, large settlements happen at all times.

[00:10:50] Mike: Yeah, it’s generally a PI firm with firms like Mass Torch. It’s a whole different calendar because they take much longer and they generally work on fewer cases, but that’s a fairly typical client for us.

[00:11:03] Patrick: Yeah. When we were talking earlier, one of the things that I found interesting is A lot of times these firms don’t get to be huge size just because there really is a, an eat what you kill mentality in these firms.

[00:11:14] Patrick: And so it doesn’t lend itself to have a large multi state structure with lots of owners and that type of thing. You gave us the example of the BP oil spill in the Gulf, how there was 99 firms involved in that. I found that awfully interesting. So if we look at those bigger cases, can you just walk through how you guys get involved in those scenarios and how that works out?

[00:11:34] Mike: For a typical multi district litigation national type, the courts will appoint a steering committee. In fact, they’ll appoint various steering committees for different things that cover. And so you have firms that are in leadership positions and they’re all publicly known and they generally Have large inventories and large investment in those cases, but there are other firms that are not.

[00:11:54] Mike: So for a large tort like that, we will reach out to firms that we know are involved, but we’ll also seek out those firms that we already know and say, Hey, who else is working on this matter? So whether it’s 3M earplugs or Camp Lejeune or whatever, and we make ourselves familiar with the timing, we make ourselves familiar with the valuations.

[00:12:15] Mike: And we talk with people about real estate. Values and timings and what income might come in during what tax years and try to be a knowledgeable partner for them to make decisions. There’s oftentimes financing involved. So we have good relationships with quite a few of the case financing companies. And we’re part of the overall.

[00:12:36] Mike: Infrastructure around the financing, the investing. And then once funds come in, making sure that those funds are as valuable as possible to the firm. It’s a longer cycle. Those cases are measured in years and unfortunately, occasionally even in decades. That’s a long process. It’s very public as to who’s available.

[00:12:55] Mike: There’s conventions twice a year. Typically people get together to talk about all the mass torts and we attend those. And it’s a time for us to educate ourselves, but also a time to maintain contact with that community.

[00:13:06] Patrick: So if we now go from, I’ll say the 99 firms down to let’s call it the individual firm in that scenario, I feel like the firms that have a few owners and then some staff attorneys, there’s always this tension, right?

[00:13:20] Patrick: With the attorneys on staff, like, Hey, I want to be compensated. Well, I like the practice of law. I don’t necessarily want to be a firm owner and deal with all of the hassle around HR and administration and all those other things. And the firm owner is trying to retain that top talent, pay them well enough so they don’t leave and go do that thing.

[00:13:39] Patrick: Can you talk a little bit about the opportunity that the deferral program has with, we’ll call it, vesting schedule and bonus and some of those other pieces? I think you’re exactly right.

[00:13:48] Mike: If you’re a

[00:13:48] Patrick: firm

[00:13:49] Mike: owner, finding that sweet spot where you’re paying your staff attorneys or your non equity owning attorneys a sufficient amount that they don’t want to go across the street and start competing.

[00:13:59] Mike: And what typically happens is a very large case walks in, and that’s the seed capital for that individual attorney to go start a growing firm. If you can provide them a deferral account that says, I’m going to pay you a certain percentage of this. And I’m going to give you the ability to take that and put it in a pre tax, tax deferred investment account, then you create a pretty powerful vehicle and an argument to say, it is better for you to stay here.

[00:14:24] Mike: You can accumulate enough wealth right here, and you don’t have to have the hassle of owning and running and financing a firm and all that goes along with that. And you can stay here and practice law in a pure sense. That is an attractive argument, and we have clients that have done that for a long period of time, and we have employees who have balances in excess of 10 million.

[00:14:47] Mike: So they’ve been able to build substantial resources without having to walk across the street. That’s a win for everybody. It’s really no cost to the firm in that each individual account pays for itself, so that employee is paying for their account, and it’s a benefit that doesn’t have an additional cost.

[00:15:06] Mike: to the employer.

[00:15:07] Patrick: That’s fantastic. And I think you nailed it. As far as a win win goes, there’s so many, I’ll call it excellent technicians out there that really have no desire to run the firm, but they’re looking at the economic cost of not running their own firm because they’re not being compensated well enough.

[00:15:21] Patrick: And so this sounds like it’s solving that problem.

[00:15:23] Mike: And we’re advocates that each attorney is going to earn a certain amount of fees over the course of their career. They’ve got so many cases and so many opportunities that will present themselves. Our goal is to work with them to make those fees as valuable as possible to them and to their family.

[00:15:37] Mike: We haven’t really talked about it, but pre tax, tax deferred, just to kind of segue into that, what it means is you take income that otherwise would be taxable to you, and you invest the full amount pre tax, and you don’t pay taxes on the gains. So it reduces your current year income, which reduces your current tax rate.

[00:15:56] Mike: So your effective tax rate goes down the tax you pay this year. It gives you more money invested, which gives you more power in the market. And then it accumulates more efficiently because you’re not paying taxes on the gains each year. So the ability to manage taxes and to invest effectively and efficiently is what we’re offering.

[00:16:13] Mike: And that’s why. I say, if you’re going to generate X dollars of fees during your career, let’s make them as valuable as possible. And pre tax tax deferred with the ability to control your current tax rate is the answer to how do you make your fees most valuable.

[00:16:27] Patrick: That’s fantastic. And we were having a discussion earlier about, we’ll call it lifestyle income.

[00:16:32] Patrick: And you made the point that if you earn about 750, 000, The total tax on that is about 24, 25 percent tax on that 750 doing the math that leaves you about 50, 000 a month or 600, 000 a year of income to live on, and you can defer the rest. Can you just walk through the point you made every dollar you make over that 750 sort of where that’s at on the tax spectrum?

[00:16:58] Patrick: Yeah, I’m

[00:16:58] Mike: making some general assumptions about your tax rate and that you might, you’re married filing or just filing jointly and you’ve got kind of the normal deductions. You’re right. A 750, 000 of income will result in an all in federal tax rate around 24%, but every dollar over that is going to be effectively 39%.

[00:17:17] Mike: So that’s a humongous, almost a 50 percent increase in your taxes. To the extent that you can live under that number, and that does, to your point, it gives you about 50, 000 of income monthly to live on. It’s sort of an efficient frontier for tax. Obviously, if you can live on less, you can become even more efficient.

[00:17:35] Mike: But you can probably only get it down 3 or 4%. You’re probably not going to get below a 21 percent tax rate. There’s really not a ton of downside, but every dollar over that immediately steps up by 15%. So it’s just recognizing that if you’re taking income, just because you want some safety money or walking around money or folding money or whatever you call it.

[00:17:59] Mike: You’re paying a 40 percent fee in order to take that money and put it in your investment account or your pocket or your mattress or whatever it is that you’re putting it. And that’s a big fee just to have a little extra money in your pocket.

[00:18:11] Patrick: Mike, I feel like this leads us to some of the flexibility that the deferral program offers.

[00:18:16] Patrick: So if I defer some dollars, let’s say I like to 750 and everything above that I’m deferring. Okay. But now I do need some money. There’s a lake house I want to buy or an investment opportunity. I want to go pursue that needs a down payment, that type of thing. Can you walk us through the loan program and maybe some of the flexibility that comes.

[00:18:35] Mike: Our elevator pitch is we work with contingent fees and contingent fee attorneys have two problems. Sometimes they have too much income and sometimes they don’t have enough. We have a deferral program for when they have too much income. We have a loan program for when they don’t, that’s what we do. The other side of the spiky income is, you know, what goes up sometimes goes down.

[00:18:54] Mike: And we offer a line of credit program. It’s separate from our deferral program. We don’t have a lien or anything like that. We’re not lending your own money back. It is a line of credit that we will provide. It gives you the ability to draw funds. Most frequently it’s used for working capital. We also see people at the end of the year paying bonuses or whatever it is.

[00:19:14] Mike: But to your point, it also can be, I do want to buy that piece of real estate and I need cash because the market often requires a cash bid or any purpose. So we have a line of credit. We will set it up. We will provide you the liquidity that you need. If you have a longer-term need, if you actually are saying I’m at a point where I’m ready to recognize that income, you can schedule withdrawals.

[00:19:35] Mike: You can take out up to 5 percent per quarter. And so you could take up to 20 percent in a year. You have to schedule withdrawals at least a year ahead of time. So it is not an instantaneous. If you need money immediately, the line of credit is going to be the answer. If you need money over a longer period of time when you start taking withdrawals.

[00:19:53] Mike: So if you had a million dollar balance, you could take out up to 50, 000 per quarter or up to 200, 000 a year. If you did all four.

[00:20:00] Patrick: That’s fantastic. I think if I were to go back to your point, you’re making about the walking around money, like why would I pay 40 percent on those dollars when I can borrow it?

[00:20:11] Patrick: If I do need it at a fraction of that cost, it seems like that would be the way to go for our liquidity needs, like our unforeseen liquidity needs versus the paying half of the dollars almost to the IRS. I agree with

[00:20:23] Mike: you.

[00:20:25] Patrick: Yeah, no, that’s great. I think sometimes people just don’t pay attention to these.

[00:20:30] Patrick: In fairness,

[00:20:31] Mike: this community has lived their whole professional career in this up and down income and having some cash reserves is not a bad thing. It’s something that provides a lot of comfort, a lot of flexibility. And everybody needs a little bit of cash reserve, but the idea that it’s expensive is just part of what we’re putting into the conversation and trying to decide what is the right amount.

[00:20:53] Mike: And to your point, don’t forget you also have a line of credit, so that’s part of the overall conversation. I don’t expect anybody to walk around with no money in their pockets. I also want people to recognize there is an expense that goes along with that taking excess income.

[00:21:08] Patrick: Absolutely. And we talk a lot with our clients about building up this margin of safety on the liquidity side.

[00:21:14] Patrick: We think there’s a minimum threshold that we will do everything in our power not to go below, but it is nice to know that we’ve got lines of credit and other sources of cash to go get. And then we think there’s an upper end of that too. That’s inefficient, right? If I, my cash gets too high, like you’re talking about, I should be deferring that into something else that can help me on the wealth building front versus just sitting there and efficient bank account.

[00:21:37] Patrick: Yeah. Absolutely.

[00:21:37] Mike: Occasionally, our clients will go all in on a case because it is better to go below that liquidity threshold and put all your chips into one case than it is to bring in co counsel and give away a piece of the fee, because it’s the equivalent of giving away equity in your firm. It’s very expensive, and if you have the ability to do it with debt, it’s very expensive.

[00:21:55] Mike: Or with liquidity, you can end up with a lot more in the end. And our clients typically believe in the cases that they’re in and are fully invested emotionally and often fully invested financially.

[00:22:07] Patrick: Now, Mike, I’m guessing in your line of work, we see this across the board. It seems like it’s more prevalent in, I’ll call it doctors and attorneys.

[00:22:16] Patrick: Where sometimes as the income grows, so does the spending. No, our entrepreneurs, for some reason, I think have lived through enough ups and downs that they’ve figured out. Like I got to get my spending under control where the doctors and attorneys seem to figure out if I go put in more time, I can get paid for it.

[00:22:34] Patrick: But do you see many people start these programs and then stop them?

[00:22:37] Mike: It goes back to that statement of we have, there are times when you have excess income and times when you have not enough income. For a lot of our clients, up to a certain level of income, they’re going to just take it all and keep it and above that they defer.

[00:22:50] Mike: So it is not uncommon at all for us to work with somebody where maybe two or three years in a row they make a deferral and then they don’t. Because, and cases tend to accordion together and then stretch out. And we saw this through COVID where the court shut down and in 2020. There just wasn’t a lot of income towards the second half of the year.

[00:23:09] Mike: And then 2021 was also very slow. But by 2022, when everything was kind of open and running again, all of a sudden people were having two or three years worth of settlements. And our clients reflect that. And the beginning of 2022, they had some things to catch up on. They had sort of had to rebuild their liquidity.

[00:23:28] Mike: But by the end of 2022 and 2023, Lots of dollars got deferred.

[00:23:32] Patrick: That’s great. So let’s say I’m a firm owner and I’ve got a big case coming. What’s the time frame after I get in touch with OpCapital to get my account set up and all the details, I’s dotted and T’s crossed to sort of execute on the deferral program?

[00:23:48] Mike: Attorneys always ask two questions. What’s the latest I can wait to, you know, to get the program set up? And what’s the latest I can wait to fund it? So we are pretty good at responding quickly. Let me work backwards. Before a client accepts a settlement, before the attorney or the client are entitled to get paid, they need to have executed a deferral agreement.

[00:24:07] Mike: Before they can execute a deferral agreement, we need to get enrolled in the plan. The enrollment process can be done in three to five business days, all in. It’s not a long process, but it’s a real challenge when somebody calls you and says, I’ve got a mediation this afternoon. Can I get enrolled? It’s not impossible.

[00:24:26] Mike: But it absolutely is not our preference. The other thing is, I most prefer to enroll somebody and have their first fee be a relatively modest fee. So that we work through the operational pieces. Here are our wire instructions. Here are your wire instructions. How do we move money around? Everybody in the office has answered all the questions.

[00:24:44] Mike: And then a month or two or however many later when that large fee does actually come through, A hundred percent of the focus is on the settlement of that fee and none of the focus is on the operations of how the deferral works. I preach this, I like to start with small fees

[00:24:59] Patrick: and then be in place for.

[00:25:01] Patrick: That’s fantastic. And I think that’s actually a pretty short turnaround time. We’ve seen some tax strategies that take, I’ll say months to get set up and executed and they’re not even that complex.

[00:25:13] Mike: It’s one of the benefits of doing this for a while. We also have a very stable employee base. We’ve had multiple people who stayed with us long enough to retire.

[00:25:21] Mike: I think the average tenure of anybody in our client service team is 10 years or so. Average tenure of all employees is probably over 10 years. We are very, very particular about who works for our firm. And once you do, we generally tend to like

[00:25:37] Patrick: to keep you around. Fantastic. Yeah, that’s great. And Mike, just want to ask this question on set up costs, what does it cost to get engaged with OpCapital to get this program going?

[00:25:47] Patrick: Because it sounds fantastic. It doesn’t cost

[00:25:49] Mike: anything to set up a plan. Our fee is 1 percent per year. Once you have funds in the plan and we either take it out monthly or quarterly, depending upon the size of the account. It comes directly out of the account, but there are no assignment costs, set up costs.

[00:26:03] Mike: And the other thing we pride ourselves on is if you defer 100, your opening balance is 100. We eat the wire fees, the movement of money costs, so that your opening balance is exactly to the penny what it is that you

[00:26:17] Patrick: sent to me. So then the investment policy statement, you guys are executing all the trades and making sure that everything aligns with that.

[00:26:26] Mike: We partner with financial advisors. So the financial advisory firm plays two roles. They are the custodian, actually the ones that are in charge of holding the funds. And they are the ones that are executing investment policy statement. Op capital does not hold participant money and we don’t make any investment decisions.

[00:26:44] Mike: It’s a three party agreement. It’s, it’s us, it’s financial advisor, and it’s the attorney. And together we work to meet the needs of

[00:26:52] Patrick: that attorney. I love that. And then I’m sure you’ve had clients that have switched financial advisors from one firm to another. Is that a relatively simple process?

[00:27:01] Mike: Sure. 90 plus percent of the time it’s because they’re following their financial advisor.

[00:27:05] Mike: That moves from one firm to the other and they follow with them. Occasionally it’s because they’re looking for something different and occasionally it’s because people get out of the business. The financial advisor, you know, those relationships are generally very personal. We do not see a lot of movement that way.

[00:27:21] Mike: It is allowable and we’re Switzerland. You know, our client tells us who they want to work with. That being said, There’s not really a lot of movement in that area.

[00:27:31] Patrick: Very good. Is there anything else we should touch base on in regards to this program? Something that people need to be aware of. From my perspective, there’s every contingent fee attorney in the nation should have a deferral program set up.

[00:27:43] Mike: Through organic questions, we walk through kind of the process of how to make a deferral, we walk through that you work with a financial advisor, and that’s where the funds are held and invested, and how you put money in, how you might take money out. Those are really the primary things. When we talk to somebody later on, they might drill down and have specific questions about the movement of money or specific questions about what investments are allowed or what are not allowed.

[00:28:08] Mike: And what we see, the fact that there, you can basically whatever your investment policy says, it’s fine. We don’t have a restriction that it has to be invested a certain way. And our clients are invested in things that are very conservative, things that are rather risky, but for every client, the account serves a different purpose.

[00:28:23] Mike: So

[00:28:23] Patrick: that may be the only area we haven’t. That’s fantastic. I just look at this strategy and it seems like it’s a win all the way around for contingent fee attorneys.

[00:28:32] Mike: Yeah. If you’re a financial advisor who has an attorney client, it’s about a 15 second investment of time to say, do you ever take a fee on a contingent basis?

[00:28:42] Mike: And if the answer is yes, are you interested in hearing about a tax advantage strategy contingent fees? And if the answer is yes, get in contact with us. Those two questions really are, we partner with a financial advisor. We don’t pretend to know anything about investment allocation or what the appropriate investments are.

[00:28:59] Mike: And we don’t necessarily ask you to be an expert on tax deferral. If it’s a contingent fee attorney who is interested in, then let’s get together on the phone together. You represent the financial advisory functions, and we will represent the fee deferral. And together we offer a complete product. We don’t ask our financial advisor partners to be experts in what we do.

[00:29:21] Mike: Because we certainly don’t know how they

[00:29:22] Patrick: do what they do. That’s fantastic. So opt capital O P T capital. com is how they can find your website. We can also get people in touch with you, Mike, what’s your email? If people want to get ahold of you that way.

[00:29:35] Mike: Mike dot McGarry MCG, a R R Y at opt capital O P T C a P I T a L.

[00:29:42] Mike: com. And at opt capital. com, there’s a four minute video that you can view. You can also search on YouTube and see the OpCapital channel, and you can view it and share it there as well. But that four minute video gives an overview of everything we’ve talked about today and is easy to

[00:29:58] Patrick: share and easy to view.

[00:30:00] Patrick: And yeah, we’ll make sure we get all of that in the show notes. So if people are listening or share this episode, they can easily find the video, the resources on your website and your contact information. Well, Mike, I really appreciate this. I’ve already been talking to Ryan about how we can get sort of very laser focused on going and tracking down some of this business as an opportunity to work together on.

[00:30:22] Patrick: I think it’s fantastic. So thank you very much. I appreciate your time and energy today.

[00:30:26] Mike: Thank you for your time. Take care.

[00:30:27] Patrick: You too. Bye. Bye. Thank you for listening to the vital strategies podcast and our conversation with Mike McGarry from Opt Capital for links to the resources mentioned in today’s show.

[00:30:38] Patrick: See the show notes of this episode at vital strategies. com forward slash episode 23 and vital strategies. We’re dedicated to helping entrepreneurs pay less tax, build more wealth and live a great life. Don’t forget to subscribe, rate and review the podcast on your favorite podcast platform. Your feedback helps us improve and reach more listeners like you.

[00:30:57] Patrick: We are past the tax filing deadline of April 15th. If you’re tired of sending so much money to the IRS, check out our free resources at 5MinuteTaxMakeover. com and keep more of your hard earned money. Again, check out 5MinuteTaxMakeover. com and see how you can save up to 10, 000 or more in income tax using our free resources.

[00:31:16] Patrick: Join us again next week for another episode packed with expert insights and actionable advice that will help you pay less tax so you can build more wealth and live a great life.

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