What is a Retainer for a Lawyer?

January 17, 2022
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A retainer for a lawyer is a payment based on a fee agreement between an attorney and a client. The retainer amount is paid upfront and is based on the attorney’s hourly rate or other agreed upon fee.

It is important to note that the retainer is the payment made to an attorney or law firm, while the legal retainer agreement is the written fee agreement, the contract into which you enter with the attorney.

What is a Legal Retainer Agreement?

A legal retainer agreement serves as a work-for-hire contract between the attorney and the client. The contract explains a period of work within which the attorney(s) will charge at a determined rate per hour. The work period may be defined or undefined. The legal retainer agreement may be for a particular matter or general services over a period of time.

For example, you meet with a lawyer to discuss an issue involving ongoing legal needs for your company. The lawyer will then provide you with a legal retainer agreement to review and sign so you can retain the attorney as counsel for your matter.

The legal services agreement may include the following six sections:

  1. Billing Rate. The billing rates for each professional who might work on your behalf. This includes the lead attorney, other partners, associates, and possibly paralegals. These fees will be quotes on a per-hour basis.
  2. Other Costs. Other costs that may be billable to you, the client. These fees may include server and court fees, as well as expert and consultant fees where necessary.
  3. Billing Frequency. How often you, the client, will be billed.
  4. Line Items. The expected itemization of the bills
  5. Client File Storage. Policies regarding the storing of the client files.
  6. Responsibilities. What, if any, responsibilities the attorney might have to the client if the representation ends before the legal matter is resolved

Here is an article outlining the specifics of a legal retainer agreement that includes additional references if you would like further information.

How Retainers for Lawyers Work

The lawyer retainer is basically an agreement between you and the lawyer that you would like to reserve a certain amount of the lawyer’s time. This time could be used for a specific issue or, in the case of a business, it might provide you with quick access to the attorney’s time.

A legal retainer is an amount of money that is given to the attorney in advance of their work for you. It is called a retainer because the money remains your property until the attorney has earned the payment, and allows you to ‘retain’ their services.

Hourly fees, for example, are deducted from the retainer on a regular schedule, as are other fees as they accrue. The schedule of deductions will be mentioned in the legal retainer agreement.

It is important to remember that the retainer amount is not meant to cover the entire cost of the attorney’s work. It may cover a percentage, no matter how small. It may also be more than enough for the work at hand, in which case, you will receive a refund of the unused amount.

If the retainer drops below a certain amount, the attorney or firm may request additional funds for the retainer. Those are funds to bring the amount back up to its original number in order to continue legal services.

Here is an article about how a legal retainer works.

Why Do Lawyers Use Retainers?

There are three good reasons why lawyers use retainers:

  1. Compensation. The retainer is a form of compensation for use of the attorney’s reputation. In the event that the name association could resolve the matter quickly, it’s in your best interest to have the attorney available for a letter, email, or telephone call.
  2. Availability. The attorney is also compensated for making themselves available to you throughout the course of events. If you need your attorney’s help, they will be there for you. Consequently, as a professional, the attorney is justified in knowing they will be compensated.
  3. Incurred Costs. The retainer protects the attorney for incurred costs as the work proceeds. They don’t have to worry about the expenses that arise from handling any particular matter. Also, if for whatever reason, you are unwilling or unable to pay the attorney the agreed upon fees, the attorney has the opportunity to recoup at least some of their costs.

Some clients might worry that by providing a retainer they may be paying for nothing if the matter should settle quickly and with little trouble. As mentioned above, the purpose of the retainer is to protect both you and the attorney. The money only changes hands when it is earned by the attorney or the firm.

The lawyer’s time may be charged by the hour, by the task, or by some combination of the two. Fees can take a variety of different forms:

  • Hourly Fee. The attorney keeps track of the time worked on a particular matter and charges a set rate per hour. Often, lawyers and firms will charge for fractions of the hour. That could be 5-minute, 6-minute, or 10-minute blocks as opposed to charging by the minute.
  • Engagement Fees. If the legal matter is substantial and potentially time consuming, you may need to pay a fee in addition to expected earned portion of the retainer. This engagement fee ensures that the lawyer or firm is compensated rather than lose money or business by taking on such a big case and possibly forgoing other work.
  • Flat Fees. A flat fee will cover all the work that the lawyer expects will be necessary in order to take care of your matter. Occasionally, there might be need for additional fees but that should be noted in your agreement.
  • Contingency Fee. This fee is the lawyer’s guarantee of a percentage of whatever monies are recovered in your case.

Click here for more information on attorney fees.

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Are Retainers Refunded by Lawyers?

That depends on the wording in your legal retainer agreement. It also depends on the nature of the agreed-upon billing.

If your agreement established a flat fee for the work on a particular matter, then you will not be receiving a refund. Even the lawyer was able to clear the matter quickly, effectively, and much faster than anticipated, they have earned that fixed fee.

However, if your agreement states that the lawyer will be working on an hourly basis with no flat fee, then you should be eligible for some kind of refund.

There are several very important steps that you should take before you sign a retainer agreement. Here is a list of tips that should help.

  • Read Carefully. Read the retainer agreement carefully from top to bottom, then read it again. Make sure you ask for clarification on any wording or subjects that you don’t understand.
  • Make a List. Make a list for yourself of the terms of the agreement as you understand them. As you read through the paperwork, compare your list to what is covered by the attorney.
  • Full Understanding. Make sure that you have a full understanding and agreement about the fees, the payment/billing schedule, and the scope of the engagement. You don’t want any surprises;
  • Don’t Rush. Remember that, barring an emergency situation, you are not in a rush. The attorney should not be pressuring you to sign and you should take your time until you are certain that all the points are perfectly clear.

Those steps are the key points to keep in mind as you move forward in your relationship with an attorney. For more information, take a look at this article here.

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