What is a Retainer Fee?

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What is a Retainer Fee?

A retainer fee is a type of payment made from a client to a lawyer for their legal services.  The way retainer fees work is that the client makes an advanced payment to the lawyer before the lawyer begins working on their case.  This is somewhat like a down payment, from which the lawyer can draw funds for their fees and costs as the case proceeds.

Usually, the money paid through a retainer fee is placed in a separate account from the lawyer’s personal funds.  This ensures that the lawyer will not use the money for their own purposes or before services are actually rendered. 

Retainer fees are the more traditional way of paying for legal services.  Another common type of payment is a contingency fee, in which a lawyer collects payments based on a percentage of the client’s monetary award issued by the court. 

Retainer fees are different from having a lawyer “on retainer”.  Having a lawyer on retainer simply means that the client has retained contact with the lawyer in the even that their services are needed.

What is a Retainer Fee For?

A client may choose to pay through a retainer fee in order to demonstrate that they are serious about their case and wish to retain the lawyer’s services.  Retainer fees help to establish a harmonious attorney-client relationship.  It indicates that the client can trust the lawyer with their funds and that the two are willing to work together.

Retainer fees also provide a somewhat greater amount of certainty in terms of the overall amount that the lawyer will be entitled to.  Other forms of fee arrangements such as contingency fees are usually dependent on the outcome of the case rather than a pre-set arrangement. 

Thus, retainer fees are usually worked out through a retainer fee agreement, which is basically a contract stating the amount of money to be paid and how it can be used.

What are Unearned and Earned Retainer Fees?

“Unearned” retainer fees refer to the sum of money that is placed in the retainer account before the lawyer has earned them.  For example, the client may pay the attorney a certain amount before the lawyer actually begins working.  The unearned fees do not belong to the lawyer until they begin putting in work for the case.

“Earned” retainer fees refer to the portion of money that the lawyer is entitled to after they begin working.  These may be accessed based on the number of hours the attorney has worked, or the types of tasks they have accomplished.  A clearly-written retainer fee agreement will be clear about how unearned and earned monies are defined. 

What is a Retainer Fee Dispute?

While retainer fees can be beneficial for both the client and the attorney, they can sometimes be a source of dispute.  One common dispute is where the lawyer’s services are no longer needed and there are still leftover funds in the retainer account.  If the lawyer refuses to return the client’s money, legal action may be needed to get the lawyer to return the money.

Another common dispute is where the lawyer prematurely uses retainer money before earning it.  This is usually the result of a poorly-written retainer fee agreement.  This type of dispute can often be avoided by clearly indicating in writing when the lawyer can access retainer funds.

Do I Need a Lawyer for Assistance With Retainer Fees?

Retainer fees are often a necessary part of working with a lawyer.  If you have any questions, legal issues, or disputes involving retainer fees, you may wish to contact another lawyer for representation.  An experienced attorney can determine whether a violation has occurred, and can counsel you regarding the appropriate legal action to take.

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Last Modified: 05-30-2012 03:30 PM PDT

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