What Is a Retainer Fee?

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What Is a Retainer Fee?

A retainer fee is an advance payment that a client makes to his or her lawyer before the lawyer begins working on the case. It is similar to a down payment and allows the lawyer to draw funds for various fees as the case proceeds.

Usually, the money from 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 before services are actually rendered.

While retainer fees are the more traditional way of paying for legal services, another common type of payment is the contingency fee, where a lawyer is paid by taking a percentage of the client’s monetary award, after the client wins the case. With a contingency fee, the lawyer receives nothing, unless the client wins the case or obtains a settlement with the other party.

Retainer fees are different than having a lawyer "on retainer." Having a lawyer on retainer means that the client pays a small fee to the lawyer on a regular basis in order to keep the lawyer on hand to perform legal work anytime it is needed.

What Is a Retainer Fee For?

A client may choose to pay using 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 contract, 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 the lawyer actually begins work on the case and can be refunded if not used.

"Earned" retainer fees refer to the portion of money that the lawyer is entitled to after they begin working. These fees may be accessed based on the number of hours the attorney has worked, or the types of tasks the attorney has accomplished. A well 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?

A way to resolve fee disputes is through fee arbitration. These programs are usually run by state bar associations and are usually free or low cost. However, fee arbitration programs usually have several problems associated with them.

Another way to resolve a fee dispute, or if you have any questions involving retainer fees, is to contact a lawyer. 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: 06-27-2014 02:57 PM PDT

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