Retainer and Contingency Agreements

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 What Is a Fee Agreement?

Attorney fee agreements are written contracts that include the total amount of the retainer necessary to secure the services of the attorney. Similar to any other major payment or purchase, lawyer retainer fees should always be recorded with a written retainer fee agreement.

A fee agreement is a written document that provides legal proof of the contract between the attorney and the client. A well-drafted attorney-client fee agreement should contain certain information regarding the services that will be performed, including:

  • The total amount of the initial retainer payment that must be made before the attorney begins legal services;
    • With a retainer, the client will place money into a special trust account, and the lawyer will deduct legal fees from this account as services are completed. The client is then responsible for reviewing the account periodically and ensuring that the minimum retainer amount is maintained;
  • How the lawyer will use and bill against the retainer;
  • The attorney’s billable rate, along with the billable rate of support staff;
    • It is important to note that many attorneys will use support staff including law clerks, paralegals, or even associate attorneys to reduce the fees for the daily tasks involved in managing a case;
  • Whether or not the retainer is refundable or immediately collected in full;
  • A description of the legal services that will be performed.
    • For example, an attorney-client fee agreement for a divorce case will often specify that the attorney is accepting the client and will render their services for the divorce matter;
      • This means that the attorney will not be representing the client in other matters outside the scope of services in the fee agreement;
  • The contact information for all the parties, including:
    • the attorney;
    • support staff; and
    • the client; and
  • The fee structure for other items that fall outside of the lawyer’s hourly rate, including fees for:
    • filing costs;
    • copies;
    • travel; and
    • other associated costs.

Both of the parties involved should sign the fee agreement. It is important to note that fee agreements that are not signed by both parties may not be enforceable against either of the parties. In addition, a signed copy of the fee agreement should be kept by both of the parties in the event of a legal dispute in the future over fee agreements.

What Is a Retainer and Contingency Agreement?

A Retainer and contingency agreement is a type of contract between an attorney and their potential client for an upcoming lawsuit. This type of agreement usually covers important issues such as lawyer fees in addition to the terms of the attorney-client relationship.

The agreements cover two aspects of the attorney-client relationship, the retainer fee agreement and the contingency fee provisions. Retainer agreements typically govern the retainer fee that the client pays to the attorney prior to hiring them.

Retainer fees are specified amounts of money that the client provides in order to demonstrate that they are serious about hiring the lawyer and retaining their services for the duration of the case. It is similar to a down payment because it may be a portion of the total attorney fees.

Contingency fee provisions, or contingency fee arrangements, govern the rest of the payment that will be made to the lawyer at the conclusion of the case. Contingency fee provisions typically provide that the lawyer will be paid a certain amount of the monetary damages award that the client wins if the lawsuit is successful.

Therefore, the attorney’s payment is contingent upon the amount of damages awarded to the client overall.

What Are the Benefits of Retainers?

Clients may choose to pay using retainer fees in order to demonstrate that they are, in fact, serious about their case and that they wish to retain the attorney’s services. A retainer fee helps to establish a harmonious lawyer-client relationship.

This fee indicates that the client is able to trust the lawyer with their finds and that they are willing to work with one another. A retainer is beneficial to both the attorney and the client because it allows the client to manage how much money they spend.

It also ensures that the law firm is paid for their work. Typically, when a retainer account becomes low or has been used fully, the client will either refill the account or they may choose to end their services.

Typically, the money paid for a retainer fee is placed in a separate account from the attorney’s personal funds. This helps to ensure that the attorney does not use the money for their own purposes before the services are actually rendered.

In addition, all of the expenses and hours that are worked by the lawyer are entered with descriptions and then provided to the client.

What Are Unearned and Earned Retainer Fees?

An unearned retainer fee refers to the funds that are placed into the retainer account prior to the lawyer earning them. This is referred to as the allowance.

The lawyer will not be entitled to use this money until they have documented earned fees, which may include:

  • Logged hours;
  • Materials; or
  • Additional overcost fees.

A well-drafted retainer fee agreement will be clear regarding how earned and unearned monies are defined.

What Is a Retainer Fee Dispute?

A retainer fee dispute may arise related to any leftover funds. This typically occurs when an attorney fails to return the leftover funds in a timely manner or the relationship has ended on negative terms and the client and the attorney disagree on the contents of the final bill.

One other common dispute that arises is when an attorney uses retainer money prior to earning it. This is typically the result of a poorly-drafted retainer fee agreement.

What Should Be Contained in a Retainer and Contingency Agreement?

The common terms and provisions contained in a contingency retainer agreement include:

  • Details about the retainer fee, such as how much the lawyer will be paid at the outset of the case, and whether the lawyer can access the money during trial to pay for expenses related to the case;
  • Details about the contingency fee, such as what percentage the attorney will be paid, whether they will be paid in installments, etc;
  • Names and contact information of all parties involved in the agreement;
  • What should happen in the event that the agreement is violated; and
  • Any other important items or instructions for the parties.

In addition, the laws that govern retainer fees and contingency fees may vary greatly from state to state. For example, some states may limit the contingency fee amount to an amount that is reasonable in light of the circumstances.

Therefore, retainer and contingency fee agreements must follow all of the applicable rules and regulations in that particular jurisdiction.

What If a Retainer and Contingency Agreement Is Violated?

A retainer and contingency agreement is essentially a contract. This means that they are subject to various principles of contract law.

Because of this, a violation of a retainer and contingency agreement would be treated as a breach of contract. In these cases, the party that did not violate the contingent agreement would be entitled to receive monetary damages to cover any losses that were caused by the breach.

For example, if an attorney attempts to collect more money than they are entitled to and they withhold their legal services until the client pays more, it would be considered a breach of contract. In this case, the client may be able to file a lawsuit against the attorney.

It is important to note that, if the client sues their lawyer, they would have to find a different attorney to handle those legal proceedings.

Do I Need a Lawyer for Help with a Retainer and Contingency Agreement?

A retainer and contingency agreement is crucial for any attorney-client relationship. If you have any issues, questions, or concerns related to a retainer and contingency agreement, it may be helpful to consult with a lawyer.

Your attorney can answer your questions, whether you are considering entering into an agreement or if you already have. Your attorney can also represent you in court in the event that a lawsuit becomes necessary.

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