A retainer is a fee paid to a person (usually a lawyer) before any services have been performed. Most lawyers require a retainer agreement, which is also known as a “work for hire” contract.
This document typically includes the type of work the attorney is doing for the client, all associated fees, and the general rights of both parties entering into the agreement.
What is a Retainer Fee?
A retainer fee is an advance payment that a client makes to his or her lawyer before the lawyer performs any legal work for the client. It is similar to an allowance in that the lawyer is able to draw funds for various fees as the case proceeds.
Retainer fees are almost always required for cases involving a trial or a lawsuit. These amount of the retainer varies based on the type of lawsuit or case. 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 the Benefits of Retainers?
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.
Retainers are beneficial for both the attorney and the client because it allows the client to manage how much they spend, as well as, ensures that the law firm is paid for the work they do. Traditionally, when the retainer account gets low or has been fully used, the client either refills the account or can chose to end the services.
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. Additionally, all expenses and hours worked are entered with descriptions and provided to the client.
Are there Other Types of Fees?
While retainer fees are the more traditional way of paying for legal services, another common type of payment is called a contingency fee.
This type of fee differs from a retainer fee because the lawyer does not request any money upfront, but instead the lawyer is paid by taking a percentage of the client’s monetary award. The risk is solely on the lawyer because the lawyer receives nothing unless the client wins the case or receives a settlement agreement.
What are Unearned and Earned Retainer Fees?
"Unearned" retainer fees refers to the money that is placed in the retainer account before the lawyer has earned them. This would be the “allowance”.
The lawyer is not entitled to touch this money until they have documented “earned” fees that include logged hours, materials, or additional overcost fees. A well written retainer fee agreement will be clear about how unearned and earned monies are defined.
What is a Retainer Fee Dispute?
The most common dispute is with “leftover’ funds. This occurs when attorneys fail to return the leftover funds in a timely manner, or the relationship ends on negative terms and the client and attorney disagree on what should be paid on the final bill.
Another common dispute is where the lawyer uses retainer money before earning it. This is usually the result of a poorly-written retainer fee agreement.
Do I Need a Lawyer?
If you believe you have a retainer fee dispute, an experienced malpractice attorney could help direct you to the resources available to you and inform you of your rights. The retainer agreement usually has a fee arbitration clause in them and that refers to programs that are run by state bar associations and are usually free or low cost. If the issue cannot be resolved through arbitration, they it would be highly advisable to seek an attorneys help in reaching a mutually agreeable resolution.