How Does a Legal Retainer Work?
One of the first questions most people ask when hiring an attorney is how much legal representation costs. The answer depends on whether you need one-time assistance or an ongoing relationship with the lawyer. There are three different kinds of fee schedules: contingency fee, flat fee, and retainer fee. Lawyers representing clients in tort cases like personal injury and wrongful death suits typically charge a contingency fee. It awards them a percentage of your settlement or court award in exchange for their representation. Some routine cases – adoptions, name changes, simple wills, uncontested divorces – can be handled on a flat-fee basis. Other legal issues like complex wills and estate plans and mediations are more labor-intensive. Retainers are more common for complicated cases.
What is a legal retainer?
Most attorneys who work on an hourly rate require an up-front payment known as a retainer. The amount of the payment depends on the kind of case the lawyer is pursuing on your behalf and how many hours of work they anticipate spending on the matter. There are three different types of legal retainer:
- General retainers cover an attorney’s time for a designated period. You pay for the lawyer’s availability during the agreed-upon timeframe spelled out in the contract.
- Retaining fees cover all costs associated with legal representation. You pay a lump sum in advance, which is placed in a dedicated trust account. As the lawyer performs work on your case, he or she withdraws against the balance of the trust. Retainer fees generally do not cover the entire cost of your legal representation. Lawyers must provide clients with detailed invoices showing how the retainer was spent and return any excess funds in the trust once the retainer agreement ends.
- Special retainers cover a specific case or project. Some states prohibit their use because attorneys cannot be discharged for the duration of the case or project, leaving clients stuck with legal representation they may find lacking.
What does a legal retainer cover?
Your attorney will draft a retainer agreement that covers the scope and nature of the legal services performed, plus which fees are covered by the up-front retainer. Most standard retainers include the following provisions:
- A description of the compensation, including how much you are paying the attorney and how the fee is calculated.
- An outline of how the attorney will work from the retainer that includes details on when and how the attorney may request additional payment.
- A listing of additional costs that can include (but is not limited to) copying, postage, and travel expenses.
- A billing frequency and terms description that spells out when bills or statements will be sent, plus a running balance of the retainer.
As a rule, most work an attorney performs on a per-hour basis is included in the retainer. For instance, if your attorney requires a $1,500 retainer and has a $125 hourly rate, you can expect that retainer to get you approximately 12 hours of work from the lawyer. Fees associated with obtaining any legal documentation or records required for supporting your case also can be deducted from the retainer balance. You will only owe additional monies to the attorney if he or she spends all retained funds before your case concludes. It should never be a surprise if you owe more money to resolve your case. Lawyers must provide you with a running total of your retainer fund balance so you can anticipate any additional expenditures.
Are retainers non-refundable?
The short answer to this question is that some states allow attorneys to collect non-refundable retainers. In these states, when clients hire an attorney and pay a retainer, they are reserving a portion of that lawyer’s time for their case. For non-refundable retainer agreements to be enforceable, they must be stated in such a way the client cannot miss them in the contract. An acceptable method for accomplishing this is to capitalize, bold, or underline the text in the retainer agreement that stipulates all or a portion of retained fees are non-refundable. The New Mexico Bar Association does not permit attorneys licensed to practice in the state to charge non-refundable retainers. The bar considers it unprofessional conduct.
When do you need a retainer?
Any time you hire an attorney to represent you, it is appropriate to discuss a legal retainer. Having a retainer in place ensures your access to your attorney and reserves availability to work on your case. If financial concerns are an issue, retainers can help you budget for your legal expenses.
When you schedule a free case evaluation with Archibeque Law Firm, we discuss all options for payment of services. Call us at 505-750-2363 or contact us online to schedule an appointment.