If you need legal services, you will need to find a lawyer to represent your case. You will want to find someone who specializes in that particular area of the law. Most attorneys will offer a free initial consultation to discuss your legal matter and help you determine whether or not you need to take legal action.
Once you have decided that you want to hire this attorney, you will be informed of your payment options. In some scenarios, you may be given the option to pay a retainer fee for legal services. If you are wondering what a retainer agreement is or whether or not you have other choices, this blog post will explain retainer fees in greater detail.
What Is the Purpose of a Retainer Agreement for Legal Services?
The attorneys in every law firm will have various methods of accepting payment for their legal services. A retainer agreement details the scope of work that will be performed using an advance payment.
By making an upfront payment with the retainer fee agreement, the hourly work lawyers conduct is deducted from the lawyer retainer fee. The money is put into a dedicated retainer account to cover services for a specified amount of time. Through this advance payment, you reserve the lawyer’s time for services to take care of your legal needs.
Types of Retainer Fees
If you are working with an attorney who will be accepting a retainer fee, there are two main types – earned retainer fees and unearned retainer fees.
Earned Retainer Fees
Earned retainer fees are funds that are transferred into the law firm’s operating account once the work on a case has been completed, or earned.
Unearned Retainer Fees
By contrast, unearned retainer fees are stored in a dedicated trust account before the legal work starts. It cannot be accessed until the work is finished, thus, this type of retainer fee serves as a deposit that is held in the client trust account and transferred to the operating account at the time of completion.
Other Ways Attorneys Charge for Legal Services
Every lawyer will have their own fee structure. Here is a look at the other types an attorney may offer besides the retainer fee:
Contingency Fees
Contingency fees are most commonly offered in personal injury cases. This structure allows a lawyer to begin working on your case with no upfront charge. You will sign a contract before hiring the attorney that states the percentage of what they will take from your compensation award if they win your case.
With fees on contingency, most attorneys will avoid cases they do not think they have a good chance of winning because they would get nothing. If you choose to work with a lawyer using this structure, make sure you understand that there may be costs associated with using their services, such as attorney’s fees and filing fees, that you may need to pay.
Flat Fees
Lawyers charge flat fees in situations where they are doing a one-time job. The client makes one single payment for the services provided, which is ideal for smaller tasks such as drafting a will or filing for bankruptcy.
Hourly Rate
If a client’s case is handled using by hourly rate, it can get expensive. However, the American Bar Association has specific rules of conduct for attorneys. Reputable lawyers will give a written estimate of their proposed hours and provide a detailed log.
In general, lawyers who charge a high hourly rate tend to get the case done more quickly. It will depend on case complexity as to how long an attorney works to complete a case. It is best to set clear expectations and make sure you fully understand the contract before signing.
Retainer Fee
With a retainer fee, particularly for general retainers, you are paying fees for a specific period of time, usually a 6 to 12 month duration. Special retainers are sometimes an option, though most states prohibit this type of retainer. Retainer fees tend to work best in legal matters where you will need future legal services, such as with matters of family law. There will often be a lot of back and forth, especially if there are clashes regarding custody, before an agreement can be reached.
When a client pays advance fees to a law firm through a retainer fee, this upfront payment serves to reserve the attorney’s time. Think of it like a down payment for legal fees and expenses.
How Does a Retainer Fee Work?
It is not particularly complicated to work with a lawyer using a retainer fee. The fee structure for a lawyer retainer does not need to be a major pain point for either party.
First, the lawyer spends time with you in a brief consultation to discuss the case. You will both then decide if you would like to create a working relationship. You will then make an upfront payment that serves as the retainer fee, effectively reserving your attorney’s availability, time, and future legal services.
With the lawyer retainer, the attorney will begin working on your case and tracking all the time spent on your case. On the administrative side, this time logged will be deducted from the retainer.
A retainer works by essentially subtracting the lawyer fees as work is conducted from the retainer amount. To better understand how a retainer works, it helps to use an example. If the billing rates for an attorney are $100 per hour and you want to work with them on retainer, they may give you an estimate of 20 hours to handle your legal situation.
That means the estimated budget would be $2,000 for the retaining fee. However, you should understand what happens when the retainer fee is used up. If the lawyer spends more time than they anticipated on the case, then you will need to add more money to the dedicated account for the retainer fee.
Conversely, if the lawyer retainer account has money remaining after the lawyer completes their services, they will need to return some of the remaining balance of the retainer amount to the client.
Benefits of a Retainer Agreement
Both the client and the attorney benefit from a retainer fee in many ways. Retainer fees provide a reassurance to clients that they will be provided with the services they need from their attorney.
The billing process for a retainer fee can further be simplified when it comes to legal scenarios that will require ongoing representation. Subscription models can be implemented to replenish funds in the trust account and continue the working relationship after the initial payment has been made.
A retainer can also improve the client experience since clients who have already paid will usually be prioritized by attorneys. Ultimately, it benefits both the attorney and client to work with a retainer; however, this may not be the best payment style for the legal situation you are facing. It is ideal to review what your case will entail and make a decision as to whether or not this structure can be helpful for your case.
What Should Be on Your Retainer Agreement?
When you are choosing a lawyer to represent you, always choose the one who can meet your legal needs and is willing to be transparent about the fees. Retainers are customized agreements and you should make sure you fully understand what the contract says before you sign it.
Each retainer will vary depending on the circumstances, but you can expect it to include many of the following points:
Description of What the Client Pays
The compensation you provide to your attorney, or what you will pay for their services, should be described in the agreement. This includes how the fees are calculated, such as a list of the hourly charges that are applied for the services of the attorney who will be working on your case.
How the Funds Will Be Used in the Retainer
The agreement should also specify where the funds will be held and how they will be used. Typically, many attorneys will put this money in a trust until a certain sum of fees are incurred and the retainer will then be used to pay these fees, or deduct them from this account.
List of Additional Costs
Any charges that will be incurred in addition to the retainer fee should be listed on this document. These tend to include court costs, costs of conducting depositions during the discovery process, costs of expert witnesses, and travel expenses.
Billing Terms and Frequency
The majority of attorneys will send out statements or bills on a monthly basis. These statements show the costs incurred for the previous amount and what was deducted from the retainer. It will also show what remains. You may receive a bill for additional costs or to replenish the retainer amount. It is important that everything deducted from your retainer is properly documented on your statement. Attorneys are bound to conduct themselves by the code of the American Bar Association (ABA), which includes having honest and transparent billing practices.
You will want to get everything you have discussed in writing to ensure it is on your agreement. This way, you can have full peace of mind that your case and all the billing involved with it will go as smoothly as possible.
How to Pay Retainer Fees
After reviewing the agreement, you can also discuss with your attorney how you can pay these fees. Your attorney may want to handle it a certain way, or you may be given one of several options to make this payment.
In most cases, especially when a case will be fairly cut and dry, you will be asked to make an upfront payment. Essentially, you make one payment of the fees that were discussed before your attorney starts your case.
Another option is to pay in installments if your attorney offers this method. Many people facing these legal issues may not have the full amount to pay an attorney’s retainer fee upfront. Paying in predefined installments allows you to pay a specific amount over a specified period. Some lawyers will break it down into monthly or quarterly payments. This will reduce the burden of acquiring reputable legal counsel for your case.
Subscription models are a newer option, one that allows for your retainer to be replenished as needed on a subscription basis. This may be the best method for a business or anyone who has a need for frequent legal services.
Tips for Understanding Your Retainer
As mentioned previously, your attorney is ethically and legally bound to deposit your retainer fee in a special trust. It should not go directly into their business account. The funds should only be transferred to the business account periodically while the case is being worked on, usually once per month.
You should keep up with the billing as well as check the statement that you get every month. It should feature accounting details that match the work done for you that was billed against the retainer. If you are not getting this statement, ask for it and review it carefully. Most attorneys will be diligent and honest in their reporting. In the event that you find discrepancies, bring them up with your attorney. Any larger issues can be brought to the ABA.
How to Choose an Attorney for Your Case
When you are facing a legal scenario, it can feel overwhelming. Finding the right attorney to represent you will make all the difference. Here are some tips to help you find the right fit for your legal counsel:
Choose an Attorney Who Specializes in Your Type of Case
If you were hurt in an accident that another person caused by behaving negligently, you will need to find a personal injury lawyer who specializes in representing victims who have been injured in similar types of accidents. For example, if you were seriously injured in a car wreck, you should work with a lawyer who represents car accident victims.
They will understand the applicable laws and be familiar with case precedents that may be helpful in your case. You should avoid any attorneys who do not work in the area of law that you need. A family law attorney would be best for divorces and custody issues, but not for helping you after a truck accident. Just as you would not go to the eye doctor for a stomach issue, make sure you consider attorneys who practice in the area of law that you need.
Consider Experience and Reputation
Flashy billboards and TV ads may make an attorney well-known, but the best measure of their skills is in the experience they have in their practice. Look at attorneys who have been practicing for years and check their track record. It helps to see what previous clients have to say about them.
Get to Know Them During the Consultation
An attorney who is experienced and highly recommended by people you trust may be the right person but it is important to go with your gut. When it comes to matters of the law, they may take some time to resolve. You will need to be prepared to work with this person for several months to a year, or even longer.
Your attorney should make you feel comfortable and heard. You should feel like you can talk to them about anything. A good indication of this trait is how patient they are with your questions. An attorney who takes the time to explain things to you and shows compassion is one who will likely be a great choice.
Availability and Responsiveness
You likely will not be the only client who your lawyer is representing but you should be able to connect with them regularly and be kept informed. The right attorney will be available to take your calls or return them promptly so that you do not feel like you are being left alone. They should also take the initiative to provide you with updates. Even if nothing new has come up in your case, a good attorney will reach out just to let you know.
Should You Use a Retainer Fee?
Whether you use a retainer agreement or not is entirely up to you and your attorney. In some cases, it may be the best way to handle paying your lawyer for their services, but in others, one of the other payment options might be a better fit.
You will have a better idea of what to choose when you learn more about the legal options in your situation. Discover the personal injury services by Mazzu Law, PLLC, and how you can get the representation you need for motor vehicle accidents, slip and fall accidents, catastrophic injuries, and other incidences where another person or entity has caused you harm.
Our attorneys will review your case and help you decide the best way to move forward. We offer a free consultation to help you discover more about the process and explain our billing practices thoroughly. Contact Mazzu Law, PLLC, today to set up your consultation and learn more.