What Is a Retainer for a Lawyer and How Does It Work?

You don't always have to pay a retainer when you use a lawyer, but it's common in many areas of law.

Understand how a lawyer retainer works and how much you might be expected to pay to prepare for legal services.

A retainer is money you pay to a professional, usually an attorney, before they start working for you. It's essentially a prepayment for the services. It's not necessarily the full amount you'll pay for the legal services; it's a guarantee or a commitment to the professional and shows that you can afford the services.

There are different types of retainers based on your needs. A general retainer means you're paying to have access to the lawyer. For example, if you're a business owner, you might keep a lawyer on retainer in case employment issues come up. You can consult with your attorney quickly because you have them on retainer. Other retainers are advanced payments for a specific legal project, such as an individual who hires a lawyer to handle criminal charges.

What's the Difference Between Earned and Unearned Retainer Fees?

When you first make your lawyer retainer payment, the attorney hasn't yet earned the money because they haven't done any work. The money goes into a retainer account, which is often a state-regulated trust account. When the lawyer completes the work, they earn the money. Depending on the agreement, the lawyer might receive part of the money as they do the work. This is an earned retainer fee, which can be distributed based on time worked or milestones reached. They might earn a percentage of the retainer at different milestones in the case, or they might earn the retainer based on their hourly rate and the time spent working on the case.

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How Does a Retainer Agreement Work?

Retainer agreements can vary depending on the situation. The agreement explains the details of the retainer, including the hourly billing rate, who will work on the case, the scope of the work and the estimated cost. It should also describe what happens if the retainer money runs out or if there's money left over. You might have to replenish the money if it drops to a certain amount, for example. You're also owed any leftover money once the services are complete. Your attorney might process billing at the end of the month, at which point you might receive a billing statement for the additional amount you owe.

How Much Is an Appropriate Amount for a Retainer Fee?

Retainer fees can vary from a few hundred dollars to several thousand dollars. It's typically based on the lawyer's hourly billing rate and the estimated time the work will take. For example, an attorney who charges $300 per hour and expects to work on a case for 20 hours might charge a $6,000 retainer. However, the lawyer can decide how much to request, which could be different than the estimated amount that the legal services will cost.

When Do You Have to Pay a Lawyer Retainer?

Many lawyers ask clients to pay retainer fees before they begin work. This is especially true if the case is going to trial, you're involved in a lawsuit or you have complex legal issues. However, many legal situations might require a retainer, including criminal charges, family law situations, estate planning, real estate and corporate legal services.

Tips for Handling a Retainer

Here are some additional tips if your lawyer wants you to pay a retainer:

• Get it in writing. Never accept verbal retainer terms. Make sure everything you discuss is in the written agreement.
• Review the terms. Ensure you understand the retainer agreement and the expectations for paying any additional fees before you sign the agreement.
• Make sure you agree. Check the agreement for specific terms to avoid potential disputes on how additional fees or refunds are handled.
• Stay on top of the numbers. Review the monthly statement that shows the billed hours to monitor how the lawyer is using the money. Question discrepancies or items that don't make sense based on what your lawyer has done for you.
• Ask for other terms. An attorney might be willing to work with you on the retaining fee, either with a lower fee or a different payment arrangement. Don't be afraid to negotiate or ask for different options.

Other Ways Lawyers Charge Clients

In addition to retainers, lawyers sometimes bill clients hourly as they complete the work or after the project is complete. For some simple situations, such as filing a simple bankruptcy or a divorce with no disputes, the attorney might charge a flat fee. A contingent fee is a final option, which means your attorney takes a percentage of the money you receive from the case. This is common in certain civil matters, particularly personal injury suits.