A retainer is a fee paid to an attorney or other professional in advance, for services. Often, retainers are paid monthly, based on an estimate of the amount of work to be done for the client each month.
A retainer might work like this: You would pay your attorney $500 a month for legal services during that month. If you have a question or need a matter handled, it comes off the retainer amount. If you don't use the full amount of the retainer, in most cases you would not get a refund or a credit toward the next month. If you use more time than the retainer amount will cover, you will need to pay the additional fees.
Benefits of a Retainer Arrangement
- A retainer arrangement benefits both the client and the attorney. The attorney has the assurance of a monthly amount, in advance. This is particularly helpful if a client is slow in paying.
- The retainer arrangement is also beneficial for the client because it provides a budget for legal fees.
One way to make sure that there is complete understanding about the fees is to ask for a retainer letter from your attorney. The letter should specify the amount, payment schedule, and the exact work to be included.
Other Ways to Pay an Attorney
Attorneys bill for their work in various ways.
- An attorney might charge by the hour. In this case, the attorney charges for general time spent on your account.
- Attorneys may also charge a flat fee for a specific assignment. For example, an attorney might charge $1000 for preparation and filing of all legal documents relating to the formation of an LLC or a corporation.
- An attorney might also agree to work on contingency, meaning you don't pay unless the result of the work (usually a case in litigation) is settled favorably for the client. The attorney is then paid a percentage of the settlement, which gives the attorney an incentive to settle the case and give the client a higher settlement.
The type of fee and the amount should be discussed with the attorney before you begin working with that firm.
Other Types of Retainers
Many professionals work on retainers. For example, a graphic designer might work on retainer for a specific client. A retainer can be set up for monthly, annual, or per-project payments. The professional is basically working off the retainer, and it is up to the client to be sure that the amount of the retainer is worked off every month. For example, if a designer bills $1000 a month, that bill must be paid even though the designer may not have done $1000 of work in that month.
Also Known As: legal fees
Examples: I paid my attorney a retainer each month so I didn't feel "nickel and dimed" to death with legal fees.