What Is a Retainer and How Does It Work

Before you hire a law firm for legal services, one of the main things you will discuss with the attorneys is legal fees. You have to make financial sense of how much money you will pay with an upfront payment, an hourly payment, a lump sum, and so forth.

But what does a retainer mean?

Many people think that a retainer and retainer agreement is precisely the same. But in reality, you might pay an attorney $500 upfront in exchange for hiring them to give you legal advice on one case. This amount that you pay is called the retainer, and with that money, you retain their services or hire them and their services. If your legal situation is complicated and you need legal services from them beyond the initial advice they give you, then you might have to create a legal retainers agreement and pay them more. 

A retainer lawyer is a lawyer you have ready and willing to help you with your legal cases. When you hire a retainer lawyer, you give them a deposit that goes into a particular account, and your agreement with that lawyer, explains how much you will pay them and what type of work they should do for you based on that retainer. The term lawyer retainer meaning is integral to understanding this arrangement. 

A legal retainer agreement is a document that specifies you will have an attorney-client relationship after you pay the retainer fee for a specific period. During this time, the contract lawyers might do legal work or be there to answer legal questions you have, like general information purposes. 

What is a retainer for a lawyer, and why is an agreement important? 

The agreement is your legal contract should you choose to have a lawyer on retainer. In the realm of legal terminology, the retainer definition law refers to the formal arrangement between a client and lawyer where the client pays a lump sum, often referred to as a retainer fee, to secure the attorney's services. By obtaining a retainer, the client ensures that they have a lawyer reserved and ready to work on their legal matters on an ongoing basis. The retainer legal definition and its specific terms, including the attorney's fees and the scope of work to be performed, are explicitly detailed in a written agreement. 

Every agreement you make with a lawyer should be specific to that situation and should be looked over thoroughly between both client and attorney before either party signs. There are, however, some similar features that you should include:

Firstly, you want to include a description of the compensation. This means how your legal retainer is calculated and what services you are paying for. You might, for example, have an attorney provide an hourly list of different services they offer and then base the amount on the average number of hours for your type of situation.

You want to explain how the attorney will work using your retainer. If, for example, you are using a retainer fee that you have paid in advance, you have to specify that the attorney has to cover any costs and fees once a specific amount of fees have been incurred.

Talk about what charges might be incurred in addition to your retainers, such as court fees, postage, communications, administrative fees, or travel expenses, and how those will be covered.

Explain the frequency of billing and the terms for the billing. If you are using a retainer fee that you have paid in a lump sum in advance, you might request that the law firm send you a monthly statement showing how much money has come out of that retainer fee and how much remains in the account. You might also need a separate bill every month or every quarter that shows the additional costs you still have to cover, which are typically due upon receipt.

Each state has rules regarding fee disputes. If you dispute your retainer and the billing, you might have to use arbitration, but it depends on where you live.

Understanding how do legal retainers work is crucial when entering into an agreement with an attorney. Using a retainer attorney, work gets done as it usually would. 

If you are using a lump sum, your attorney will do work on your case or project and then take the money for those costs out of the lump sum. If you hire them with a general retainer, which means you pay them every month regardless of whether you use their services, the work they do will vary based on the terms of your agreement.

For example, if you hire a law firm and you pay them a retainer every month, they might deposit that money into an account and, when the need arises, take money from that trust account. 

So, if you have a lawyer on retainer for your business every month and you have paid them $1,000 every month for five years, when a case does arise, you have $60,000 in that account, which you can put toward the costs of the case. But this is just an example and is entirely contingent upon the type of agreement you have. Comprehending the issue of “how does an attorney retainer work” helps to manage expectations and ensure a smooth attorney-client relationship.

With a retainer lawyer, work is based on the type of retainer you get:

General retainer fee, sometimes called a monthly retainer, is a fee you pay for a specific length of time rather than for a specific job or project. Basically, with a general retainer, you want to have attorneys or law firms readily available to discuss anything that arises and any questions you have. 

For example, a law firm might charge you $1,000 per month as a general retainer fee. In exchange for this fee, the firm makes it a priority to be available for you to discuss whatever legal questions or issues arise for that month. 

This is a good practice for businesses who want to make sure that in the event there is a complication with their employees, they can turn to the attorney. Similarly, if a company has attorneys on retainer, if the business gets hit with a workers’ compensation lawsuit or discrimination lawsuit, they can turn to the law firm they have hired.

You pay a retaining fee in full in front. In this situation, an attorney has a separate trust account into which that retaining fee is deposited. Then, as they continue to work on your case or project, they draw money from that account to cover the expenses. If the lump sum you have deposited runs out before the end of the project, you might have to increase the retainer, and if there is any money left over after the project, you get it back.

For instance, if an attorney charges $300 per hour and expects your case to take about 10 hours, they might ask for a retainer fee of $3,000 upfront. This is a good practice for businesses or individuals with only one major project or situation for which they need attorneys. They don’t necessarily want to pay attorneys every month for the entirety of their business do have a legal situation at present where it makes sense to deposit a lump sum upfront.

A one-time flat fee paid particularly for a single case is called a special retainer. Many states prohibit a special retainer because you have to stick with the same attorney until they have finished the case, and this can interfere with any situation where you want to fire and replace the attorney.

In general, the fees might be as low as $500 or as high as $5,000. Legally, the retainer fee you pay could be whatever an attorney requests, and it is usually based on their hourly rate multiplied by the number of hours they expect to spend on your case.

For lawyer retainer fees, you should consider hiring a lawyer on retainer if you have a business. A retained attorney can help you look over your contracts to recognize unfair issues, vulnerabilities, or hindrances. 

Having a business lawyer on retainer can save you time and money should litigation arise. It can also help you circumvent litigation by having an attorney there to answer any questions or provide legal guidance before situations get worse.

Before you hire an attorney on retainer, consider:

What does having a lawyer on retainer mean?

Having a lawyer on retainer means you've secured their services on an ongoing basis. It involves paying a lawyer an upfront fee, called a retainer fee, typically held in a trust account, which is then used to cover future legal services as they are provided. When a client asks, “What is the purpose of a retainer for a lawyer?” they should understand that this arrangement offers them immediate access to legal advice or representation when necessary.  

Are they experienced?

Due to the way in which retainer fees are calculated, you might want someone more experienced, especially if you are hiring them for your business. Just because somebody offers a less expensive retainer fee does not mean they are the better option. You should evaluate attorneys on retainer the same way you assess any attorney you would otherwise hire for your personal or professional needs. 

Check that they have experience handling cases like yours or working in your particular industry. If you are hiring an attorney on retainer to help you check things like employee contracts when you hire new people, make sure the attorney you hired has business experience.

Do you have a legitimate business need for a retainer lawyer?

If you are an individual looking to hire a retainer lawyer to help you with issues involving your homeowners or auto insurance, check your policy. Many insurance policies say that they will cover the cost of an attorney if you are in an accident. 

You don’t need to pay extra money for a separate attorney if you have such a policy. Similarly, if you are a union member or an employee with a large company, having a lawyer to help you with employer problems might be part of your benefits.

Overall, under the term retainer meaning law, paying a retainer signals that you have formally engaged an attorney's services. The funds you provide are the retainer, held as prepayment for the legal assistance your attorney will provide. 

By signing a retainer's fee agreement, both parties commit to a professional relationship where the attorney agrees to work for the client in exchange for compensation. A clear understanding of how does a retainer work is crucial for fostering a smooth attorney-client relationship, ensuring the client gets the legal help they need and the lawyer receives guaranteed payment for services rendered.