In the legal business, a retainer fee is an amount of money that a client pays to a lawyer in advance of receiving service from the lawyer. It is similar to a down payment and indicates that the client is hiring a lawyer to perform legal services for them.
A retainer agreement may be paid to an attorney in a personal injury case. Usually, in a personal injury case, the attorney agrees to accept as payment for their work a percentage of the amount the attorney recovers for their client from the person who injured them, either through negligence or in an intentionally tortious act. This is referred to as a “contingency fee,” a fee that is based on the outcome of the case.
However, in a personal injury case, the attorney may incur expenses while they prosecute the case to its conclusion. Additionally, they may want to collect a retainer fee at the start of the case to pay those expenses. The attorney would use the retainer fee paid by their client to pay the expenses of prosecuting the case.
At the end of the case, if the attorney has won an award of damages from the person who injured their client, they would reimburse the client for the amount spent to pay the expenses of litigation. They often also return any part of the retainer fee that was not used. Whether the attorney returns the full retainer fee after they get an award of damages for their client depends on the retainer agreement they have with the client.
Of course, in a personal injury case, if the attorney does not recover an award of money damages for the client, then the attorney would not be paid. In this case, the client would also not recover the money they paid as a retainer unless some of it is left after all the expenses have been paid. But again, what happens in the event there is no recovery depends on the retainer fee contract.
In other cases, attorneys charge clients for their services on an hourly basis. They charge a certain amount of money per hour for their work. They keep careful track of the time they spend on a case and bill the client monthly for the work they perform every month.
An attorney who works on an hourly basis might ask for a sum of money at the beginning of the attorney-client relationship. This would be the retainer. Then, as the attorney works for the client, they would withdraw their monthly charge from the retainer account. If the retainer were to be used up before the work was complete, the attorney might ask for an additional amount.
On the other hand, if the attorney finishes their assignment before the retainer has been used up, they would return the remaining amount to the client.
When Are Retainers Agreements Made?
A retainer agreement is usually made at the beginning of an attorney-client relationship when the client decides to hire an attorney to represent them. The money paid by the client is placed in a special account. The fee secures the lawyer’s services, and the lawyer may then draw from that account as the case proceeds. They would make withdrawals in order to pay for their services as well as various costs associated with the case.
The retainer fee agreement should be made between the attorney and the client before the case actually begins. A client should be sure that this is done because it is in the client’s interest to have a clear, understandable agreement with an attorney about how the attorney is to be paid and how any expenses are to be paid before the attorney begins work.
A client wants to read any retainer fee agreement carefully and make sure they understand it before they agree to it. If they do not understand it, they should question the attorney and discuss the terms of the agreement until they do understand how it is supposed to work.
After a full discussion, a client may want to suggest that the agreement be revised in some ways so that it accurately and fully states the agreement between the attorney and the client.
Are Retainers Refundable?
There are a number of situations in which a retainer fee, or part of it, might be returned to a client. As noted above, retainers may be refundable under certain circumstances.
For example, a person might pay an attorney a retainer for certain services. The attorney may learn information that leads them to think they cannot perform the service the client needs. The attorney may discover that they have a conflict of interest that prevents them from working on the case. If this were to happen, the attorney would have to return the retainer paid by the client.
Again, a client may pay a retainer to an attorney who plans to bill the client hourly for their service. The attorney may finish the job at a point when there is still a balance in the client’s retainer account. In this case, the attorney would return the amount remaining in the retainer account to the client.
In a personal injury case, as noted above, the attorney may return the amount of the retainer to the client if the attorney succeeds in winning a payment of money damages for the client. In this case, the retainer is more like an advance from the client to cover costs during the lawsuit. The advance is returned in the end if the client wins an award.
Other situations in which an attorney might return a retainer may arise.
What if a Retainer Is Violated?
Retainer agreements can be violated in many ways. The most common way is when an attorney uses retainer funds for their own personal use without the client’s agreement.
Funds that a client pays as a retainer are supposed to be kept in a separate trust account. This is so that they are strictly off-limits to the attorney until the attorney has billed the client legitimately and becomes entitled to take a portion of the funds.
Failing that, the attorney must avoid the personal use of such funds. If the lawyer does not bill the client as required and makes use of the money for their own benefit, this should lead to a dispute between the attorney and the client. If the violation causes the client losses, the lawyer may need to pay for the economic damage to the client.
Do I Need a Lawyer for Help With My Retainer Issue?
Legal disputes may arise regarding attorney retainer fees and agreements. If you want to enter into a retainer agreement, you may want to consult a lawyer about the agreement.
If you are having a dispute with an attorney about an existing retainer agreement, you want to consult a lawyer about the issue. LegalMatch.com can connect you to a contract lawyer who can help in drafting, reviewing, or litigating a retainer fee agreement. Your attorney can provide you with the legal advice you need for your issue and can inform you of the various legal options available for resolving any issue.
