What is a retainer agreement?
Maybe you’ve heard about people who hire lawyers on retainer. People who operate small businesses or are self-employed often pay attorneys a little fee to ensure that they are accessible in times of legal necessity. A lawyer can be retained in that manner.
Businesses that require frequent legal work but cannot afford to employ an attorney full-time can benefit from a retainer agreement. If your business is subject to frequent audits or is required to submit regulatory compliance paperwork on a quarterly basis, you may want to consider keeping an attorney on retainer to guarantee accuracy.
You can choose from a variety of retainers. Having a lawyer on speed dial isn’t necessary for everyone. Keep reading to find out when you may require the services of an attorney, how much a retainer is, and what constitutes a retainer fee.
Various Forms of Retainer Fees
In order to retain legal representation, a client must pay a retainer. The reasons you retain legal representation will impact the specifics of the fee agreement and the amount you pay.
Any kind of long-term agreement is considered a general retainer. If you require legal advice or representation, you can hire an attorney and pay for their services in advance. This form of retainer is discouraged by the American Bar Association (ABA) since it involves paying the attorney for services that have not yet been rendered.
For one particular legal matter, a client may pay a flat charge known as a special retainer. According to the most recent guidance provided by the American Bar Association (ABA), any flat fee arrangement must return any money that wasn’t used at the conclusion of the matter in question.
When you initially retain legal representation for your case, an advance payment or retaining fee functions similarly to a down payment. It is the attorney’s responsibility to deposit this sum of money into the trust fund of the client and then pull money out of that fund until it is empty. After that, they’ll charge the customer their usual hourly rate.
Recently, the American Bar Association (ABA) released an ethics opinion known as Formal Opinion 505, which serves to warn both clients and lawyers that advance payments cannot be nonrefundable. According to the decision, a general retainer is payment for the attorney’s guarantee of availability, rather than an advance deposit towards future legal services. Simply put, it’s a way for the client to pay the attorney to set aside time for them. It doesn’t represent a down payment on any legal services.
Things to Think About Prior to Engaging a Retainer Attorney
The majority of people and small companies do not require the services of an attorney on retainer. If your company is subject to frequent audits or reviews to ensure compliance with regulations, the expense of periodic attorney services will likely be lower than monthly retainer rates.
However, a solid attorney-client relationship is crucial if you want weekly legal guidance from a lawyer and need to evaluate contracts or real estate transactions on a frequent basis. Employing a retainer could prove to be a wise decision for your company in these circumstances.
Think about this:
For what purposes will you retain an attorney? A lawyer is usually only necessary every few years for the average person. This means that hiring a lawyer on retainer might not be the best financial move for you.
Take a look at your insurance plans. If you are ever in an accident, your insurance company should cover the cost of legal representation. This includes both car and house policies. If that’s the case, hiring a lawyer isn’t necessary to protect yourself from these claims.
Take a look at the perks that your employer provides. A lawyer-on-call service can be a perk for union members and employees of big companies. Wills, real estate transfers, and some types of litigation are among the common legal issues that these lawyers can manage. It is usually not financially prudent to pay a separate lawyer on retainer when one is already available through one’s employment.
Keep in mind that the words “retainer” and “retainer agreement” are not the same thing as “having a lawyer on retainer.” Rather, “retaining” an attorney refers to the act of hiring them, and “the retainer” refers to the sum of money paid to the lawyer. The document that an individual signs when they engage an attorney is known as the retainer agreement.
What to Expect From Your Retainer Agreement When You Hire a Lawyer
It is common practice to pay a fixed fee in advance when hiring a lawyer for legal representation. While some may refer to it as a retainer, the most accurate term is an advance. Following the initial consultation, the attorney will deposit the money into a client trust account and subtract the total amount due for legal services and any applicable court costs. As soon as the funds run out, they will charge you their regular rate.
The following are some of the billing details that should be included in your legal representation agreement:
- How much the lawyer charges each hour
- Charges for filing and court expenses
- Time spent by associates and paralegals, if charged independently
- Number of hours expected to be devoted to the case
- Extra expenses like the cost of copies, mailing, electronic filing, and so on.
An upfront payment may still be necessary for matters that are handled on a contingency fee basis, including personal injury lawsuits. The attorney may send a bill to the client for expenses and fees or take them out of the settlement amount, depending on the fee arrangement. The contingency fee agreement is the place to spell out all of these details.
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