Defining a Legal Retainer Agreement
A legal retainer agreement is made between a lawyer and a client. The purpose is to list the hourly rate charged by the attorney, as well as the type of expenses that will be incurred while working on the case. It differs from a typical billable hours agreement because the legal retainer agreement will have a dollar amount listed that will need to be paid in full before any work takes place. The funds are held in a special account until an amount is required for specific services. Once the retainer is used up, you receive a request for more , or a bill must be generated for the legal fees. Any money that is retained until the legal services have been rendered has to be placed in a trust account. The money can only be taken out when there are invoices sent out that have legal fees attached. Any overage that remains is then returned to the client after the final bill is sent. This is beneficial because the attorney does not have direct access to the funds until work has been completed. Before a lawyer will take your case, both the client and attorney have to sign the legal retainer agreement. A copy is then retained by both parties in case disputes arise later on down the road.
The Components of a Retainer Agreement Template
A legal retainer agreement template serves as a framework within which you can outline the details of a client relationship. The scope of work to be provided, payment terms, and confidentiality clauses should be left as a general guide, since the particulars of each situation will likely differ considerably.
Scope of Work
The scope of work should be a broad description of what types of work you will be completing for a given client. For example, if the agreement is being offered to an existing client, you can simply state that all future work shall be completed under this agreement unless otherwise agreed upon by both parties in writing. If the agreement is for new clients, you would need to be more specific as to your services.
Payment Terms
Depending on how you handle your billable hours, payment terms can be quite simple or somewhat complex. A retainer agreement template should reflect these variations so that you can easily modify the template to suit your needs for each client. How often you bill them, what the rates are, any penalties for late payment and how that penalty is handled should all be considered. This is also the place to list your billable rate for other services, such as preparation of court documents, filing motions, or performing depositions. Finally, any expenses related to processing your payment should be listed here as well, such as travel costs charged on top of your billable hours, or percentage taken if credit card processing is necessary.
Confidentiality and Terms of Termination
It is advisable to include a confidentiality clause, as well as something covering the terms of termination. The former may be addressed by your state or federal bar association or another authority, but the latter is generally left up to you to spell out. If your client has a higher need for confidentiality, additional language may be inserted to cover this aspect of the relationship between you two, but otherwise you can rely on your governing organization to ensure that you maintain confidentiality and avoid discussing privileged communications.
Duration of Agreement
Although language may be included to ensure clients have to renew their retainer agreement every so often, many lawyers prefer to keep their retainer agreement templates simple and straightforward so that they do not have to revisit the issue very often. If you expect your relationship with a client to be fairly short lived and you are willing to discuss further retainer agreements at the end of the relationship, you can include a short period of time in your agreement, such as 30 days with a "tacit agreement" that it will continue unless specifically terminated by either party.
Different Types of Retainer Agreements
Typically, a retainer agreement contains a clear and precise statement of the basic legal services to be performed by the lawyer under the agreement. Although there are legal retainer agreements based on various billing methods, this blog post will focus primarily on the most commonly used types of retainer agreements used in the United States.
Hourly Retainer Agreements
An hourly retainer will clearly define the scope of legal services that will be performed. The client will then pay an hourly rate for the services performed. Although the retainer agreement might require that monthly billing statements be submitted to the client for payment, the agreement will not establish a specific time frame for the performance of those specific legal services. These types of retainer agreements are very common in the U.S. and are sometimes referred to as "general retainer" agreements.
Flat Fee Retainer Agreements
Flat fee retainer agreements bind the lawyer to provide specific legal services at a flat fee. These types of retainer agreements are usually entered into where no immediate legal action is anticipated. The contract usually includes a retainer agreement by which the client agrees to deposit a fixed amount of money to the lawyer’s trust account. Through the intermediary of the retainer agreement, the amount deposited by the client will be held in trust by the lawyer while sufficient funds remain available to cover the cost of services rendered. If the client seeks additional legal services, a second flat fee retainer agreement will be entered into between the client and the lawyer, and funds will be withdrawn from the lawyer’s trust account to offset the new amount agreed upon by the client and the lawyer.
Contingency Fee Retainer Agreements
Contingency retainer fee agreements made in real estate or civil litigation transactions are probably the most common type of retainer agreements that are entered into. Through this type of retainer agreement, the lawyer agrees to represent the client for a specific purpose at a specific fee. The retainer agreement will clearly specify what that purpose is. If the specified legal services are performed and the contract is honored by the lawyer, the agreed upon fees will be paid at the conclusion of the specified legal work.
How to Modify a Retainer Agreement Template
Customizing a retainer agreement template is a straightforward process, but it requires careful attention to detail to ensure that the document is legally valid and meets the specific needs of the attorney’s practice.
First, it’s important for legal professionals to understand the specific services that will be rendered under the terms of the arrangement. A retainer agreement should clearly outline the services to be rendered, the scope of the engagement, and any limitations on the services provided. Any services not specifically included in the retainer agreement should be billed separately.
Next, attorneys should determine their hourly billing rate and ensure that the retainer agreement clearly sets forth the rates for various services rendered. This includes specifying different rates for attorneys at different levels, as well as determining the billing rate for paralegal support.
Attorneys should also be mindful of any specific provisions set forth in their state bar rules or ethics opinions regarding the use of retainer agreements. This may include requirements for how client funds are held in trust, as well as any specific limitations on the use of retainer agreements in certain practice areas.
Finally, it’s important to clearly explain the terms under which the retainer may be replenished, and to set forth procedures for billing and invoicing. This may include specifying whether invoices will be submitted on a monthly basis or at the conclusion of the engagement, as well as setting forth any procedures for resolving disputes regarding billing or fees.
By carefully customizing a retainer agreement to fit the specific needs of their practice, legal professionals can protect their clients and themselves from potential misunderstandings or disputes.
Legal Considerations and Enforcement
Among seasoned attorneys, the importance of a legal retainer agreement is understood, and the implications of a sound agreement are simply accepted as standard practice. In many jurisdictions, a fee agreement is no longer just a best practice, but rather a best practice enshrined in law. In New York, for instance, there is a specific requirement for written retainer agreements as defined by the rules of professional conduct. One court has held that the fee arrangement "must clearly set forth the terms of the representation" (In re Cohen, 96 N.Y.2d 395, 404), and that "any retainer agreement must… inform [the client] how the retainer will be charged" (Sion v Sion, 307 A.D.2d 213, 214). The rule is implemented to protect clients from unreasonable bills. However, it is clear that these rules were implemented to protect attorneys as well. When clients fail to fulfill the terms of the written agreement, attorneys can invoke the full powers of the document. Clients are obligated to pay all amounts due to an attorney, and must understand that attorneys have a right to collect fees in their entirety. (See Gonzalez v. Parish, 47 D.P.R. , p. 385). Attorneys must abide by the payment schedule set forth in the original agreement, and lawful enforcement includes stopping work if clients refuse to pay. (See Baruchson v. Baruchson, 182 A.D.2d 563, 564; Sion v. Sion, supra, at 215). If an attorney believes that a retainer agreement has been breached, an attorney may. Retaining an attorney is not free. (See Rotwein v. Zumpano, 72 A.D.2d 667), and attorneys have the right to conduct a full investigation of a breach when warranted.
Client Obligations and Liabilities Clients are obligated to pay all amounts due under a contract. Clients have 30 days from the time of termination to secure all file materials. If they fail to do so, attorneys have the right to terminate the collection of such materials. (See 22 NYCRR 1400.3; Are v. Are, 158 A.D.2d 105) Attorneys can accumulate fees based on contracts, collection of funds, and services rendered. (See Alpert Weinstein LLP v. Epstein, 76 A.D.3d 51, 54-55); (See People ex rel. witherspoon v. Geraci, 74 A.D.2d 753; Cavalieri v. Schreiber, 43 A.D.3d 1152, 1153-1154). Retainer agreements are enforced in court and must be followed unless the contract is proven to be unenforceable.
Best Practices for Retainer Agreements
Effectively using a retainer agreement requires following a few best practices. First among them is to set out the specific scope of the work to be completed in the retainer agreement. A clearly defined scope of work helps prevent misunderstandings between you and your client if they subsequently try to argue that the work they assumed you were doing is not covered by the agreement. Another best practice is to provide your client with a copy of the agreement as soon as it’s signed and have a system in place to keep track of any revisions or amendments made to it. Clients should also be informed of the status of funds held in their trust account at regular intervals. This can help you maintain a positive experience for the client and limit the chances that they will be surprised by a bill. If most of a retainer fee remains after a case has settled, then this is an opportunity for you to explain what the remaining funds will be used for (if anything) and guide the client on how best to handle the remaining balance. After each case, review your retainer agreements. Are there proposed amendments that can be made to make your retainer agreements more effective? Can you switch to an alternative type of retainer agreement? Is there any language that should be changed or added? Taking a few moments to periodically review your retainer agreements can help you stay ahead in the face of changing laws or industry standards and can help provide a more seamless experience for clients.
Where to Locate Trusted Legal Retainer Agreement Templates
To find reliable and legally sound retainer agreement templates, law professionals can turn to a handful of resources. One of the most accessible is online legal template providers, which offer a wide range of professionally-reviewed templates that can be customized to suit specific needs. These services often provide legally-compliant templates in multiple formats, including Microsoft Word and PDF.
Another option for obtaining reliable retainer agreement templates is to consult with a legal expert, such as an attorney. An attorney can help draft a retainer agreement template or provide guidance on customizing an existing template to ensure it meets the specific legal needs of a law practice.
It is also possible to find some free retainer agreement templates online , but there are some drawbacks to this solution. Free legal template providers may not guarantee that their templates are legally sound. Any practice that uses a free template risks violating client confidentiality, the ethical rules that govern legal practice in their jurisdiction and even facing a lawsuit.
When searching for a reliable retainer agreement template, it is important to consider whether the model has been fully vetted by an experienced attorney, whether the content appears comprehensive and whether it has been updated recently. Otherwise, a simple mistake could cause a practice to lose thousands of dollars or end up with a lawsuit.