What is a lawyer retainer?
Understanding Legal Retainers: What you need to know
You must have heard someone say to others, “You will be hearing from my lawyer” — well, maybe on TV most of the time, but you surely would have at least read it somewhere.
That phrase usually translates to them having a lawyer “on retainer”; in other words, they (the clients) are paying a lawyer a small amount regularly to have them as backup, ready to assist legally whenever the situation arises.
In general, when it comes to legal matters, hiring a lawyer ensures that you will have your rights, legal necessities, and representation covered and protected, given the chance that you require of them. However, the cost of legal services is not usually that affordable, at least for most people, since many of them do not have the budget necessary to pay. In fact, some studies suggest that as many as half of all U.S. households are unable to afford an attorney.
That is when lawyer retainers come into play, both as a valuable solution to mitigate expenses and to have their rights covered. And, when hiring a lawyer, you may be required to pay for a lawyer’s retainer.
Well, what exactly are Lawyer Retainers?
Overall, a lawyer retainer is a fee paid upfront to secure a lawyer’s services for a specified period or a particular legal matter. It is also part of a professional agreement on two parts and acts as a guarantee of eventual payment.
This ensures that the services are available to represent the client’s needs and advise them as required without having them be obligated to pay the whole fee immediately.
Things to Consider before hiring a Legal Retainer
According to FindLaw, there are some things to ask yourself before taking the leap and hiring a lawyer. For example:
- What will you use the lawyer for? Since most people only need a lawyer once every few years, or perhaps every few decades, having a lawyer on retainer may not be a smart decision, at least financially. You may be wasting money on a necessity you do not actually have.
- Have you checked your insurance policies? Most insurance policies, including auto and homeowner’s insurance, will pay for a lawyer in case you get involved in an accident. In that case, there is also no need to pay for a lawyer in advance as additional insurance against these kinds of lawsuits, as you are already covered.
- Have you checked your employee benefits? Since a lawyer on call, in charge of handling most routine legal matters, may be part of your benefits if you are an employee of a large company or a member of a union, you most likely won’t need to pay for another lawyer on retainer, and this would be another way of wasting money.
What types of Retainers are there?
If you have decided to get a lawyer’s retainer, you will need to know beforehand what types to choose from, depending on your legal and financial needs.
General Retainer
According to Forbes, a general retainer is a specific type of lawyer retainer that is not considered a deposit for legal services or a prepayment of legal services. Instead, when you pay this kind of retainer, you are paying to reserve a lawyer’s or firm’s time.
Basically, it is a fee paid to retain the services of a lawyer (or firm) indefinitely. This allows the lawyer to provide ongoing legal services to the client whenever required, though the client still must pay separately for any legal services they need. Additionally, this retainer guarantees that the lawyer or firm will be there in case you need their assistance.
The client pays the lawyer a set amount on a recurring basis, such as monthly or quarterly.
General retainers are typically not refundable, and lawyers are required to get your written consent if you pay a lawyer retainer, which you cannot get back if you don’t use legal services.
Specific Retainer
As the name suggests, a specific retainer is basically the opposite of a general retainer; while the former is for an unspecified amount of time and in case of whatever the client needs, the latter is paid to secure a lawyer’s services on a particular legal matter.
This type of retainer covers the legal services required for a specific case or transaction. Once the case is resolved or the transaction is completed, the retainer relationship ends.
Security Retainer
A security retainer involves money being placed into an escrow account, also known as an IOLTA (Interest On Lawyer Trust’ Account), to pay for future legal services for those who cannot afford them. This way, the lawyer does not get to keep the money until they actually provide the services that the client is requesting.
Said money earns interest, which is usually sent to a state charitable fund.
The lawyer and the firm must earn the money first.
The goal is to ensure funds are available whenever legal services are required. Additional funds may be deposited after initial fees are paid out, and unused funds may be refunded or kept over time, depending on the representation agreement.
Advance Payment Retainer
An advance payment retainer is a lawyer’s retainer similar to a security retainer, where clients pay money to access specific legal services without requiring a special account. These payments may cover future fees or be a deposit, with additional fees if extra costs are incurred.
However, this type of retainer is not allowed in certain states due to potential difficulties in returning prepaid legal services.
Benefits of Lawyer Retainers
Cost Management: Lawyer retainers provide clients with an anticipated cost structure. By paying a retainer in advance, clients can better plan their legal expenses and avoid sudden financial surprises or struggles.
This allows clients to have a clear understanding of the cost of legal services in advance.
Priority Access: By entering into a retainer agreement, clients gain priority access to their lawyer’s services. This allows them to receive immediate attention for their legal needs. Rather than encountering potential delays in acquiring legal assistance, clients with retainers have peace of mind knowing that their lawyer is readily available when needed.
Expertise and Support: Hiring a lawyer with a retainer ensures that you have access to their expertise and support at any given time. Legal issues can arise at unpredictable moments, and having a retainer in place ensures that you can seek advice or representation immediately.
Guaranteed Payment for Attorneys: As LawPay states, an attorney retainer offers guaranteed payment to lawyers, similar to insurance, covering part of their time spent on a case and ensuring compensation for their services rendered.
Protection for Both Parties: According to LawPay, a lawyer retainer helps establish a feeling of trust between lawyers and clients, and by holding funds until they have been earned, upholding obligations, and protecting each party in case of conflict, it’s ensured that both parties are further protected.
Is getting a lawyer retainer worth it?
It usually depends on your circumstances, as the questions that you should ask yourself beforehand have demonstrated.
Bear in mind that a retainer is not money that you pay a lawyer upfront to cover fees that are yet to be earned, but a fee that is paid monthly or annually to get the right to access legal services in case you need them.
As LawPay has expressed before, a legal retainer functions as a guarantee that the lawyer will be available to work for the client if the need arises, providing peace of mind for the client that the eventually required representation will be available. As such, and according to the Forbes FAQ, a lawyer retainer may be worth paying depending on your situation. If you pay a general retainer, you will be simply paying to reserve a firm’s time in the future and will then incur separate fees for any services.
On the other hand, by getting a security retainer, you are pre-paying for services, but your lawyer will not receive the money until they perform legal services to earn it.
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