When it comes to getting paid, plenty of options are available for lawyers. They can use:
- Hourly rates based on time spent.
- Flat fees that have a fixed cost.
- Contingency fees tied to case outcomes.
- Retainer fees that require upfront payments.
How do you know what’s best for your law firm? It starts with gaining a solid understanding of each legal billing model. In this blog, we’ll provide a comprehensive look at retainer fees—covering the types available, how they work, and the benefits they bring clients and lawyers alike.
What is a retainer fee?
A retainer fee is an upfront payment that a client makes for future legal services. Lawyers calculate these fees by multiplying their hourly rate by the number of hours they expect a matter to take. The client pays the fee before any work is completed and the law firm holds the funds in a dedicated account. As lawyers complete their work, they deduct their fees from the retainer.
What are the types of retainer fees?
There is no one-size-fits-all model for retainer fees. Instead, the payments come in various forms and structures, allowing lawyers to tailor them to the unique needs of their clients and firm. Next, we’ll delve into some of the common types of retainers—starting with a look at the difference between earned and unearned retainer fees.
Earned retainer fee
A lawyer receives earned retainer fees for the services they have provided. These funds are transferred into a law firm’s operating account only after they’ve done the work, which explains why they’re called “earned” fees.
Unearned retainer fee
Unearned retainer fees are upfront payments held in a dedicated retainer account before any legal work begins. Lawyers can’t access the funds until they complete the work—the fee simply acts as a deposit that ensures the availability of funds for future support. Once the lawyer renders the services, they transfer the funds from a client trust account into an attorney’s operating account.
Retainer fee examples
Retainer fees are well-suited to a range of legal matters and client needs. Below, we’ve highlighted a few different examples of legal retainer fees.
- A classic retainer fee, also known as a general retainers, is an upfront payment made to secure legal services. These fees aren’t tied to any hours or services—they only guarantee that the lawyer will be available for legal services when a need arises.
- A security retainer fee is an upfront payment for legal services, where the client owns the funds up until the point the work is completed by the lawyer. Once the legal work is completed, the lawyer can access the money. This is often used when there may be high expenses associated with a legal matter.
- An evergreen retainer fee is an agreement where a client pays a fee into a separate trust account, which a lawyer invoices against once services are provided. The fee is replenished once it hits a predetermined minimum balance. This fee structure is popular among clients who require regular legal support, such as those dealing with family law matters.
