How Retainers Work

Human beings disagree. While many of us can settle those differences informally amongst each other, there are some disputes that require legal representation. From negotiating the terms of a divorce, to preparing for a HIPPA audit of your managed care plan, to drawing up the documents that protect elders’ assets, the expertise and prowess of a seasoned attorney can be the difference between your hoped-for outcome and the unknown.

Sometimes inaccurately equated with a security deposit for legal services, often a retainer is a set dollar amount a lawyer requests to represent you in the event of legal action. Some attorneys base the initial fee on their estimate of how many hours the matter will need to be resolved, others have a minimum retainer to secure their services. There are three major types of retainers (not all of which are allowed in every US state and territory), and knowing which one best matches your case ensures the best representation for the matter at hand.

1. General Retainer

Not considered a deposit to reimburse legal services, this fee is paid to reserve the services of the firm or a specific attorney in that firm. These agreements are most commonly employed by organizations on an Empire scale who anticipate disputes or the need for legal representation from one of many places they do business. They are also helpful to individuals whose work is public, who manage consistent media attention, or those whose work attracts a great deal of conflict.

Typically, because these fees pay for guaranteed representation, clients later pay a separate fee for the legal services needed to settle disputes as they arise.

2. Security Retainer

A security retainer is the one retainer agreement that does function like a downpayment for services. The client deposits a set amount in an account called an interest on lawyer trust account (IOLTA), and the attorney and her firm is not allowed to withdraw the money until they have provided the services you hired them to perform.

Usually, if your case does not require the full retained fee to resolve the dispute, you will be reimbursed the remaining payment, conversely if your initial deposit does not pay for all the hours of work you will be required to pay the remaining fee. This is the kind of detail outlined in the retainer agreement.

3. Advance Payment Retainer

These funds are prepayment for the representation you anticipate needing. An advance payment retainer reserves future legal services from a firm or particular attorney. Unlike the security retainer, the advanced payment retainer does not have to be held in an IOLTA.

The terms of this agreement, or another alternative fee arrangement, will clarify how the funds will be applied to services rendered, and if you are eligible for an alternative fee arrangement, or reimbursement of unused payments.

For guidance on retaining legal representation for your matter, contact us.

Related practices: Healthcare, Managed Care, Litigation, Real Estate, Divorce & Family, Estate Planning


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