What Is A Retainer, Anyway?
You may have heard the term "retainer" used different ways. That's because it can mean different things. Actually, it typically means one of two things. I'll call these two things or types of retainers the retainer in trust and the true retainer (otherwise known as the "classic retainer").
Retainer in Trust
A retainer in trust is a sum of money that a lawyer requires from the client prior to expending time on a case or legal matter. It is calculated in whatever way the attorney or the law firm has determined is an accurate measure to ensure that there is always money to draw from for work done for a client. Retainers are held in the firm's trust account at a bank or other financial institution for the benefit of the client until it is earned by the attorney. Once it is earned, it is transferred to the law firm's operating account and is no longer held in the client's name. The funds in a firm's trust account should never ever be commingled with funds from the operating account of the firm. Additionally, trust funds cannot be used for purposes other than for what they are intended without permission from the client. Many firms require that a client replenish his retainer account when it declines to a certain level, to ensure that there are always funds in trust to pay billed fees and costs as they come due. Clients who do not pay retainers as agreed can find that the services of their attorney are discontinued temporarily or permanently, depending on the situation.
True or Classic Retainer
A true retainer is a sum of money that is paid to an attorney to "reserve" that attorney's services in the event they are needed. It ensures that attorney or that firm will not do legal work for a client that has conflicting interests of the person who paid the retainer. It is separate from and on top of any hourly or fixed fees the attorney will bill for doing the actual legal work. The following excerpt was taken from the California Bar web site, and is a good explanation in my opinion:
"A true retainer is earned upon receipt (and is therefore non-refundable) because it takes the attorney out of the marketplace and precludes him or her from undertaking other legal work (e.g., work that may be in conflict with that client). It also requires that the attorney generally be available for consultation and legal services to the client. Sometimes a true retainer will take the form of a single payment to guarantee the attorney's future availability for a specified period of time and other times as payments made on a recurring basis, such as a monthly retainer, to assure the attorney's availability to represent the client for that month. Sometimes this is referred to as having the attorney 'on retainer.'" [http://www.calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=11337&id=6493]
The Florida Bar explains,
"In essence, a "true retainer" is akin to an option contract: the client pays the attorney a fee for the right to employ the attorney. The "true retainer" is therefore earned upon receipt and should not be deposited in the trust account."
Chances are these days, when asked to give your attorney a retainer, you are being asked for a retainer in trust. It used to be that true retainers were more popular, but with the larger pool of talented attorneys and the more comprehensive codes of ethics of each state requiring "client loyalty", it's not quite as important to reserve the talents of one particular lawyer for your potential future legal work as it once was.
More by this Author
I have read many times that the number one complaint filed with the Florida Bar concerns attorneys not returning the phone calls of their clients. I assume if this is the number one complaint filed with the Bar, it...