Why do Lawyers Require a Retainer?
Once an attorney has undertaken representation of you in a legal matter, certain ethical obligations attach. Where an attorney is registered as counsel of record in an ongoing court case, for example, an attorney cannot simply stop working. They must have a Substitution of Attorney form signed by the client and judge or, in some cases, seek special permission to withdraw from representation from the judge. That process can require pleadings, hearings, etc. which can take a month or more to accomplish. Even when an attorney does not represent you in court, however, your client agreement sets out a scope of representation and a hired attorney will have an obligation to ensure that your interests are not harmed even if that scope cannot be fulfilled. Sometimes clients part ways with counsel in a hostile manner (the client stops responding to the attorney, the client wants to fire the attorney, etc.). Sometimes tragedies occur – a client death or incapacity, for example. In any of those situations, there is a strong likelihood that additional work will be needed to ethically wrap up the representation. Because of this, most legal malpractice carriers require or recommend that lawyers collect a retainer. Think of it like insurance, or when a hotel puts a hold charge on your account when you check in.
Retainers are not additional fees. Instead, your retainer will be placed into a secure client trust account. When your invoice is issued each month, it will be paid out of the retainer. You will be asked to replenish the retainer. At the conclusion of representation, all unearned fees in the client trust account will be returned to you.
Here is an example:
January 1: Initial consultation with attorney, quoted $1600/month with $5,000 retainer.
January 2: Decide to hire an attorney, pay $5,000 retainer. Retainer placed in the trust account.
February 2: The attorney performs work for you.
February 2: Invoice prepared for $1600 monthly fee plus $5 postage expense. The invoice of $1,605 was deducted from your trust account. You receive an Invoice showing a deduction. Trust replenishment invoice was sent to you asking you to send in $1,605 to replenish your trust account back to $5,000
This repeats monthly until the matter concludes, with expenses varying as incurred (if at all)
March 15: The matter has concluded. Final Invoices issued/deducted from the trust account. Any balance of funds left in the trust account is returned to you.