Having a lawyer on retainer can come in handy in many business scenarios. Now, most of us will never need to have a lawyer on retainer for the kinds of issues or the amount money for issues you hear about on the news. But if you are running your own business, having a lawyer on retainer can save you a lot of frustration and headaches. You always want an experienced attorney or law firm to have your back if the time comes when they are needed so you aren’t scrambling for legal advice.
Before you agree to a retainer setup with the first lawyer you find, be sure you consider these 8 points for hiring attorneys that you can depend on.
1. Know What a Retainer Is
Before you enter into a retainer agreement with a lawyer, you should know the type of agreement you are getting into.
A retainer is a fee that you pay the attorney in advance. This advance fee is for services that you will receive in the future. That way you can focus on your business and not burn out trying to handle legal matters too.
You could agree to pay one large payment. Or you could agree to make monthly payments for estimated work.
Usually, the attorney will want you to agree to an amount that will cover the anticipated work.
2. Know What Is Included
There is no standard retainer fee agreement. This means you will need to carefully read the agreement before you sign.
There are a few common features though. We will focus on those for the purpose of this review.
Earned When Paid
If you see this statement, then you should know that your money is non-refundable. This saying means that your lawyer will have earned their payment at the time of payment and not when they render the services.
Defined Billing Rates
These are the rates of the employees at the law firm that will work on your case. This could include the attorney, the paralegal, and staff.
As people work on your legal needs, their hours are tracked. Then their rates get charged against your retainer.
Confirm with the lawyer who exactly will work on your case and what their rates are. Then if there are any staffing changes, you need to be informed of these changes and any potential rate changes.
Additional Costs
It would be nice if everything was included in your retainer. This isn’t the case though. Items like court fees, travel expenses, and deposition costs do not get charged to your retainer.
Knowing these costs will help you budget for the true and total cost of representation beyond that of the retainer.
Billing Terms
You will want to find out how often you can expect a bill. Most law firms send out monthly statements and invoices.
Each bill you receive should state what work was completed the previous month. It is important to note that many of these invoices are due upon receipt.
When You Don’t Pay
No one wants to think about what happens when the contract goes wrong. But you need to check this part of the agreement.
Will a service fee pile onto your total amount owed? Or maybe the attorney will add interest to the overdue balance.
Finally, you may lose access to your documents by the attorney putting a lien on your case-related documents. This prevents you from walking from one attorney and hiring another without paying the first.
3. Confirm How the Attorney Handles Payment
Your money must go into a special trust account for your retainer. Lawyers must do this not only because of ethics, but also the law.
The attorney then can transfer funds into their business account. These transfers can only happen after the attorney performs the work required.
Do not agree to work with an attorney who does not practice this sort of separation of funds.
4. Monitor Your Bills
It may be tempting to pay your retainer and think you are all good now. But it is up to you to ensure that you actually receive the services claimed to warrant transfer of the retainer money to the lawyer.
Let’s say you hire an elder abuse attorney to represent you in a claim against a nursing home. You can expect to receive an update every month that outlines the actions taken such as writing a letter, contacting the nursing home’s representation, or submitting documents to the court.
This statement should have line items detailing the hours worked and the resources used. It should also show a total that was billed against your retainer.
If you don’t receive these updates, you can ask for one.
5. What Happens When Money Runs Out
Look in the agreement for the terms that outline what happens when the retainer fee runs out. Do you have to pay another retainer? Or will the attorney begin to bill you monthly?
Either one of these can happen. But before you get to this point, a quality attorney will bring to your attention that your retainer is about to run out.
This is an opportunity for you to sit down with the attorney and discuss the status of your case.
6. Get It in Writing
Your attorney should already know this. After all, isn’t this the most common advice lawyers give? Unfortunately, it is still common for clients and attorneys to agree to a retainer orally.
This not only violates ethical rules the lawyer must follow, but it also leads to a “he said, she said” situation. Without anything in writing, you risk suddenly having no lawyer and no recourse.
7. Define the Expected Cost
Do not simply hand over your hard earned money and not know what you are paying for. Ask the attorney to estimate the expected cost of the intended work. Have them define the scope of their representation.
Understand that this is just an estimation. But you have a right to know if your representation will cost $2,000 or $10,000.
8. Agree on Communication
One of the most common complaints and cause of conflict between lawyers and their clients is a lack of communication. So as a part of your agreement, decide how you and the lawyer will communicate.
If you prefer all communication be done through phone calls, then put this in the agreement. If reaching you by email is more effective, then put this in there. That way everyone is on the same page about how future case related communication will happen.
Hire Your Lawyer on Retainer
Before you decide to hire a lawyer on retainer, you need to know what you are going to get for your money. Come to an agreement with your attorney about all of the different elements we discussed here.
Then put into writing whatever you agree to with your retained attorney. This way there is no dispute later on when you say one thing and your lawyer says another. Overall hiring a lawyer on retainer is a smart option for additional legal and financial security.
Retaining an attorney or law firm can make the difference between your business not surviving or it thriving when a serious legal situation arises. Unfortunately most successful entrepreneurs or business owners deal with at least one legal case because success often invites critics and enemies.
