Retainer

What is a retainer?

Generally, a retainer refers to two different things depending on how the word is used. A retainer can be:

A lump sum of money paid to a lawyer to secure his or her services and to cover legal fees and other future expenses of a legal action (referred to as a “retainer fee”) or;

A written agreement (contract) between the lawyer and client that is the basis for the solicitor-client relationship (referred to as a “retainer agreement”).

Often, when you hire a lawyer, you will be asked to provide a retainer fee and sign a retainer agreement.

Last updated: February 2016

What is usually included in a retainer agreement?

A retainer agreement is a contract that you have with your lawyer that defines and sets out your relationship. A retainer agreement is in writing and includes terms such as:

  • the scope of your lawyer’s authority to act. Usually, a lawyer will have full authority to act for a client, subject to the client’s instructions on important steps, like making a court application or accepting a settlement offer;
  • the lawyer’s hourly fee;
  • payment of charges such as photocopying and delivery expenses;
  • disbursement; this means different kinds of fees such as court filing fees or fees for an expert report;
  • charges for the services of legal assistants or other employees of the lawyer;
  • what will happen to the retainer fee if you or your lawyer terminates the relationship; and
  • interest charged to you if you do not pay your bill on time.

Last updated: February 2016

What is a retainer fee?

A retainer fee is a lump sum of money that a lawyer requires a client to pay before the lawyer will begin to act on behalf of a client. The amount of the retainer fee varies from lawyer to lawyer. The retainer fee is kept in the lawyer’s trust account, and only paid to the lawyer after the client has been billed for the lawyer’s services.

Last updated: February 2016

I went to see a lawyer for a half-hour consultation but I didn’t pay her any money.   Is she now my lawyer; i.e. have I retained her?

No. There is a service in Alberta, and in most provinces, called the Lawyer Referral Service. Under this program, you will be given the names of three lawyers who practice in the field that concerns you. You may book appointments for a one half-hour consultation with each of these lawyers free of charge. Perhaps this is the arrangement that you experienced.   There is no obligation on your part or the part of the lawyer to continue. However, if you do decide to use one of these lawyers, you will probably be asked to pay a retainer and sign a retainer agreement before your chosen lawyer takes on your file. In most cases, you will not have retained your lawyer until these two steps are completed.

Last updated: February 2016

Do I have to have a retainer agreement?

Usually, a lawyer will require a new client to sign a retainer agreement before the lawyer will act for the client. Retainer agreements are usually required because they protect both you and the lawyer by setting out the rules of the relationship and how you will be billed. Sometimes, lawyers do not require a client to sign a retainer agreement, but this is usually when the lawyer has a long-standing relationship with the client.

Last updated: February 2016

Does a lawyer have to charge a retainer fee?

A lawyer doesn’t have to charge a retainer fee but most lawyers will. Your lawyer is providing you with a service, and the only way the lawyer can be sure that he or she will be paid is to require their clients to pay a lump sum amount in advance. Sometimes, a lawyer will work on a contingency fee basis, instead of requiring a retainer. We will discuss contingency fees in Question 14.

Last updated: February 2016

How much does a lawyer charge for a retainer?

The amount that a lawyer charges for a retainer fee varies from lawyer to lawyer, and will vary depending on the type of legal problem you are having and the expertise of the lawyer you hire. For example, if a lawyer thinks that a client’s matter can be dealt with quickly and easily, the lawyer may charge less of a retainer fee. A complicated or protracted matter may require a larger retainer fee. Some lawyers will also adjust their retainer fee based on the client’s circumstances, so if you cannot afford the retainer fee the lawyer requests, you can ask to negotiate the amount. You may also be able to pay in installments.

Last updated: February 2016

How is a retainer fee used by a lawyer?

A retainer fee is kept in the lawyer’s general trust account until the lawyer issues a bill for services rendered. The client does not usually have the opportunity to approve the bill before the money is paid out of the trust account. As soon as the bill is issued, then the law firm will pay the amount of money billed out of the trust account and into the general account of the law firm. If you do not agree with the bill, you can discuss it with your lawyer. If you cannot resolve the problem, you may ask for the bill to be “taxed”. This means that you can ask a person at the courthouse known as a taxation officer to review the bill to determine if it is reasonable.

Last updated: February 2016

So, my money does not go into a trust account in my name? Why not?

Not usually, no. Sometimes, for certain kinds of transactions, or if a very large sum of money is expected to sit in the bank for a long time (for example, to close the purchase of a large business), a lawyer will open a separate trust account in your name. In general, however, money is not usually deposited long enough to warrant the cost of setting up a separate trust account. In other words, the interest you would earn on the account would not offset the cost of setting it up.

Last updated: February 2016

If my lawyer’s trust account is earning interest on my money, shouldn’t I receive that interest?

Your lawyer is not keeping the interest on your retainer fee. In Alberta, the Legal Profession Act requires that the interest earned on lawyers’ general trust accounts, which is where retainer fees are deposited, is transferred to the Alberta Law Foundation (ALF). ALF, in turn, uses these funds to give grants to community organizations to provide projects for the public good. An example would be Legal Aid. For more information about this, you can go to the website for the Alberta Law Foundation. If, however, you have a separate interest- bearing trust account with your lawyer, then you do receive the interest on that account. Ask your lawyer if you have a separate interest-bearing account.

Last updated: February 2016

Will I only have to pay a retainer one time?

You may have to pay a retainer multiple times. This will depend on many factors, such as how much work must be done on your file, how long it takes, and how complex the matter is. Usually your lawyer will want enough money in the trust account to cover your next bill. In other words, when you have been billed for work completed and the retainer fee is nearing zero, your lawyer will ask you to top up the retainer amount.

Last updated: February 2016

How can I find out how much money is left of my retainer fee?

You can ask your lawyer at any time for a trust account statement. Also, when you receive a bill from your lawyer, it may indicate how much of your retainer is left.

Last updated: February 2016

Will I get my retainer fee back from my lawyer if he or she doesn’t spend all of the money?

Yes. If there is no money owing to the lawyer for services provided to you, then the remaining retainer fee will be returned to you.

Last updated: February 2016

I have heard that lawyers can be paid in other ways than by a retainer. Is that true?

Yes. The other common way a lawyer can be paid is by a “contingency fee agreement”. A contingency fee agreement means that your lawyer agrees to represent you, and you agree to pay your lawyer from the money you receive from a judgment or a settlement. Usually, your lawyer will take a percentage of the total judgment or settlement. This is quite common in personal injury cases. The percentage your lawyer receives will usually increase depending on how far the process goes before settlement. Basically the more time and work the lawyer puts in, the bigger the percentage the lawyer will collect at the end. There are numerous and specific rules about contingency fee agreements in Alberta. Some of these rules can be found in the Alberta Rules of Court, Section 10, available online at the Alberta Queen’s Printer website. Lawyers are also bound by very specific guidelines set out in their Code of Conduct.

Last updated: February 2016

Are there any other arrangements I can make with my lawyer about payment?

Yes, there is something called a “Limited Scope Retainer”. A limited scope retainer means an agreement, which must be in writing, for the provision of legal services for part, but not all, of your legal matter. Some matters may be too complex for your lawyer to accept a limited scope retainer. The scope of the service to be provided must be discussed with you and you must acknowledge and understand the risks and limitations of the limited scope retainer. Your lawyer should identify the tasks for which you and the lawyer are responsible. You will be advised about the related legal issues which fall outside of the scope of the limited scope retainer and the consequences of proceeding in this way. An example might be that you would ask your lawyer to draft and file a Statement of Claim for you, but then you would take over the handling of your own case and represent yourself in court.

Last updated: February 2016

I fired my lawyer and now he is refusing to give me my retainer back. What can I do?

You can ask your lawyer, in writing, to provide you with a trust account statement and copies of any bills that have bee issued. If your lawyer does not provide these to you then you can contact the Law Society of Alberta and speak to someone about your complaint. For more information, see the website for the Law Society. If you do not agree with the amount that your lawyer has billed you, then you can request that your bill be “taxed”. This means that you would ask a taxation officer at the courthouse to review your bill to ensure that it is reasonable. The taxation officer has the authority to lower a bill if he or she thinks it is too high.

Last updated: February 2016

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