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Retainer

From Canadian Legal FAQs

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 the lawyer to secure the services of the lawyer and to cover legal fees and other future expenses of the 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 both provide the retainer fee and sign the retainer agreement.

What is usually included in a retainer agreement?

A retainer agreement is the contract that you have with your lawyer that defines and sets out the relationship between you and your lawyer. Usually, a retainer agreement is written and includes terms about:

  • the scope of the 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 (for example, the cost of photocopying and faxes);
  • disbursements (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;
  • what will happen to the retainer fee if you or the lawyer terminates the relationship; and
  • interest charged to you if you do not pay your bill on time.


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 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 services.

I went to see a lawyer for a half hour consultation, but I did not pay her any money. Is she now my lawyer (have I “retained” her)?

No, probably not. Most lawyers do not take you on as a client until you have both paid a retainer fee and signed a retainer agreement. As a result, the lawyer will not “act” for you (not even receiving or reviewing documents) until these two steps are completed.

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 also vary depending on the type of legal problem that you are having. For example, if the lawyer thinks that a client’s matter can be dealt with quickly and easily, the lawyer may charge less of a retainer fee. Some lawyers will also adjust their retainer fee based on the client’s circumstances, so if you cannot afford the retainer fee that the lawyer wants to charge you, you can ask the lawyer if it can be lowered.

How is a retainer fee used by the lawyer?

A retainer fee is kept in the lawyer’s general trust account until the lawyer issues a bill for services rendered. The client usually does not 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 from the trust account into the general account of the firm. If you do not agree with the bill, you can request that the bill be “taxed”. This means that you would ask a taxation officer at the courthouse to review the bill to ensure that the bill is reasonable.


You mean my money does not go into my own trust account, in my name? Why not?

Not usually, no. Sometimes for certain kinds of transactions, or if a large amount of money is expected to sit in the bank for a long time, the lawyer will open up a separate trust account in your name. in general however, the money is not there long enough to warrant the cost of setting up the trust account (in other words: the interest you would earn would be less than the costs involved).

Will I only have to pay the retainer fee one time?

You may have to pay a retainer fee multiple times. How many times you have to pay this lump-sum fee to the lawyer will depend on many factors, including how much work must be done on your file, and how complex that work is. Usually a lawyer will want enough money in the trust account to cover the next bill. In other words, when you have been billed and the retainer fee is nearing zero, the lawyer will ask you to top up the retainer amount.


Do I have to have a retainer agreement?

Usually a lawyer will require that a new client sign a retainer agreement before the lawyer will act for the client. Retainer agreements are generally required because they protect both you and your 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 situation is usually limited to when a lawyer has a long-standing relationship with the client.


I can’t afford to pay a retainer fee. Is there anything I can do?

Sometimes a lawyer will agree to a smaller retainer fee. You should talk to your lawyer about the amount that you can afford to pay, or talk about alternative payment options. Some firms will allow the clients to make monthly payments instead of a large lump-sum amount. You may also want to investigate alternative ways of solving the problem instead of hiring a lawyer. Mediation is a popular dispute resolution process that may solve the issue and be less expensive. You can also look into court services that are available in your jurisdiction. There may be community organizations that can assist you, or you can apply for Legal Aid coverage. There is also something called a “contingency fee agreement” that may be an option for you. This is discussed below.


Does a lawyer have to charge a retainer fee?

A lawyer does not have to charge a retainer fee, but most lawyers will. Your lawyer is providing you with a service, and the only way that a lawyer can ensure that s/he 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. Contingency fees are discussed below


I’ve heard that a lawyer can be paid in other ways than by a retainer. Is that true?

Yes. The other common way that a lawyer can be paid is by a contingency fee agreement. A contingency fee agreement means that the lawyer agrees to represent you, and you agree to pay your lawyer from the money you receive through judgment or settlement. Usually, the lawyer will receive a percentage of the total judgment/settlement. The percentage will usually increase depending on how far the process goes before settlement is reached (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).

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

You can ask your lawyer for a trust account statement.


If the lawyer is making interest on my money, shouldn’t I get that interest back?

Generally, no. In Alberta, all of the interest earned on general trust accounts (where retainer fees are deposited) goes to the Alberta Law Foundation (ALF). ALF, in turn, grants these funds to community organizations to provide projects for the public good (for example, legal aid). The Legal Profession Act requires that the interest be transferred to the ALF. For more information, see ALF’s website. If, however, you have a separate interest bearing trust account with your lawyer, then you do receive the interest on that account. To find out if you have a separate interest bearing account ask your lawyer.


Will I get my retainer fee back from the lawyer if the lawyer does not spend the money?

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

I fired my lawyer and he is refusing to give me my retainer fee 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 been issued. If the lawyer does not provide these to you, then you can contact the Law Society of Alberta and speak to someone in the Complaints Department. For more information, see the Law Society of Alberta’s webpage. If you do not agree with the amount of money that the 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 the bill to ensure that the bill is reasonable.

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