Retainer Agreements
by Wes Cowell, updated 13 February 2016 -- suggest a correction
llinois law requires written retainer agreements when lawyers represent clients in matrimonial and family law matters. If you're concerned about some of the price estimates you've gotten or the proposals you've seen, call my office for help. We offer:
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hourly rate services,
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flat rate representation,
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"limited scope" representation,
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"out-of-court legal services," and
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contingency fee agreements.
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Lawyers are not hired, they are retained. The concept of retaining attorneys originated at a time when there were only a few lawyers (like, two or three) in town. When folks saw a problem on the horizon and anticipated a possible lawsuit in their future, they'd run down to the lawyer's office and "retain" him. By giving the lawyer a little money — a retainer — the client could prevent the opposing party from hiring the same lawyer (due to the obvious conflict of interest). The lawyer got to keep the retainer fee regardless of whether any litigation took place. If a lawsuit followed, the lawyer got paid above-and-beyond the retainer fee for the work done in the case. The retainer was merely to ensure that the lawyer would be available in the event litigation was necessary.
It sounds like overkill, today, given so many lawyers in our society. Go back even 100 years, however, and imagine that you were involved in a significant property dispute, you anticipated a lawsuit, and of the only two lawyers in town, one was named Abraham Lincoln, or Clarence Darrow. What would you do?
The concept of attorney's Retainer Agreements has transformed over time and, today in Illinois, there are three types of Retainer Agreements: 1) the classic retainer, 2) the advance fee retainer, and 3) the security retainer.
"Classic" Retainer / Initial Consultation Fe: It's worked for centuries. You pay your lawyer a relatively small amount in advance to be available in the event of litigation. The retention acts as a conflict-of-interest barrier -- it "conflicts out" that particular lawyer form ever working for your spouse. The lawyer gets to keep the money whether or not he ever does any work. It's that simple. These days, classic retainers are really presented as "initial consultation fees"—you pay $200 - $500, sit down and talk about your case in depth, and the lawyer is there for you if you need him in the future and is conflicted out from representing your spouse. If a case ever starts up and you need the lawyer's help, you pay for that work above-and-beyond the initial retainer payment.
Flat Rate Retainers: Our clients love flat rate retainers. In the long run, they save clients a lot of money. For that reason they're very popular. We like them too. In most cases they are the best way to go. It works like this: we talk about your case, agree on a fee, you pay the fee, we do the work, and we get your case DONE. That's it. It's that simple. It's like buying an airline ticket: you pay the money, the airline gets you to your destination — there is no surcharge if the weather is bad, there's no extra fee if the guy in the control tower is in a snit, no hourly charges for standing in line. You pay…you get to your destination…no ups, no extras, no problems.
Clients love flat rate retainers because they don't have to worry about being nickled-and-dimed for every phone call. They can ask as many questions as they want, whenever they want, and they won't be charged a penny more. They don't have to worry about making mistakes because they didn't talk with their attorney (because they didn't want to pay for the call) — every call is free…so client errors are eliminated. Clients also don't have to worry about any of the messiness that sometimes pops up in a case — you've paid your fee, we deal with the rest. It becomes our job to answer all of your questions, help you AVOID the messiness, and get you to your destination. We carry ALL the water.
Clients mostly appreciate that the case gets done much more quickly and in a much more streamlined fashion. The flat rate gives the lawyer the incentive to get the case done quickly, efficiently, properly, and with finality — there's no profit in a case that drags on for months or years and has post-decretal work. With flat rate retainers, your attorney lives, breathes, eats, and sleeps your case. In one instance, a fairly large case (large estate, kids, retirement planning, maintenance, everything) was concluded the very first day -- from first meeting to finalization in front of the judge -- started in the morning, done by supper. Sound nice? Call to learn more.
The Advance Fee Retainer: This is the type of retainer most Illinois divorce attorneys use, today. You pay an advance fee to the attorney. The payment immediately becomes the property of the attorney for accounting and tax purposes. He can deposit it in his general business account and use it in the operation of his practice. He does the work and bills against the retainer. It is like when you order a product on-line -- you send in your money and, later, you get the product. For example, if you paid a retainer of $3,500 and, in the first month the attorney did $750 worth of work, at the end of the month the retainer would be reduced to $2,750. You will receive a monthly statement showing the work done and how it affected the retainer balance. The lawyer keeps track of his time and applies his charges against the retainer each month. If the retainer is exhausted, the client may be asked to pay an additional, or a "continuing," retainer or may go on a pay-as-you-go plan (paying each monthly invoice as it comes due). If, however, the case is concluded or the lawyer is discharged before the retainer is exhausted, the attorney accounts for all the work done and refunds back to the client the unearned portion of the retainer.
The Security Retainer: This retainer remains the client's property even after it is tendered to the attorney. This is like when you order a product, but find out it is on back-order. You send in your money, the merchant keeps your money, but you don't get the product. All the while it is understood that the money is YOUR money, not the merchant=s. Eventually, if the product is shipped, the merchant claims the money. If the product cannot be found, you get your money back. In a law practice, the attorney places the money in a trust account, usually in the client's name -- that way any interest earned on the money will benefit the client. Each month, as the attorney works on the case, he sends a bill to the client and pays the bill by drawing money out of the trust account. The money only becomes the attorney's property after he does the work and bills the client. The accounting and tax ramifications of this sort of retainer make it cumbersome and costly when applied in a family law practice. For these reasons, nearly all family law attorneys use Advance Fee or Flat Fee Retainers.
