Have you ever wondered why an attorney asks you to pay a retainer fee to get started? I lay out my reasons below. To learn more about the trust account, see *** at the end of this post.
1. It tells me I have a client.
Committing with your words and signature to me representing you is substantial. But more substantial is a commitment with your money. The retainer usually approximates one or two month’s billing. A person’s unwillingness to put up this amount of money is usually a sign of lack of committment on the case.
2. Its tells you you have an attorney.
Retainer money is not mine. It belongs to the client and it goes into my attorney trust account. That is a bank account required under Oklahoma law where attorneys have to put any money they receive that isn’t theirs. After I earn the money and in accordance with our written fee agreement, I can transfer money to my operating account and it becomes mine.
All this being said to make the point that taking a retainer is serious business. One of the quickest ways for an attorney to become an “ex-attorney” is to monkey around with trust account money. If I take your retainer money, I am compelled to be serious about your case.
3. It shows the sincerity of your belief in your case.
Actions speak as loud as words or a signature on a retainer agreement. You being willing to put up money, even money you might get back, tells me not only that I have a client, but that I have one who is serious about the case.
4. It increases the chances I am going to be paid for my work.
I can do a lot of work in a month. In some cases I may spend 40 hours or more working on a case. That is a lot of billable time. Since I only bill monthly, I will have done all the work, provided all the benefit to the client but not yet have received anything. Usually clients pay in this scenario. However, having the money to cover the bill in my trust account means that I will not be giving away a month of free work. Think of it like this at whatever your job is: Would it be okay if your employee skipped paying you for one period? Would that have any impact on your financial situation?
A couple of qualifiers. I don’t usually worry about retainer fees in estate planning work or general business matters. Litigation is the area where the retainer fee is most critical. Also, if I have successful track record of a client paying for my services, there is rarely a need for a retainer on new matters.
***What money goes into a trust account?***. Travis Pickens, the Ethics Counsel at the Oklahoma Bar Association, provided this answer:
Unearned legal fees, unincurred expenses, and third-party monies in connection with the representation. This typically means, for example, retainers (until the monies are earned), flat fees (until the monies are earned), filing fees, deposition and expert witness expenses. Settlement proceeds on a check to you and your client(s) or others may also go into the trust account for distribution.
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