You want to retain talented lawyers so that you receive the legal services you need. Good lawyers are scarce and busy because everyone wants their services. We understand that you also want to control the legal fees you pay so that you have certainty. This is why we are transparent about the legal fees we charge, and why we are open to alternative fee arrangements (AFAs), such as a retainer fee structure.
What kinds of retainer fee structure are there?
A retainer is a kind of alternative fee arrangement in which you pay a fixed fee on a recurring basis, and we are bound to do work for you to the value of that fee. There are various types of retainer, with the most common of these being:
Subscription retainer (or “pay for work”)
Under this structure, you pay X every month, and the attorneys work for X-value amount of time. If the attorneys reach that figure, they stop and contact you.
In order for this to work, there has to be reasonable consistency in what that work will be and what it will cost.
In our opinion, this structure works well for matters that repeat on a monthly basis. However, this is often unlikely in a legal context.
Deposit retainer (or “retaining fee”)
Under this structure, you pay a lump sum of X, which the attorneys place into a trust account and draw from to do work for you as and when you require it. If the attorneys use up that lump sum, they stop and contact you.
In order for this to work, there has to be a reasonable idea of the cost of the matter in question.
In our opinion, this structure works well for single, large matters that are billed for over a long period. It does not work well for multiple small matters, because it does not give you a clear understanding of what your legal expenses are month to month.
General retainer (or “pay for access”)
Under this structure, you pay X every month, and the attorneys make themselves available to you for a certain number of hours during that month. If you have work for them, the attorneys will drop everything to make sure that they get it done. Even if you do not have work for them, you still pay them, as you are buying their availability. Some attorneys allow unused retainer hours to roll over into the next month, or later.
We have some issues with this retainer fee structure, as it can sometimes become unfair or impractical in its typical form, depending on how you view it. For example:
- it could be unfair if unused retainer hours are lost at the end of the month – you will not receive the full value of your money, while the attorneys will receive more than they should for their hours worked;
- it could be impractical if unused retainer hours are rolled over into the following months – you will receive the full value of your money, but the attorneys will have to recalculate their availability every month, based on the number of hours that roll over. More to the point, if multiple clients have retainer structures, and each of those clients have a few hours roll over into the next month, it is possible that the attorneys now have to make themselves available for more hours than there are available in a month.
It is also worth noting that as attorneys cannot be sure when you will need them, it is not unreasonable for them to take on other clients, some of whom may require urgent attention. If your work does come up, they would have to drop those clients to attend to your work, because you’ve paid for their attention as a priority. But what if that client also has a retainer with the attorneys? Then who takes priority? Someone will have to suffer, which calls the very purpose of the “retainer” into question.
In order for this retainer fee structure to work, the attorneys would need to be able to work out the chance of you needing them at a particular time relative to the chances of any other retainer client needing them at the same time, and offer a retainer that is big enough to be meaningful to you, but small enough not to be reckless to their other clients. This is a particularly tricky bit of maths to navigate.
Our preferred retainer fee structure
While some attorneys work with structures like those listed above, we prefer not to, because we want to promote as much certainty and transparency as possible in our fees. As such, our preferred retainer fee structure is our own variation on the general retainer structure.
Capped general retainer for work done
Under this structure, you agree to a capped fee for every month, and we only charge you for the amount of work we actually do, up to the capped amount. If we reach the capped amount, we stop and contact you.
As you are paying for our actual hours worked, and not our availability:
- we will only charge you for work that we do for you – this ensures that you do not pay without receiving value; and
- we are able to work with you in determining our capacity to take on your work – this helps us to manage your expectations when we know that we will not be able to attend to your work immediately, and avoid dropping our other clients without notice.
This gives you a degree of certainty about your monthly legal fees, because they will never go over the cap. You can add even more certainty by agreeing to a slightly lower “soft” cap, which we can exceed, but only with your approval.
In order for this retainer fee structure to work, there needs to be clear communication between us and you. For example, you would obviously not want us to stop working without telling you, even if we have reached the cap – particularly if the matter is important. We would need to tell you that we have reached the cap, and you would have to let us know if you are happy for us to stop work for the month, or give us permission to exceed the cap. If this occurs often during the relationship, it could be an indication that the cap is too low.