The first document shared with any client likely is the retainer agreement. A good retention agreement can be a problem-solver, problem-avoider, sword and shield, the starting point, ending point, and, with careful planning, the stops along the way of a representation. Retainer agreements help mold expectations and place limits upon them.
In many ways, a retainer agreement is a map of the representation. Retainer contents have their own map or guidebook—the rules of professional responsibility. What is included, or excluded, depends heavily upon responsibilities to clients. The agreement’s functions merge practice management with client communication. Ethical rules inform agreement contents. Client information expands upon the requirements.
Retainer agreements define the attorney-client relationship in two ways. First, according to ABA Model Rule 1.2, the agreement defines the scope of the relationship, the boundaries of representation. Think of the retainer agreement from the client’s perspective. The client is hiring a lawyer, not a divorce lawyer, not a child support lawyer, not a custody lawyer, but a lawyer. Clients feel they are hiring “their lawyer,” and lawyers feel they are being hired for a specific purpose, e.g., a divorce. If the client gets a traffic ticket, is the divorce lawyer now a traffic attorney? How about if the case is appealed; is the trial lawyer on the hook for meeting appellate deadlines? The answers may very well depend on what the client thought at the time of retention. The best indicator of what the client understood is the retention agreement.
Rule 1.2(c) allows attorneys to limit the scope of employment. Limiting the scope can exclude other areas for which the lawyer will not represent the client. Specifying the scope of representation helps specify when the lawyer will work for the client and when the client needs to seek additional representation. Within the scope of representation, retainer agreements should only include areas for which the lawyer is competent to practice. However, the retainer agreement can be broad enough to include other firm members who might practice other areas of law, such as criminal or real estate law. It is also helpful to communicate to the client the level of expertise the attorney has in the various subissues that arise within the family law case. Specifying that lawyers are not competent to provide meaningful real property valuations, for example, defines a limit that will need to be addressed. This informs the client of additional personnel who may be necessary during litigation.
More and more, ethical rules allow attorneys to “unbundle” representation, meaning representing a client for a limited, specific purpose. An attorney may be hired to review a draft agreement, as an example of unbundled services. Specificity is extra important here. If the retention is for an unbundled service, make sure representation is specified to end upon the task being completed. Make sure the quantity of work is clear: state “reviewing a draft agreement once,” for example, as opposed to simply “reviewing an agreement.”
The art to drafting these provisions is identifying the scope wide enough to include foreseeable issues while excluding those issues for which the attorney does not wish to be bound. Think foreclosure. Divorce cases often arise from financial stress, and foreclosure can result. Is the attorney representing a client for divorce and related matters thus bound to represent the client for the foreclosure? Casting too wide a net may ensnare the lawyer in litigation for which the attorney is not prepared. Examples and laundry lists of areas covered under the agreement help specify the exact nature of the relationship. The simplest solution is to be as concrete as possible. Using examples or specific limiting language in the agreement can be useful.
Communicating the steps is another function the retention agreement can serve, toward three ends. First, it signals the client how the attorney intends to reach the objectives set by the client. Second, it provides protection against successful malpractice claims if the client fails to comply with attorney recommendations. Third, it protects the attorney if the client does not enable the attorney to carry out requested legal steps.
The client defines the objectives of the case. The attorney determines how to accomplish those objectives. ABA Rule 1.2. The retainer agreement should specify what the attorney believes may be necessary in achieving goals. Minimally, the retainer agreement should recite that the attorney will attempt to achieve objectives set by the client. Optimally, the retention agreement should include language providing specific evidence the attorney expects to need. For example, attorneys in custody litigation often rely upon psychologists. Business cases need business valuation experts. Discovery can be another need; specify if you think subpoenas will be needed, and how to limit the costs of discovery through the client collecting documents.
It is also useful for the attorney to outline the parts of a family law case. The retention agreement can state family law cases usually follow a pattern of filing, investigation, pretrial conference, trial preparation, trial conference, and trial. Tell the client if he or she faces mediation or other dispute resolution.
Finally, the retainer agreement can define a team approach to representation by stating the attorney’s process for making requests for costs or additional fees. Specify how the request will be made to the client, how soon the client must comply, and that the successful achievement of objectives set by the client may depend upon timely compliance with requests for costs or information.
By being specific in these matters, the retention agreement identifies for the client what he or she can expect. This allows the client to prepare emotionally and financially for litigation. Moreover, setting forth the attorney’s expectations helps short-circuit later claims that the attorney did not tell the client how much a case was going to cost or the attorney did not keep the client informed. Finally, client failure to comply with requests for information or costs have been successful defenses to malpractice claims. In these regards, the retention agreement becomes a communication device as well as a shield.
From the lawyer’s perspective, the most important function of a retention agreement is defining how the attorney will be paid. Fees of the attorney must be reasonable. ABA Rule 1.5(d)(1) specifically targets domestic relations attorneys, banning contingent fees based upon securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof.
If the retainer agreement calls for a traditional, hourly rate, the rate or rates should be specified. While fees cannot be shared with attorneys outside the firm without client agreement, there is nothing limiting sharing of fees within the firm. By specifying rates for law firm staff, the agreement constitutes an agreement by the client to those fees within the firm. This agreement can be useful if another lawyer in the firm is called upon to step in on behalf of counsel or new issues arise. Return to the foreclosure situation; having hourly rates specified allows another attorney to handle the foreclosure action internally.
The retention agreement can also be a key to withdrawal if the client does not comply with fee requirements. Time frames for fee payments should be specified, along with a time limit for disputing charges. If fees are not paid, interest may accrue, but it may only be chargeable if specified within the agreement.
Most, if not all, jurisdictions prohibit use of contingent fees in securing the initial domestic relations judgment, on grounds that contingencies encourage litigation and that contingencies are unnecessary for parties to secure family law counsel. Once a judgment has been secured, however, the prohibition is lifted because the rule becomes inapplicable. Some states have allowed contingency fees in post-judgment litigation on the grounds the contingency fee allows an unempowered spouse to obtain counsel to secure rights in a judgment. Restatement (Third) of the Law Governing Lawyers § 35 cmt. g (2009) note g. However, courts will not enforce a contingency agreement that charges an unreasonable fee in relation to recovery. Id. (Supp. 2009). Thus, contingency fees remain an unsettled area in family law litigation.
The contingency fee concept incorporates a level of risk for the attorney, which the attorney assumes based upon his or her expected outcome. If a fee is an allowable contingent fee, the agreement should identify an alternative measure of fees, such as based upon the hourly rate of the attorney. The risk here is that if an alternative measure is specified, courts may discard the contingency and turn to the alternative measure, even where a contingency is proper. If the court rejects the contingency arrangement, the attorney has borne the risk without the reward.
Reasonableness should be communicated within the retention agreement. Retainers now take many forms: end retainers, refresher retainers, enhancement fees. The distinctions between enforceable and unenforceable fee terms seem to be whether the fees are being charged for routine services or whether the attorney is receiving a “bonus.” Enforcement of “bonuses” such as value billing and enhancement fees tends to fall under scrutiny regarding the overall reasonableness of fees, which is often gauged by some measurable outcome. If enhancement fees or contingent fees are used, explain in the retention agreement why they are being proposed and agreed. Perhaps the client is agreeing because the attorney will dedicate significant time to the exclusion of other cases. Or, maybe, the client puts a priority on expedited conclusion and is willing to pay a premium to get it. Factors like these are considered under the ethical rules in determining whether fees are reasonable. If these are the facts, state so in the retention agreement.
The Model Rules require attorneys to communicate the basis for fees and expenses to be to the client, preferably in writing. Rule 1.5(b). Some courts have added restrictions on markup of costs. Almost all jurisdictions require retainer agreements in family law actions. In some states, court remedies are limited if there is no written agreement to the extent that fees may be forfeited. See, e.g., 750 Ill. Comp. Stat. 5/508(c)(2). The lesson here is retention agreements practically must be written. Make sure the agreement is signed before commencing work, or at least make sure not to barge ahead too far without an agreement.
The rules also discuss how an attorney should conduct the case—things the lawyer can tell the client through the retainer agreement. For example, the retainer agreement can identify methods of communicating with the client and charges attendant to text messages, emails, and phone calls. Rules 1.4, 1.5. The retention agreement should specify limitations on obstruction of access to evidence (Rule 3.4) and the obligation to be truthful to the court (Rule 3.3). Clients should be warned that if they knowingly make false statements under oath, the attorney will take corrective action. Rule 3.3(b).
In addition to these components, the retainer agreement should include the requirements for paying fees or refreshing retainers and for paying costs when requested. When an attorney recommends an expert witness, the agreement can specify how the request will be communicated and what will be included in the request and can set a deadline for payment. If the client fails to pay the retainer, the consequence should be spelled out.
When outlining obligations, keep in mind that courts are reluctant to enforce agreements as written if doing so will prejudice the client, and prejudicing the client is a professional violation itself. Rule 1.16(b). A lawyer is not required to continue to represent a nonpaying client under conflict of interest rules (Rules 1.7(a)(2), 1.16(b)), but the lawyer must still comply with jurisdictional notice requirements (Rule 1.16(c)). To avoid problems, large retainer or fee requests should be made in advance of trial or significant hearing sufficient to allow the attorney to take corrective action. To set this up, spell out the timelines within the agreement itself.
Termination of representation comes in two ways: The attorney withdraws or the case ends. The retention agreement should cover both possibilities.
Clients think that if they fire you, you cannot work for them anymore. Clients also believe that once you say you quit, you are done working for them. Of course, neither is true. Among the things the agreement can include is a list of conditions under which the attorney must withdraw or, most likely, will withdraw. These include being discharged by the client, a lawyer’s diminished capacity, or continuing representation violating professional ethics rules. Rule 1.16. Other circumstances that may trigger withdrawal are conflicts of interest, nonpayment by clients, fraudulent or criminal conduct by the client, and even the client taking action the attorney finds repugnant. Once again, specifying the type of conduct that will trigger withdrawal is a function the retainer agreement can anticipate. If there is the possibility of removal to another state or federal court, or even to another circuit, the retention agreement should specify retention will end and another local attorney will be retained by the client.
When litigation concludes, the retention agreement should identify the exact point at which representation will end. Representation can end immediately, but allowing a short window in which to clean up loose ends is also a good idea. The retainer agreement should either include or exclude post-judgment items like preparing and entering qualified domestic relations orders. The retention agreement could state post-judgment cleanup fees will be charged by the hour. Again, think how a client thinks. The client has one attorney who does everything and will take care of everything. Correcting the client’s misconceptions about ongoing representation can take place within the retention agreement. Representation should end when jurisdiction over the initial case ends.
Third, the retention agreement should communicate to the client that fees earned prior to discharge or withdrawal, and fees needed to conclude representation with the court, will be chargeable. Further, as a diligent attorney you may be required to perform tasks prior to withdrawal if the circumstances of the case require it. Clients believe once the attorney is discharged, the attorney should not charge anything. But we know there are steps to be taken, and the client should pay for those steps.
Not all cases have fund balances when the case concludes. If collection is necessary, the retention agreement can be a sword for collection costs as well as attorney fees. Some jurisdictions do not allow collection of interest unless the retention agreement specifically includes interest as collectable. Similarly, some jurisdictions do not allow attorneys to recover fees if they self-represent during collection, but they will allow collection by third-party attorneys if agreed in the written retention agreement.
Finally, after conclusion, clients often call attorneys for one-time consultations. Sometimes, there are a lot of follow-up calls. Make sure to include a provision allowing billing after the representation ends for these quick phone calls. You can always waive the fee later.
The destination of the retention agreement is implementation. Once the terms of representation are set out, follow them. The retention agreement should create expectation. If you ask clients to pay monthly, make sure they do. If you require a trial retainer 90 days before trial, request the retainer 120 days before trial, and if the client does not pay, move to withdraw. If you tell clients you will give written estimates of costs, give written estimates, then follow through on making sure the estimates are paid. Consider withdrawing for noncompliance.
Under the rules, diligent representation is required. Nonpayment of fees may be a defense, but it is not always. Continuing to trial without needed resources is not a best practice. It becomes a worst practice if your retainer agreement says you will request needed expert fees and then do so a week before trial. First, it is unlikely withdrawal will be allowed. Second, the defense that the client failed to follow the attorney’s advice by failing to pay needed fees will likely be hollow when the request was not timely made. Aside from the retention agreement stating an end point, it is good practice to tell the client when representation is deemed ended, to avoid confusion if the client receives notice of further motions.
Outlining obligations in the retainer agreement fosters a team approach between client and attorney. Clients become better informed. Attorneys are given a structure in which the client expects what will happen. Clients can prepare. Attorneys can get paid. Follow the guidance of rules of professional conduct, and attorneys can create a roadmap for successful case management.
Disclaimer: These retainer provisions are provided as models only. The author makes no representation the terms will be enforceable. Consult the law of your jurisdiction to determine enforceability before including any retainer term.
This agreement shall not apply to appeals. CLIENT agrees a separate agreement will be signed and appeal retainer paid in full prior to COUNSEL being required to file a notice of appeal.
CLIENT and ATTORNEY specifically agree that foreclosure actions are not related matters. CLIENT and ATTORNEY specifically agree that disputes over prior attorneys’ fees are not related matters. CLIENT and ATTORNEY agree that COUNSEL shall not engage in contested pet custody cases.
Terms of this agreement remain available for 30 days from the date of the agreement.
CLIENT also agrees to read all correspondence, follow instructions in correspondence, and respond in a timely fashion. Such documents will include pleadings, responses, financial affidavits, discovery requests, and questions posed in written form, and may include other documents.
All requests for additional cost retainers will be made in writing itemizing the need for additional funds. CLIENT agrees to pay cost retainers within 14 days of request unless otherwise agreed with the ATTORNEY. Successful achievement of objectives set by the CLIENT may depend upon timely compliance with requests for costs.
While fees cannot be determined in advance for a number of reasons, CLIENT understands that all estimates of time and expense are based upon CLIENT’s representations to the ATTORNEY. If CLIENT does not accurately represent case facts, or if CLIENT does not follow COUNSEL’s advice, time expended and fees and costs incurred may increase.
This agreement includes a contingency fee. The agreement is not one to secure a dissolution of marriage judgment, but to collect child support through post-judgment action. The parties agree the contingency is necessary because the recovery can be clearly identified in relation to the fee, and CLIENT is unable to pay a retainer fee to obtain compliance with a court order. Under these circumstances, CLIENT agrees a contingency fee is reasonable and necessary.
This agreement includes an enhancement. CLIENT agrees to pay all fees incurred in pursuing child custody. “Custody” is defined to include having the child reside with CLIENT for more than 50 percent of the time. If ATTORNEY is successful, CLIENT agrees to pay an enhancement of $10,000. This agreement is agreed to be reasonable because (1) the litigation is post-judgment litigation; (2) the presentation of a full custody case is enhanced through presentation of a fact-intensive case supported by expertise and skill; (3) the outcome of litigation in custody matters is uncertain; (4) CLIENT places special importance on achieving this objective; and (5) CLIENT is informed about Rule 1.5 of the Rules of Professional Conduct, and agrees the factors of Rule 1.5 support an enhancement fee upon success.
Under ethical rules, ATTORNEY is forbidden from advising CLIENT to violate the law, including any court orders. ATTORNEY is further forbidden to destroy evidence or to obstruct access to evidence. If CLIENT offers false testimony, ATTORNEY is obliged to take corrective action, which may require withdrawal from representation.
If CLIENT seeks further advice or services after representation is concluded, COUNSEL may charge CLIENT for providing advice or services in accordance with this agreement.
