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Practice Management

Novating Our Retainer Agreements

Jeremy M Evans

Novating Our Retainer Agreements
whyframestudio via iStock

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The written agreement for services generally starts the legal relationship between the attorney and client. Typically called a legal services or retainer agreement, it defines and protects the attorney-client relationship and services. The traditional billing model is based on an hourly rate that is started with a signed retainer agreement and payment. Once the initial retainer payment is exhausted, the client is notified and either the retainer is replenished or a time sheet with an invoice is sent out within a 30-day pay period after the retainer has been exhausted.

We need to think more efficiently about fee structures, with the client’s needs at the top of our minds. Within the guidelines of your state bar’s ethical rules on fee structures, the essential questions to ask yourself when quoting a price for a prospective client matter are: “What is this work worth?” and “What is convenient for the client?” They should not be: “What we can get out of this client?” or “What do we need to charge to cover our bills this month?” A client has needs and the lawyer has the remedy, as opposed to thinking that we the lawyers have needs (e.g., to pay our bills and overhead), and the client has the financial remedy for us.

Alternative fee structures exist. In the solo and small firm setting, especially in California with the prevalent entertainment, media, and sports clientele, attorney’s fee structures often are contingency-based (i.e., waiting for a film, TV show, or musical score to pay out) where the percentage rate the lawyer receives is based on some industry standard, the relationship, and what is fair and convenient to the client. More common are flat fees. Flat fees do three very important things: (1) fix the price for the client, (2) get rid of the hourly clock, and (3) provide for a positive working environment by throwing out the first two listed points.

Why are attorneys the last to catch up with technology? Maybe the rules confine us. Maybe we need the rules to open doors to working more efficiently with the technology that tracks time spent on a project so that we can have flat-fee offerings for our clients. It seems funny that we fight so hard for wage-and-hour issues only to be the first to violate our own rules by working too many hours, charging ourselves in work-life balance and the client in dollars.