The Retainer Agreement: Different Types and Use
In the world of legal services and beyond, the concept of a retainer agreement is akin to a strategic handshake. It’s the legal foundation that shapes the relationship between a client and their lawyer, setting the stage for collaboration, clarity, and the pursuit of justice.
However, not all retainer agreements are created equal. They vary widely in structure, purpose, and the unique needs they cater to. If you’ve ever been curious about these legal contracts or found yourself wondering which one aligns best with your circumstances, you’ve come to the right place.
What Is a Retainer Agreement?
In Ontario, if you hire a lawyer, you will most likely be asked to enter into a retainer agreement. A retainer agreement is a common way for lawyers and legal professionals to outline the essential terms of the services provided, including the parties to the agreement and their obligations. This article outlines the various types of retainer agreements and what you can expect.
The content of a retainer agreement varies depending on the nature of the matter. Common aspects include:
- Outlining the scope of legal services provided, including any limits on representation;
- Estimated fees and disbursements the client will be charged and billing details;
- Best ways to communicate with the client and frequency of reporting; and
- Termination of the retainer agreement, including withdrawal from representation.
It should be noted that there is no requirement to have an agreement in writing, but most lawyers request that new clients sign a written retainer agreement document to promote clarity and understanding of the scope and depth of the work that will be done.
Examples of Types of Retainer Agreements
Before starting work on your file, most lawyers will require an upfront fee. This fee will be placed in a trust account for future legal costs and disbursements. Then, as services are rendered, it will be used depending on the type of arrangement entered.
There are multiple ways to structure payment for legal services provided in a retainer agreement. Four common methods are found below.
Hourly arrangements refer to charging a set fee per hour. Typically, a senior lawyer’s hourly fees will be higher than those of junior lawyer or a paralegal. Further, hourly rates differ depending on the type of law and the geographical region of the matter and the lawyer.
Legal professionals meticulously record the amount of time spent on each task related to your case. As such, it is possible and advisable to request an estimate of time to complete a set task. However, be aware that an estimate may vary once the lawyer delves into the details of your case. Cost-conscious clients can request that a lawyer update them on the progress of their case once a certain amount of time is spent before deciding on how much more they are willing and able to dedicate to the legal matter.
Flat or Block Fee
A flat or block fee typically refers to a fixed amount of money paid for specific activities. The fee will not vary based on the time it takes a lawyer to complete the agreed upon task.
Flat or block fees are more common for discrete tasks such as drafting a document rather than for an entire case. Flat or block fees are often negotiated depending on the nature of the legal matter, but these arrangements are rare for complex or unpredictable cases.
Under a contingency fee arrangement and retainer agreement, the client will only be charged if the lawyer successfully completes the case. Usually, where the case is successful, the lawyer receives an agreed-upon percentage of the amount recovered by the client. Where a case is unsuccessful, the client will not be charged for the lawyer’s services.
Note that contingency fee arrangements exclude costs and reimbursements. This means that even where the case is unsuccessful, the client may still be responsible for paying costs awarded in court and for expenses incurred by the lawyer.
Not all cases are appropriate for a contingency fee arrangement. There are certain matters that cannot be covered by a contingency fee arrangement. For more information, please review the Solicitors Act.
Hybrid fee arrangements is a catch-all category that includes many types of flexible arrangements. For example, it may include a blended arrangement where a certain fee structure is applicable up to a certain stage, and a different arrangement for other steps in the same matter. Another example is where the hourly rate of billing is reduced after the volume of work reaches a certain point during an agreed-upon time period.
There are many variations of hybrid fee arrangements so it is best to explore with your lawyer to see what structure suits your legal matter best.
Contact Achkar Law
If you are an employer or an employee and need assistance with a legal workplace issue, or if you require a second opinion on a matter, our team of experienced workplace lawyers at Achkar Law can help.