Understanding Legal Fees: What Is A Retainer?

 

Inviting an attorney into your personal affairs is stressful, and trying to understand the jargon that is thrown around may add to the stress. This article will answer some of the common questions regarding that jargon, particularly when it comes to paying for an attorney and the costs associated with legal representation.

What is a “retainer” and how is it determined?

A "retainer fee" or “retainer” is an amount of money paid before an attorney begins work. The amount is an estimate of the number of hours we think it will take our team to complete your case. Of course, this is much like attempting to summarize a book by reading its first few pages or reviewing a movie based on the previews - we do not fully know what we are in for until we are in it. Ethically, once an attorney represents you, he cannot stop representing you if it would unduly prejudice your interests. It is easier for a client to end representation at any time than it is for an attorney to do the same.

What impacts how a retainer is estimated?

We estimate your retainer based on our initial consultation. We listen to you and understand the “big picture” of your legal issue, a sense of the parties, the age of the children (if any), and the general circumstances. The primary determining factors include:

  •   Are your documents and finances organized?
  •   Are there minor children?
  •   Will there be a custody fight?
  •   Will you end up in court or is this something that can be settled?
  •    Is this a new case or do you have a case already pending?
  •    Is the other party represented by an attorney?
  •    Is there a premarital agreement?
  •   Do you share assets that need to be divided?

What happens after the retainer is paid and what is a "trust account"? 

An attorney is required by the American Bar Association (ABA) and Interest On Lawyer’s Trust Accounts (IOLTA) to accept your retainer and place it directly into the Client Trust Account - a special account that is separate from the attorney's Operating Account. The trust funds are not touched until it is time for you to be billed for the attorney’s time and fees. This concept is like a savings account. The retainer remains very much “your money” until it is used to pay for your attorney's time on the case. 

Our law firm invoices clients each month with an itemized breakdown of the legal services provided, fees expended on your behalf, the amount of money that was deducted from the Trust Account, and your remaining Trust Account balance.

What is the retainer used for?

Any work that an attorney does on your behalf is usually billable. Examples of billable time are emails, telephone calls, texts, communications with opposing counsel, and other correspondence. Also included are meetings, court, travel time, communications with court personnel, document preparation, filing fees, planning, legal research, and investigating your case. 

What is the retainer not used for? 

Generally, any additional expenses such as mediation, custody evaluations, and counseling are not deducted from the Trust Account.  

How is money deducted from the Trust Account?

An attorney who works on an hourly basis determines his time by dividing the minutes spent on a task into 60 (i.e., minutes in an hour). Therefore, if an attorney receives a text from a client, reads the text, and responds to the text, an attorney will divide the total number of minutes the entire “text conversation” took and bill accordingly. For example, if an initial text by the client was received at 8:21 a.m. and the attorney answered via text (concluding the “conversation” at 8:33 a.m.), the attorney spent a total of 12 minutes on that client’s work. Consequently, 12/60 equals .20 of billable time charged to the client.

The following chart is a useful tool and is based on an attorney who charges an hourly rate of $200.

Minutes Spent

Code

Money Spent

0-6

.10

$20

7-14

.20

$40

15-20

.30

$60

21-27

.40

$80

28-32

.50

$100

33-38

.60

$120

39-44

.70

$140

45-50

.80

$160

51-56

.90

$180

57-60

1.0

$200

                                                     

 

 

 

 

 

 

 

 

 

 

 

 

The “Money Spent” is the amount that is deducted from your retainer (including sales tax). This system is used each time you send an email, want to speak on the telephone, or have other time to be spent on your case. The code will then show up on your monthly itemized billing.

Can you see how your attorney used your retainer?

Absolutely. Each month you will receive an itemized invoice from our law firm. The invoice will include the date, attorney name, a description of the work completed, the code to indicate how much time was spent, and the amount deducted from the Trust Account. If there is a question regarding the invoice, please discuss this directly with your attorney.

Do you have to pay with a retainer or is there another way to pay?

While other practice areas may charge flat fees, family lawyers generally charge an hourly rate.

It is common to hear “we only recover if you do.” This is called a "contingent fee" agreement and is very common in personal injury cases. However, this fee option is not used by family law attorneys because the majority of money awarded (if any) is child support or property division. We cannot recover the amount you receive from child support because that is to be used directly for the care and benefit of your children. 

Can I pay the initial retainer and nothing else? In other words, can I pay a "flat fee"?  

A flat fee is rare in family law because these cases are often unpredictable. A flat fee may be used in areas like estate and business planning where the attorney knows what the client wants and has a set amount of time they need to complete the project. Although family law attorneys would like to think they can accurately estimate how much time, effort, and money a particular case will take, family law has many unknown and conflicting parties to take into account. You may think custody will not be an issue, but then three days are spent in court for the judge to determine custody. Therefore, flat fees are not feasible for family law work.

Can I pay with a payment plan or installments?

No. When we give you an estimated retainer amount, this is the amount we need initially to begin your case. Hopefully, the initial retainer will cover all services, but often it does not. Payment plans are difficult to use in family law. Some practice areas can very easily institute payment plans because they have a final product to complete. Family law does not really have a “final product” and there is no estate or resulting account from which to recover. Family law cases often end in compromise, with no clear “winner” and there is a chance you may have to return to court if the parties fail to do what was agreed to or were ordered to do by the court.

Will I be required to pay more? What does it mean to “replenish” my trust account or retainer?

Possibly, but it depends on the circumstances of your case. Family law is characterized by high-conflict and charged emotions, which makes cases particularly difficult to accurately estimate. The basic rule to remember is whenever an attorney spends time on your case, money is deducted from the Trust Account. Therefore, the more you communicate with your attorney, the more office meetings you have, the more pleadings, documents, and hearings your case requires, all directly factor into whether you need to replenish your account.

What if I do not replenish my account?

The uncomfortable truth about this conversation is that we are a business and this is our profession. The easiest answer is that the attorney will withdraw from representing you and your interests. Oftentimes, however, if the court believes the client will be harmed by an attorney withdrawing and there is not another attorney stepping in to take their place, the court will require the attorney to continue representation until the immediate matter is complete. This process is not pleasant, but is sometimes necessary and a very real justification for requiring retainer payments.

Is it possible to get my retainer back?

Yes, by either ending representation with a balance remaining or by having money remaining after your case is complete.

How do I know when my case is done?

Family law cases are also characterized for their lifespan. While some cases may have a definite end (like a divorce decree or adoption), many cases are continually modifiable and can be dormant many years before additional action is taken. For example, child support and child custody can always be modified, so a case would never “end” until the minor child either turns eighteen or graduates from high school. Another example is that your ex-spouse may not do what was promised in your divorce settlement and you must take them back to court to get what was previously agreed to. For this reason, at the end of our representation, we provide a letter notifying you that your representation has ended. 

I need an attorney, but I simply cannot afford one - what can I do?

Many attorneys struggle with this question because there are many people who want and need legal help but cannot afford to hire an attorney.

There are organizations that work with low-income clients and do pro-bono (free) legal work. The reality is these organizations are inundated with more clients than they have the resources to advocate for, but their information is provided below:

Access to Justice (Reduced Fee and Pro-Bono legal work):
1-855-287-3510

East River Legal Services: Eastern South Dakota
605-336-9230

Dakota Plains Legal Services: Mission, Rapid City, Pine Ridge, Sisseton, Eagle Butte, Ft. Yates, Ft. Thompson.
1-800-658-2297

Charles Huff
Connect with me
Family Law and Criminal Law Attorney