A legal retainer agreement is the contract between a solicitor or firm of legal representatives and a client, setting out the basis on which legal service will be provided, how fees will be calculated, and what the retainer fee covers. For clients instructing a firm for the first time, and for solicitors explaining their fee structures at the outset of a matter, a clear understanding of how retainer agreements work can help avoid confusion and potential cost disputes later in the relationship. 

How a Legal Retainer Agreement Works 

At its simplest, a retainer agreement confirms that a client has engaged a legal professional to act for them, and sets out the terms on which that legal representation will continue. In many arrangements, the client pays an advance payment, sometimes referred to as paying a retainer, which the firm holds on account and draws down against as work is carried out. This is different to paying only once a matter concludes, since it gives the firm and the client a working method for managing costs as a matter progresses. 

Not every instruction requires an advance payment. Some retainer agreements are structured instead around ongoing monthly payments, particularly where a client requires continuing legal support over a long-term period rather than for a single, defined piece of work. This kind of arrangement is more common in ongoing commercial or regulatory work, where a business requires access to legal advice on an as-needed basis, rather than in a single piece of contentious litigation. 

Common Fee Structures 

Retainer fees can be calculated in more than one way, and the agreement should set this out clearly. The most familiar approach is an hourly rate, where the client is charged for time spent on the matter, usually recorded in units and billed periodically against the sum held on account. Alternatively, some retainer agreements are based on a fixed fee for defined services, which can give a client greater certainty over the potential cost of a matter from the outset, though this approach tends to suit work with a clearly defined scope rather than open-ended advice. 

Whichever fee structure is used, the retainer agreement should specify how unused funds are treated, how additional payments will be requested if the balance runs low, and what happens to any sum remaining on account once the matter concludes or the retainer ends. 

What Should Be Covered in the Agreement 

A well-drafted retainer agreement will typically set out the services covered by the retainer, the basis of charging, how disbursements such as court fees are handled, and the circumstances in which either party may bring the retainer to an end. Clients are generally entitled to a clear written explanation of these terms before work begins, reflecting the wider expectation that legal professionals provide transparent information about costs at the outset of instruction, rather than leaving clients to establish the basis of charging only once a bill is received. 

It is also worth being clear about what a retainer agreement does not do. Paying a retainer does not guarantee a particular outcome to a case, and it does not fix the total cost of a matter unless the agreement is specifically structured as a fixed fee arrangement. Firms should avoid language that could be read as a guarantee of results, and clients should understand that further payments may be required as a matter progresses depending on how it develops. 

Why Retainer Agreements Matter for Costs 

From a costs perspective, the retainer agreement is usually the starting point when a bill is queried or challenged. Where a client disputes the amount charged, or believes the fees charged did not reflect the basis of charging set out at the outset, the retainer agreement is generally the first document a costs lawyer or costs draftsman will review, alongside the firm’s file, when advising on a potential assessment. A retainer agreement that clearly records the fee structure, the services covered, and how the advance payment was intended to be applied can make this process considerably more straightforward for all parties. 

For solicitors, taking time to ensure retainer agreements are clear and are explained properly to the client from the very start is generally one of the more effective ways of reducing the likelihood of a costs dispute arising later. For the client, understanding the basis of a retainer agreement before instructing a legal professional can help set realistic expectations about how costs will accrue over the course of a matter. 

FAQs 

What is the difference between a retainer and an hourly rate?  

A retainer is the overall funding arrangement, often involving an advance payment held on account, while an hourly rate is one of the ways a firm might calculate the fees drawn down against that retainer. 

Do I get money back if my retainer isn’t fully used?  

This depends on the terms of the individual agreement. Retainer agreements should set out how any unused balance is treated once a matter concludes or the retainer arrangement ends. 

Can a retainer fee be challenged?  

Yes. If a client believes charges did not reflect the agreed basis of charging, the bill can generally be queried with the firm in the first instance, or, in some circumstances, referred for a formal costs assessment. 

Speak to Greener Costs Today 

If you are a solicitor reviewing your firm’s retainer agreements, or need support with a costs assessment arising from a disputed retainer, contact Greener Costs’ costs lawyers and costs draftsmen on 01204 263047 or info@greenercosts.co.uk.