A retainer may be an advance against future fees held in a client trust account, or a true retainer paying for availability rather than services. Advance fee retainers remain client property until earned.
Unearned amounts must be refunded on termination.
Alternative Names:
Retainer Fee, Advance Fee
Why it Matters?
The trust accounting obligation is where retainers create risk, since advance fees belong to the client until earned and must be held separately. Withdrawing unearned amounts is a common and serious disciplinary violation. In insurance defense the concept rarely applies since carriers pay on invoice, but it governs direct client engagements and any matter where the firm is paid in advance.
Frequently Confused with
Related terms
Frequently asked questions
Who owns retainer funds?
Are nonrefundable retainers permitted?
