What Is a Retainer Fee?

A retainer fee is an upfront payment to secure the services of a lawyer, consultant, freelancer, or other professional. A retainer fee is most commonly paid to third parties that the payer has engaged to perform a spec🅺ific action on their behalf.

These ꦬfees only ensure🍌 the receiver’s commitment. In addition, retainer fees usually do not represent the total final cost of the services provided.

Understanding Retainer Fees

A retainer fee is an advance payment that a client makes to a professional, and it is considered a 澳洲幸运5官方开奖结果体彩网:down payment on the future services rendered by that professional. Regardless of 澳洲幸运5官方开奖结果体彩网:occupation, the retainer fee funds the initial expenses of the working relationship. For this reason, these fees usually remain separate from the hourly wages of the consultant, 澳洲幸运5官方开奖结果体彩网:freelancer, or lawyer. This ensures that money is not used fo𝔉r personal purpo🔜ses before fully performing services.

Example of a Retainer Fee

A lawyer may charge a $500 retainer fee. If the lawyer charges $100 an hour, the retainer covers all services up to the five-hour limit. Th✤e lawyer then bills the client for the cost of any additional hou🌺rs of work on behalf of that client.

So, if a trial case takes 10 hours, the lawyer charges the client an additional $500, which comes to $1,000 when including the retainer. If the cli🥀ent’s case is resolved before reaching the five-hour limit, the law🌳yer refunds the remaining portion of the retainer to the client.

Earned Retainer Fees vs. Unearned Retainer Fees

An unearned retainer fee is an initial payment h💝eld in a retainer account before any services are provide🐭d. Retainer fees are earned once services have been fully rendered.

ꦕI𓃲n the example above, the retainer is considered unearned until the court case is closed and finalized. These unearned fees do not belong to the person performing the tasks—in this case, the lawyer—until work begins. Any unearned retainer fees that are not used can be returned to the client.

Earned retainer fees are the portion of the retainer that the lawyer is entitled to after work begins. Earned retainer fees may be granted to the lawyer bit by bit, depending on✃ the number of hours worked. Reta💛iner fees can also be distributed based on tasks or milestones. For instance, a lawyer may receive 25% of the retainer fee after completing the pretrial process.

The Bottom Line

A retainer fee is a down payment on a professional’s services to ensཧure you have priority. Retainer fees are usually 𝔉charged by lawyers, accountants, and consultants to maintain their continued services.