Solo Practice

Greatest American Lawyer's Rejoinder to the Well Drafted Retainer

In a response to my earlier post, The Well Drafted Retainer, my blogging colleague Enricho Schaefer ponders whether the traditional retainer is outdated.  Schafer argues that the complexity of retainer agreements complicates relationships with clients rather than facilitating them.  Schaefer explains that his firm memorializes the attorney-client agreement with an email listing the tasks to be performed and the flat fee, which clients can pay via Pay Pal and thus commence the relationship.

To my mind, what paves the way for Schaefer's type of retainer agreement isn't so much the electronic nature of the transaction, as he suggests.  After all, in an internet age, even a "paper agreement" can be scanned and signed or acknolwedged by email.  Instead, what really enables Schaefer's agreement is the flat fee and the way that it liberates lawyers from the attendant protections required when they bill by the hour.    When lawyers charge a flat fee, they merely need to state what work they will perform and (if they choose to be overly cautious) what tasks are not covered.  Clients do not care how many hours each task will take or what each task involves because they have already agreed to a sum certain and understand that the lawyer will perform all work needed to complete the task.  In short, they pay an end product, not hours billed. 

By contrast, in the example that I gave in my post regarding a family law matter, the attorney intended to bill by the hour.  And in fact, most lawyers still do bill by the hour.  Thus, to prevent "sticker shock" at the end of a matter, lawyers must use the retainer agreement to educate the client regarding the tasks involved and the possible outcome.  Where a flat fee is assessed and agreed to, particularly where a sophisticated client is involved and the cost is reasonable (or a refund is available as in Schaefer's case), this extra verbiage is superfluous.

Of course, even if you plan to adopt an alternative billing strategy, as Schaefer points out, some jurisdictions require certain "magic language" in contingency fee agreements or so-callsed non-refundable retainer agreements.  Absent this language, a court might void the retainer and a lawyer might jeopardize a fee.

In addition, while I like the simplicity of Schaefer's agreement - and indeed, use a similar format for my flat fee appellate matters -- in more complex cases even where I charge a flat fee, I  like to educate my clients about what to expect by preparing a road map or strategy plan.  Sometimes, if it's a short discussion, I may include the road map in the body of the retainer; for more complex cases, I will include it as an appendix or attachment.  Again, the road map tempers client expectations and prevents complaints about "why is this taking so long" down the line.

 So getting back to Schaefer's original question about whether the traditional retainer agreement is outdated, I'd agree - at least where the agreement involves the outdated/old fashioned practice of billing by the hour.   Indeed, perhaps that's the best side-benefit of flat fee billing:  the ability to toss the cumbersome retainer letter by the wayside.

Full post as published by My Shingle.com on July 29, 2008 (boomark / email).