A retainer agreement is a legal contract between a client and a professional, often a lawyer or consultant, whereby the client agrees to pay the professional a retainer fee for their services. This retainer fee can serve as a down payment for future services, an ongoing payment for continuous services, or a reserve from which fees will be drawn as services are provided.
Parties Involved: Clearly identify the client and the professional (or firm) who will be providing the services.
Scope of Services: A detailed description of the services that the professional will provide to the client.
Retainer Fee: The amount of money the client will pay upfront. Depending on the agreement, this can be:
Non-refundable: The professional retains the fee whether or not all services are used.
Refundable: Unused portions of the fee can be returned to the client.
Billing and Payment: Details on how the professional will bill against the retainer fee. This can include hourly rates, flat fees for specific services, or other billing arrangements. The agreement should also specify how often the client will be billed and any additional payments or replenishments of the retainer if it's exhausted.
Duration and Termination: The term of the agreement (e.g., one year, ongoing, until the completion of a specific project) and the conditions under which either party can terminate the relationship. Clauses might detail how any unused portion of the retainer will be handled upon termination.
Confidentiality: Many retainer agreements, especially with lawyers or consultants, include clauses to ensure the confidentiality of information shared during the course of the relationship.
Conflict of Interest: Provisions ensuring that the professional does not have any conflicts of interest that would impair their ability to serve the client.
Dispute Resolution: Terms defining how disputes between the client and the professional will be handled, such as through mediation or arbitration.
Governing Law: Specifies the jurisdiction's laws (e.g., the laws of a particular state or country) that will apply in interpreting and enforcing the agreement.
Signatures: Both the client and the professional (or their authorized representatives) must sign and date the agreement, making it legally binding.
Retainer agreements offer advantages to both parties: professionals get a guaranteed payment or a continuous stream of income, while clients can secure the professional's time and expertise as needed. Given the legal and financial implications of such agreements, it's recommended that both parties review the terms carefully, ideally with legal counsel, before entering into a retainer agreement.