Common questions that clients have but seldom ask when they go to see a lawyer for the first time include: “What is a retainer?” “How do retainers work?” “Are there different types of retainers?” While the answers to these questions might be self-evident to lawyers, they are not so obvious to clients, or potential clients looking to engage the services of a lawyer, especially those contemplating retaining a lawyer for the first time. Therefore the purpose of this paper is to explain in a very general way what retainers are and the different types of retainers that lawyers can offer to perspective clients.
A retainer agreement, also known as an Engagement Letter, is “a document containing an agreement between solicitor and client respecting services to be provided … described as ‘a retainer document.’ ‘Retainer’ means the agreement between solicitor and client respecting services, whether it is in writing or oral.”
In Stewart, Macdonald J. confirmed that obligations in a retainer agreement between a solicitor and client are contractual in nature. Further, MacDonald J. confirms that other professional obligations may attach to the relationship between lawyers and their clients based on the Rules of Professional Conduct in the province in which a lawyer practises and any other legal or equitable principles that may exist at the time the retainer is signed. However, those other obligations may be affected by the terms of the retainer, according to McDonald J.
While retainer agreements can be either written or oral, it is not recommended that retainer agreements be anything other than in writing if for no other reason than to minimize or avoid misunderstandings between the lawyer and the client.
The Law Society of Upper Canada recommends the following be part of a retainer agreement:
Scope of services
- The client’s goals and the specific legal services that the client will receive from the lawyer or paralegal
- the key steps in the matter and the lawyer or paralegal’s representation of the client
- any actions or next steps to be taken by the client (e.g. information or documents to be provided) or third parties (e.g. investigations or preparation of expert reports)
- the expected time required to complete the legal services and achieve the results
- any limits to the representation (e.g. when the engagement will end, tasks that cannot be performed under the law or goals that the lawyer or paralegal cannot achieve for the client)
- the results that the lawyer or paralegal is likely to achieve
Fees and disbursements
- an estimate of the fees or disbursements that the client will likely incur and any assumptions upon which the estimate is based
- whether the client will be charged an hourly rate or a flat fee, or by another method
- the amount and payment date of any initial money retainer or ongoing monetary retainers
- whether and how often the lawyer or paralegal will provide the client with interim bills, what they will include, and when the client can expect the final bill
- whether the client is responsible for paying disbursements directly or if the lawyer or paralegal will pay them and later bill the client (e.g. third-party expert fees)
- the rate of interest that will be charged on outstanding accounts (i.e. in accordance with the Solicitors Act)
- consequences of the client’s failure to pay accounts in accordance with the terms of the lawyer or paralegal’s engagement
- the lawyer or paralegal’s billing policy (enclosed for the client’s review), if the lawyer or paralegal has one
Communications with the client
- manner of communication between lawyer or paralegal and client (e.g. telephone, email, mail, fax)
- how the lawyer or paralegal will keep the client apprised of the matter on an ongoing basis (e.g. sending the client copies of correspondence, documents relating to the matter, memos to file; telephone calls; meetings)
- how the client will keep the lawyer or paralegal apprised of the matter on an ongoing basis
- frequency of reporting to the client
- estimated time that it will normally take for the lawyer or paralegal to respond to client calls, emails, letters or other communications
Withdrawal from representation
- circumstances where the lawyer may withdraw from representation (e.g. client’s failure to pay retainers or accounts in accordance with the retainer agreement, any other circumstances contemplated by the lawyers’ Rules of Professional Conduct or the Paralegal Rules of Conduct)
- consequences if the lawyer or paralegal cannot obtain adequate instructions from the client to complete the tasks for which the lawyer or paralegal was retained
- ownership of file contents
- charges for file transfer in the event that the file is transferred to the client or to another lawyer or paralegal
Robert Shawyer practices with Shawyer Family Law