Requiring each client to pay a substantial retainer deposit is a sound business practice for solo practitioners and small law offices.
Unfortunately, many clients will not be able to afford to pay a substantial retainer deposit. Attorneys should be concerned about the future financial viability of working for a client who cannot afford to pay at least a $500 retainer deposit.
Other than the obvious cash flow benefits of a retainer deposit, clients who have invested money in their legal matter are more likely to be long term financial partners in their legal matter. They have “skin in the game”.
When taking an upfront retainer that is not intended to be payment in full, but a deposit, it is very important that the client understands that he or she will be expected to pay more.
The idea of a retainer deposit, particularly when that deposit pays for the first few months of services, can be confusing to clients when it is finally time for them to pay more into the retainer.
Three things will help avoid confusion and possible conflict over the payment of retainers and the purpose of a retainer deposit.
1. The attorney should ask the client to pay a minimum retainer installment every month regardless of the retainer balance. Some months the retainer may go negative, but the client is more likely to pay when payment is the same amount every month. You can always ask the client to increase the retainer installment a bit if the retainer balance is often going negative. You can setup auto charge payments from a client’s debit and credit card accounts. This practice will avoid unnecessary collection problems.
2. The attorney and client should sign a retainer agreement that acknowledges the initial retainer deposit and documents how future payments will be billed and paid.
3. To remind the client of the retainer payment arrangement, the attorney should print a summary of the retainer agreement on each billing statement to the client.
Interbill bills incremental retainer installments for all of our attorney customers. For more information please email info@interbill.com or call 800.733.9933 and ask for Phil Paisley, Bob Furay or Bryan Paisley.
