For representation in a particular legal matter, a true retainer fee is not a separate or distinct fee, but rather an advancement of fees against what will ultimately be owed to the attorney, i.e., a “down payment” or credit toward what is owed. It is a guarantee that a client has “retained” a law firm or attorney for legal representation, and that, as such, the attorney or firm will be paid for work completed in behalf of the client’s case.

A variation of this type of retainer fee is actually more like a flat fee paid in advance. Sometimes an attorney will estimate the amount needed to resolve a legal matter (see cautions mentioned above) and require the payment up front to “retain” his or her services.

In either of these retainer arrangements, a portion of the retainer fee may or may not be non-refundable. However, where the fee represents an advancement of fees for work actually done, attorneys and law firms must itemize the actual hours worked, or the work actually completed, in order to draw from the retained fee. Any excess fee will then be returned to the client (see remedies, discussed below).

An exception to the return of excess retainer funds involves still another classic form of retainer fee. This type of fee arrangement involves retaining a law firm or attorney to be at the service of, or on call and on demand for, (usually) a corporate client or wealthy individual with recurring legal problems. For a flat fee (generally on an annual basis), legal service and representation is on demand for the client, even to the extent that other clients or cases are turned down in order to serve the client. The retainer fee ensures that an attorney will always be available or “on call” to answer a client’s legal questions, provide counsel and advice, or intervene/intercede on behalf of the client in a pending matter or dispute. This type of retainer fee is generally non-refundable, even if the client ultimately makes little use of the retained services over the subject period of retainer.