What is a retainer agreement?
Today to talk to you about retainer agreements a retainer agreement is the contract between you and your lawyer which basically puts in writing the responsibilities of the attorney in representing you and also your responsibilities to the attorney as well it also states how much you will pay your attorney and on what basis that is are you paying the attorney on an hourly basis a contingency fee basis or on a flat fee basis.
What Is an Attorney Retainer Fee?
A retainer is your money that we put into a special trust account each month you receive an itemized invoice from our firms showing you what we did and how much it cost we will then automatically pay the amount due to our firm from the funds that are remaining in your retainer account in most cases we do require a retainer if you don’t have funds for a retainer know that under Illinois law if one spouse is unable to pay for the services of an attorney because the other spouse has control over all the income and assets we can petition the court on your behalf asking the court to order your spouse to give you money or assets so that you can pay for your own attorney.
Read This Before Signing a Contingency Fee Agreement.
If you’re a plaintiff meaning the person who files the lawsuit some attorneys work by what’s called a contingency fee agreement these agreements don’t generally require you to pay an attorney on an hourly basis instead the attorney takes a percentage of any recovery you receive from the defendants contingency fees differ among attorneys types of cases complexity of cases and depending on your location contingency fees generally range between thirty three to forty percent of the total recovery hiring an attorney on a contingency fee basis could be very helpful to you especially if you can’t afford to pay an attorney per hour let us give you a few words of caution make sure you understand exactly how the contingency.
Fee is calculated before you agree to anything contingency fees are negotiable even if the attorney does not tell you that if you feel a fee is too high you can ask for a lower rate and the worst that can happen is that he or she will say no the most important thing to ask any attorney that you’re considering hiring on a contingency basis is whether the contingency fee is taken before or after expenses are deducted the difference could be substantial we’ll give you two examples to illustrate this point in example, one the contingency fee is taken before expenses are deducted you hire an attorney to represent you for a 40% contingency fee in a lawsuit against a driver who caused back injuries to you in an automobile.
Collision you settle with the defendants insurance company for $100,000 the litigation expenses so the filing fees expert witnesses depositions and all that total $22,000 since the contingency fee agreement was for 40% before the expenses are deducted it would look something like this $100,000 recovery – $40,000 of the attorney’s share – 22,000 and expenses equals $38,000 left which is your share now let’s look at example number 2 where the contingency fees are taken, after expenses instead of before let’s take this same set of facts with the only difference being that the attorneys 40% contingency is taken after expenses are deducted first we have the $100,000 recovery – 22,000 and expenses which gives us a net of seventy eight thousand dollars then from that seventy eight thousand the attorney takes a forty percent contingency fee which comes out to thirty one thousand two hundred for the attorney then we take the seventy eight thousand net and subtract from that the thirty one thousand two hundred dollar contingency fee and that leaves forty six thousand eight hundred dollars.
For you the client now here you can really see the difference when the contingency is taken after expenses are deducted you end up with forty six thousand eight hundred dollars in your pocket which is significantly more thanyou would get if the contingency was taken before expenses were deducted which would leave you with thirty eight thousand dollars you would end up with eight thousand eight hundred dollars less if the contingency was taken before expenses were deducted so it’s a significant difference this illustrates.
Why it’s so important that you understand the terms of the contingency agreement before you agree to anything here’s another warning about hiring an attorney on a contingency basis the very nature of a contingency fee gives an economic incentive to attorneys to put in less work than they would if they were getting paid by the hour that’s not true about every attorney but it has long been argued in the legal community.
That some attorneys working on a contingency fee basis don’t give a person’s case as much attention as they should since the attorneys fees are entirely dependent on the outcome of the case for example:
If at some point the attorney believes you no longer have a good chance of success he or she might not put as much time into your case as another case that they believe stands a greater chance of rewarding them financially if an attorney hired on a contingency fee basis is handling other cases in which he or she is getting paid by the hour then you have this economic incentive to give greater attention to the clients who pay per hour it has also been argued that it’s not uncommon for contingency, fee attorneys like some real estate agents or brokers who wait for Commission to be paid at the closing of a real estate transaction to focus on the potential for income rather than what’s best for you.