Understanding Retainer and Contingency Attorney's Fees

The terms "retainer fee" and "contingency fee" refer to different methods of compensating attorneys for their services. Here’s a breakdown of the differences between the two:

Retainer Fee

• A retainer fee is an upfront cost paid by a client to secure the services of an attorney. It acts as a down payment on the attorney's services.

• The attorney typically bills against the retainer as work is performed. This means that the retainer amount is drawn down as the attorney performs work on the case or project.

• Once the retainer is depleted, the client may need to replenish it, depending on the agreement.

• A general retainer pays for the availability of the attorney over a specified period, regardless of actual time spent.

• A special retainer is specific to a particular case or project, where the attorney draws fees for the work done on that specific matter.

• Commonly used in cases where ongoing legal services are needed, such as corporate law, family law, or ongoing legal advice.

Contingency Fee

• A contingency fee is a payment structure where the attorney only gets paid if they win the case or achieve a favorable settlement for the client. The fee is a percentage of the amount recovered.

• The attorney’s fee is contingent upon winning the case. If the case is lost, the attorney typically does not receive any payment for their services.

• Common percentages range from 25% to 40% of the recovered amount, depending on the complexity of the case and the stage at which it is resolved.

• Often used in personal injury cases, medical malpractice, and other civil litigation where the client seeks monetary compensation.

• Beneficial for clients who may not afford to pay an attorney upfront, as it allows access to legal services without initial out-of-pocket costs. The attorney assumes the risk of the case.

Key Differences

• Payment Timing

  • Retainer Fee: Paid upfront and as needed throughout the case.

  • Contingency Fee: Paid only if the case is won or settled favorably.

• Risk

  • Retainer Fee: The client bears the financial risk of paying regardless of the case outcome.

  • Contingency Fee: The attorney bears the risk, as they only get paid upon a successful outcome.

• Application

  • Retainer Fee: Suitable for ongoing legal services or cases not involving monetary recovery.

  • Contingency Fee: Suitable for cases where the client seeks financial compensation and cannot afford upfront costs.

Understanding these differences helps clients choose the right fee arrangement based on their financial situation and the nature of their legal needs.

Questions? Reach out to William Cain to get answers.

Reach Out