By Criminal Defense Lawyer Jeremy Rosenthal
This is a common question.
Remember a lawyer is selling their time. Both a flat fee and retainer are different ways the lawyer sells that time. These are actually topics of much debate in the legal community and are a bit more complex than meets the eye.
Abraham Lincoln said the legal fee is important because “It lets the client know he’s got a lawyer and the lawyer know he’s got a client.”
Important Reasons Which Go Into a Fee Amount
A lawyer’s time is not an unlimited resource and some lawyers are justified in charging more for their time than others based on complexity of the matter and that lawyer’s experience.
Also, when a lawyer accepts your case – the lawyer is also limiting themselves because the lawyer now can’t sell time to (1) a different paying client because there are only so many hours in a day or (2) other potential clients he or she cannot legally represent because they would be conflicted from representing by virtue of their representation of you.
A flat fee sounds a bit more self-explanatory than a retainer but there are still restrictions and issues with lawyers charging flat fees.
The advantage of the flat fee is it is clear-cut and caps the client’s potential financial output. The disadvantage is the client could over-pay if the case is more resolved more quickly than anticipated.
Flat fees must still be justifiable at the end of the day. Common sense still applies. Where a client pays a lawyer gobs of money on day one and the client terminates representation on day two – the lawyer simply cannot justify keeping anything other than the amount he’s actually earned, if any.
A retainer is money paid to the lawyer which the lawyer sets aside in a trust account. The money legally remains the client’s property unless or until the lawyer earns it. Once they earn it, they can then draw it from the account.
If the lawyer does not earn all of the money you deposited in trust then the client is entitled to a refund of the unused retainer.
The upside of a retainer is obvious. The downside of a retainer is once the retainer has been expended, it typically needs to be refilled.
I compare a retainer to a tank of gas. Sometimes it takes a half a tank to get to the destination but sometimes it could take 3 tanks.
Is A Flat Fee Better or is a Retainer Better?
It depends on the case in my mind. You don’t want your lawyer to be paid too much and believe it or not — you really don’t want them to be paid to little either.
In a criminal defense practice there are many cases we handle very routinely where our time is predictable and as the lawyer, we’re willing to take the risk on a flat fee because we know from experience the amount of time we’ll be spending on a certain case falls in within an acceptable range. Those tend to be misdemeanors like DWI, domestic assault, or theft cases to name a few.
Retainers are a flexible way to handle cases where our time output will be a bit more difficult to predict. Those would typically be cases like sexual assault, felony drug possession, or white collar charges such as embezzlement or money laundering. A retainer also assists when we need to pay other client expenses such as investigators or expert witnesses which we’ll need to involve from time to time depending on the case.
The retainer, then, is a good way of making sure the fee is just right on more complex cases where a flat fee may just be far too high or far too low.
*Jeremy Rosenthal is Board Certified in Criminal Law by the Texas Board of Legal Specialization. He is Designated as a Texas Super Lawyer by Thomson Reuters.