6 Tips for Building a Better Retainer Agreement
Many attorneys use short retainer agreements that address little more than the fees themselves. Personal injury fee agreements, for example, often are limited to one page. The realities of a sexual harassment case, however, can create all manner of complexities, particularly where the Federal Rules of Civil Procedure are involved. A one-page retainer agreement just won’t do. Here are 6 tips for building a better retainer agreement, excerpted from Litigating Sexual Harassment & Sex Discrimination Cases:
1. Clearly establish the subject of the representation
Early in the agreement, set forth the subject of the representation. This will limit the scope of your responsibilities to the sexual harassment claim and related claims. While you might think it obvious that an employment attorney is not responsible for handling a car accident, clients seldom see the attorney-client relationship through the same narrow lens. A statement of the claims in the retainer agreement itself generally will suffice, but you might consider also attaching a separate fact statement, which will provide more space for elaboration.
2. Consider a limited-purpose retainer agreement
It is not uncommon for an attorney to take a case for the sole purpose of negotiating a settlement with the EEOC. In that instance, consider using a limited-purpose retainer agreement, which requires you only to represent the client in that limited capacity. Should efforts at resolving the case at the EEOC fail, the retainer agreement can be revised. This permits you to use one fee provision for the initial work – for example, a flat fee – while reserving the right to renegotiate that fee if litigation becomes necessary. Your client also may be more comfortable addressing the case in stages, and thereby postponing the decision about having to pay the greater fees or costs that may result from litigation.
3. Think twice before lowering your hourly rate
The hourly fee agreement is the simplest of all. The client pays the attorney’s hourly rate based on monthly billings. In addition to the guarantee of payment, the attorney reaps the benefit of getting paid immediately, rather than having to wait for the end of the representation. If you and your client choose to go this route, think twice before lowering your hourly fee. When arguing that your hourly rate is reasonable in fee petitions, it is helpful to be able to show that you are, indeed, paid that hourly rate by clients. There are other considerations in fee petitions, of course, but being able to say that you regularly receive your requested hourly rate is a powerful tool in that context.
4. A replenishing retainer is always advisable
No matter what fee arrangement is used, unless the client will not be funding any of the litigation at all, a replenishing retainer is always advisable. For example: In a $10,000/$5,000 replenishing retainer, the client deposits $10,000 into the client trust account. The client is sent a bill each month, but is not required to pay anything unless the funds on deposit drop below $5,000. At that time, the client is required to deposit whatever funds are necessary to bring the funds on deposit back to $10,000. This has several advantages for both you and your client. It avoids “nickel and diming” the client with $50 bills in the months where you do nothing but send an email asking opposing counsel for an update. At the same time, you are free to work on the case and be assured of payment. It also gives you time to file a motion to withdraw as counsel if the client stops paying, before you do any work for which you will not get paid. From the client’s perspective, it is possible to avoid having to make a single, large payment by making smaller ones that keep the balance in the trust account over the replenishment amount.
5. Provide for a settlement statement before funds are distributed
Settlement payments often go through the plaintiff’s attorney’s client trust account. Accordingly, the retainer agreement should include a provision explaining your authority to receive and disburse funds. That provision should include language requiring you to provide a written statement explaining how the funds are to be distributed before actually distributing any funds. Providing for a settlement statement is good practice because it forces the client to agree to the distribution (or forces a discussion as to how the distribution should proceed) before any funds are disbursed.
6. Build trust by taking the time to explain each provision
A proper retainer agreement – one that does more than just establish the fee arrangements – can be intimidating and confusing. Take the time to meet with your client to review the agreement. Explain each provision, and have your client initial each page. Carefully explaining the retainer agreement builds trust with your client and lays a solid foundation for the representation.
Aaron B. Maduff is a member of Maduff & Maduff, LLC, a national law firm dedicated to the practice of employment law. Prior to law school at the University of Iowa, Mr. Maduff had a background in rape victim advocacy, which led to an interest in practicing sexual harassment law, something he has done since his first day as a licensed attorney. Mr. Maduff is licensed in Colorado, the District of Columbia, Illinois, Minnesota, Ohio, and more than 20 federal jurisdictions, including the Supreme Court of the United States. He is Board Certified as a specialist in Labor and Employment Law by the State of Ohio. Mr. Maduff has taught courses on employment law at both the undergraduate and graduate level. He is a frequent speaker on employment law issues to such organizations as NELA and its 7th Circuit and Illinois chapters; the Illinois State Bar Association; the Chicago Bar Association; and the Council for Legal Education Opportunity.
