A retainer is paid to a law firm, when that firm will be charging you or your business, for legal work, on an hourly basis. The retainer is “billed against,” by the law firm, as the firm performs work on your case. Most law firms do not bill you and wait to be paid. Instead, they bill you and are immediately paid, from your retainer, which they are already holding. This allows the law firm to focus on the practice of law, rather than on bill collecting. When a law firm works on a retainer, that firm will notify the client when the retainer is close to depleted so that the client can pay an additional retainer.

A flat fee works very differently. There are different types of flat fee arrangements, but – in general – when a client pays a flat fee, the flat fee is all the client will ever pay, except for incidentals and filing fees. In other words, the flat fee covers all of the hourly work the law firm performs. You will still have to pay for copying, filing fees, expert witnesses (if used), and other non-labor costs, but at least you know – up front – how much the general cost will be.

A flat fee cost structure may sound like a better deal, but this is not always the case. The problem is, with most cases, it is very difficult for the firm to ascertain how much time a particular case will take. When a client pays with a retainer and is billed hourly, the client will end up paying less, if the matter is resolved quickly. On the other hand, if a case takes considerable more time than the average similar case, the client with the flat fee payment arrangement will end up paying less.

Flat fee payment arrangments are generally only offered by law firms, in certain areas of law. For example, our firm offers a flat fee payment structure for most criminal law matters, nominee trusts, single-hearing representation (such as LAR family law matters), and in a few other areas. Ask your attorney how long he or she thinks your matter will take. They will usually give you an educated guess, and this may help you determine which fee structure you wish to go with.

Finally, there is a contingency fee arrangement, which is generally only offered in personal injury cases. Our firm also takes personal injury matters on a contingency basis. With a contingency fee arrangement, you pay nothing up front, and – in fact – you will never pay anything, if the law firm is unable to collect on your behalf. However, when the law firm does collect either a settlement or judgment on your behalf, the law firm takes an agreed upon percentage off of the top, along with costs – which include filing fees, copying and printer costs, postage, travel, and any other out-of-pocket costs the law firm incurred in taking your case.