Should my law firm use retainers or just bill as work is done?

Misbah Jalal Siddiqui

Should my law firm use retainers or just bill as work is done?

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Law Firm Billing

Law firms either bill as work is done (e.g., monthly, quarterly, or at predetermined milestones) or by using a retainer model.

The three retainer models most frequently used by law firms are:

  • General retainers
  • Flat fees or advance payment retainers
  • Security retainers

General retainers secure a lawyer’s services for a particular period of time, and flat-fee retainers function as complete up-front payment for an anticipated set of services.

The most commonly used of these is a retainer. Under a security retainer, a client establishes a trust account with a law firm on which the firm then draws for services completed.[1]

Pre-funded retainers offer many advantages over periodic billing. One particularly advantageous type of retainer is known as an evergreen retainer. Under an evergreen retainer agreement, clients continually replenish the funds in the trust account if the balance falls below a certain amount.[2]

Here are some of the benefits to both law firms and clients:

Increased client ease and satisfaction. Because regular billing is handled internally (by drawing from the retainer), clients are only required to submit funds to the firm when their retainer balance drops below a specific point. Clients appreciate fewer bills in the mail and having one less to-do (although you are required to still send them invoices and need to get their approval for the bill before withdrawing the funds).

Increased collection rates. Because billing happens internally, evergreen retainers allow firms to bring firm collection rates up to 100%, which increases profit margins.

Streamlined accounting.  Evergreen retainers simplify the process of settling invoices because bills are paid immediately. Law firms can also seek billing and accounting software that allows retainer balances to be tracked automatically. The software can alert users when a balance is getting low and even automatically send a notice to the client.

Stronger relationships with clients. Clients on retainer are invested in a long-term relationship with their firm of choice. They have indicated their loyalty, and they will be more likely to pick up the phone to connect with a firm if they don’t expect a bill to arrive in the mail every time they ask a question. This allows for stronger personal relationships and increases client retention for the long haul.


1. The Basics of Client Retainer Management for Lawyers
2. Tips For Improving Your Law Practice Cash Flow: Evergreen Retainer

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