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What are the benefits of having a retainer?

CosmoLex TeamDecember 23, 2019

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Retainer

Requiring a retainer for your clients to get a financial commitment on their end presents a number of advantages, including:

Maintaining cash flow

For law firms, consistent cash flow allows you to plan for covering costs associated with payroll and traditional business expenses such as copiers, leases and equipment. Sending out invoices takes time, but waiting for the payment to arrive can take much, much longer. Even if the terms on an invoice are net-30, there will always be clients who don’t pay in a timely manner.

Requiring a retainer will bring to light any potential concerns for timely payment if the client fails to provide the retainer funds. With regular payments coming in, firms can make regular outgoing payments.

Avoiding collection issues

While clients must still be invoiced and approve funds withdrawn from retainers and their respective trust accounts, these funds help to reduce the amount of time spent on collection issues. Rather than taking on a client who may not have the funds to cover fees, retainers ensure there is a pool of funds to draw from for payment. Additionally, retainers reduce the amount of time spent following up and chasing down clients for payment.

Retainers typically fall into one of three categories[1]:

  • Classic retainer
  • Security retainer
  • Advanced or flat-fee retainer

Under each of these, law firms are required to upload proper handling before disbursing payments. Even while operating under the premise of retainer and trust accounting rules and regulations, these can still be very effective in ensuring payment for work completed.


References

1. Attorney Fees: How to Avoid a Conflict with Your Client

Tags:
  • benefits of retainer
  • retainer account
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[1] For new LawPay customers only. The monthly fee is absorbed by CosmoLex only for active LawPay users (which is defined as processing at least one credit card transaction within CosmoLex each month).CosmoLex may deactivate inactive users LawPay account or charge LawPay’s normal monthly fees of up to $20/month.

[2] If your external accountant or bookkeeper qualifies to become “CosmoLex Accounting Partner”, he or she can access your account remotely (with your explicit permission), without any cost to you or them. Call us for details.

  • Features
    • Legal Billing & Payments
    • Business Accounting
    • Trust Accounting
    • Practice Management
  • Pricing
  • Happy Customers
  • Compare To
    • Desktop Systems
      • CosmoLex vs PCLaw
      • CosmoLex vs Quickbooks
      • CosmoLex vs Tabs3
      • Other Desktop Software
    • Cloud-based Systems
      • CosmoLex vs Clio
      • CosmoLex vs MyCase
      • CosmoLex vs PracticePanther
      • CosmoLex vs Rocket Matter
      • Other Cloud-based Software
    • Manual Systems
    • Starting a New Law Firm