Retainer: Overview, definition, and example
What is a retainer?
A retainer is a payment made in advance to secure the services of a professional, such as a lawyer, consultant, or freelancer. It serves as a commitment between the client and the service provider, ensuring that the professional is available to provide services as needed. Retainer agreements are commonly used in legal, consulting, and creative industries, where clients may require ongoing or priority access to expertise.
Retainers can take different forms, including:
- General retainers – A fixed payment to secure availability over a set period, whether or not services are used.
- Retainer fees for specific services – Prepaid funds set aside for future work, deducted as services are rendered.
- Rolling retainers – Ongoing monthly or periodic payments for continued access to services.
Why is a retainer important?
A retainer is important because it provides security for both the client and the service provider. For clients, a retainer ensures priority access to expertise without needing to negotiate each engagement separately. For professionals, it provides a predictable income stream and guarantees payment for their availability and work.
For businesses, using retainers allows for consistent access to legal, consulting, or specialized services, ensuring smooth operations. For professionals, retainers provide financial stability and a long-term working relationship with clients.
Understanding retainers through an example
Imagine a business hires a law firm on a retainer basis. The business pays the firm a monthly retainer of $5,000 to ensure ongoing legal support. Each time the law firm provides legal services, the cost is deducted from the retainer. If the company uses more services than covered by the retainer, additional fees may apply. If the company doesn’t use all the funds, they may roll over to the next month or expire, depending on the contract terms.
In another example, a marketing consultant works with a startup under a retainer agreement. The startup pays a monthly fee of $3,000 to ensure the consultant is available for strategy meetings, content creation, and advertising support. The consultant guarantees a set number of hours per month under the agreement, ensuring the startup receives consistent service.
An example of a retainer clause
Here’s how a retainer clause might appear in a contract:
“Client agrees to pay Service Provider a retainer fee of [$X] per [month/quarter] for ongoing professional services. The retainer shall be applied to services rendered, with any additional services billed separately at the agreed-upon hourly rate. Unused retainer amounts shall [expire/roll over] as per the terms of this Agreement.”
Conclusion
A retainer is an upfront payment securing ongoing access to professional services, ensuring availability and priority treatment for clients while providing financial stability for service providers.
For businesses, retainers offer predictable access to expertise, avoiding the hassle of negotiating services on an as-needed basis. For professionals, retainers create steady income streams and long-term client relationships, ensuring business sustainability.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.