What are they?
In general, a retainer letter or agreement confirms the terms of engagement of your professional services. It sets out the scope of services to be performed, billing matters, and your authority to act on behalf of your client.
You should discuss the topics to be covered in the retainer letter or agreement early in your relationship with your client, preferably at the first meeting. If you decide to accept the client's case, you should send the client a retainer letter or agreement detailing what was discussed at the initial meeting, and setting out the essential terms of the relationship.
You should instruct the client to read the retainer letter or agreement before signing it, and in some situations, such as a contingent fee agreement, you should inform the client that he or she may want another lawyer to review the agreement. Keep a copy of the signed retainer agreement in the client's file.
What Purpose Do They Serve?
The retainer agreement helps to turn the client's mind to the issue of fees, and also that the services you perform are professional services that require payment.
It is essential to discuss fees with clients at the start of your relationship, and to issue timely and sufficiently detailed bills. This will help you to manage your relationship and manage your client's expectations. It may also increase the chances of your getting paid for your services and reduce the possibility that your client will file a complaint to the Law Society.
A retainer agreement serves a number of other valuable purposes. It can:
give you some assurance that at least some payment will be received for the services you perform;
set out the services you will and will not perform;
confirm your authority to act on the client's behalf;
outline how your services are to be billed, including frequency of billing, disbursements, tax issues, etc.;
confirm crucial information you discussed with the client at the first meeting;
let the potential client know that you are not representing him or her until the retainer letter or agreement is executed and returned to you;
provide a mechanism for replenishing a money retainer and alerts the client to the methods by which the lawyer-client relationship may, or will be terminated; and
provide valuable evidence about the intended terms of your relationship, if there is a dispute about matters such as the scope of your services.
It is important to remember that in the absence of a written agreement, uncertainty as to the scope of the retainer will be construed in the client's favour.
Before you ask your client to sign your retainer agreement, you should explain the terms of the document so that your client understands the scope of the professional relationship.
See the “Client Service and Communication Practice Management Guideline” prepared by the Law Society of Ontario for some additional relevant information, and the “Engagement Letters and Retainer” Podcast transcription also by the Law Society of Ontario.