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Someone hires a lawyer to file a complaint. The lawyer asks for a retainer of $25,000 which the plaintiff puts up. The engagement letter says that the lawyer's fees for work done will be charged against the retainer, which will is to be "replenished" to $25,000 on a monthly basis.

Recently the lawyer instituted a new "evergreen" policy. The lawyer did $10,000 of work in the most recent month. The lawyer billed for $20,000; $10,000 for the work itself, and $10,000 to replenish the retainer.

That doesn't seem right. My understanding is that the retainer represents collateral, against the lawyer's billing. As long as it is "replenished," the client is all paid up, right? I don't see why the client is charged for both the retainer and the bill itself because the retainer is supposed to the cover the bill. It's supposed to be one or the other.

Are there multiple practices/understandings about how a retainer is treated? Can a lawyer unilaterally change the terms and conditions of the billings in the above manner?.

Libra
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1 Answers1

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I will explain the typical billing approach.

The retainer is held by the lawyer in a trust account, and the client is the beneficiary. The client is the beneficial owner of the retainer money.

The lawyer billed $10,000 and thereafter transfered it from the client's trust account to the lawyer's or firm's general account in order to satisfy the debt. These two steps must be done in this sequence: bill, then transfer from trust.

Any additional money that the lawyer requests from the client to top up the retainer is not "billing" — it is due to a separate agreement to keep the trust account topped up to a particular amount.

Jen
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