A Rundown on a Retainer Agreement

Standardized Legal Documents A Rundown on a Retainer Agreement

Breaking Down the Retainer Agreement

Retainers are not reserved for lawyers only. Many other occupations also require a retainer agreement. Negotiating a beneficial retainer agreement stems from understanding it to a T. We’ll assist you in discerning different types of retainer fees and agreements, figuring out what the agreement should cover, and weighing its pros and cons.

Our app will also come in handy when you need to draft various legal documents for your business or other purposes.

What Is a Retainer Agreement?

A retainer agreement is a contract between a client (typically a company) and a professional (usually a freelancer) where they agree to work together. The purpose of a retainer agreement is to set forth the roles and obligations of the parties entering into it.

The word retainer in this agreement is a fee that the client usually pays in advance to retain the services of a professional in case they need them. So, even though it’s a work-for-hire agreement, you shouldn’t confuse it with the independent contractor agreement.

Retainer Types

Types of retainer fees and agreements vary depending on your line of work and what both you and the client decide on. The most common types are:

  1. General retainer—The client pays for your availability so that you can provide a service when called upon. It usually covers a specific period
  2. Retaining fee—Clients need to deposit a lump sum in a designated trust account in advance. Once you perform a service, you can withdraw the agreed amount
  3. Special retainer—It includes a flat fee for a particular project

The Pros and Cons of Retainer Agreements

Most jurisdictions require a retainer agreement, but even if they don’t, you should look into the benefits and drawbacks of having one:

Pros Cons
  • Guaranteed income—It is especially beneficial for freelancers who are living off variable incomes and want steady earnings
  • Extra funds—Even if you don’t perform any services in a month, the company needs to pay you the retainer to keep you available
  • Flexible stability—No need to scout for new businesses all the time while still having a certain amount of freedom
  • Fewer opportunities—You may need to turn down other job offers because you’re completely booked
  • Varying workloads—Depending on your clients and the agreement, you may work overtime for one period and then barely anything for another, which can be overwhelming both personally and financially

What Does a Retainer Agreement Cover?

Drafting a retainer agreement that will benefit both parties is essential. Before you negotiate or add any clause or term to the agreement, go over the basics almost every retainer agreement should cover:

  • Scope of your work—A detailed description of your services
  • Amount of work—Number of hours and projects
  • Retainer fee—The amount and method of payment
  • Other payments
  • Additional expenses—E.g., travel costs, meals, materials, and paperwork
  • Client responsibilities
  • Service provider responsibilities
  • Office hours
  • Communication methods
  • Indemnification or release of liability
  • Termination conditions
  • Additional provisions

Tips for Getting a Better Retainer Agreement

If you want to be satisfied with your work, you’ll need to keep a balance between your and your client’s needs. Negotiating better terms may entail compromising in certain aspects, but it can be beneficial for you in the long run. Here are some tips on obtaining a promising retainer agreement:

  • Prove your worth—Develop relationships and keep a record of a job well done
  • Consider a retainer discount—Offering or accepting a lower retainer fee may be a good idea for new clients who are not familiar with your work
  • Prepare a pitch—Present your services in the best possible light to get the projects you want and the income that you deserve

Learn About More Legal Documents With the Help of DoNotPay

You have to understand agreements and contracts you may need to sign, which is why we are constantly adding rundowns on different legal documents to our learning center. Explore different documents and find tips on acquiring the best deals for yourself:

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