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As your business grows, you may consider having a lawyer "on retainer" to handle any legal curveballs that come your way. But what exactly does that mean?
Instead of using different attorneys on an ad-hoc basis, the idea is that you can retain the services of an attorney whom you trust with your business' affairs.
Here are three things your business should know about retaining an attorney:
1. A True Retainer Is for Exclusivity.
Although there are easy ways to find business attorneys online, it may take a while to find one who has the time to properly look after your business' needs. Having an attorney on retainer means that your attorney will give your needs priority over their regular billings whenever you call.
Keep in mind that a true retainer agreement is only for this period of exclusivity. It is not payment for future work.
2. There Are Different Types of Retainer Agreements.
This is a confusing part of the legal practice, as "retainer agreement" can often be used interchangeably with "fee agreements." A true or classic retainer (as discussed above) is a payment solely for your attorney's availability and is non-refundable -- regardless of how much work is done.
However, attorneys may present you with something that looks like a retainer agreement but instead is really an advance fee. For example:
"Client agrees to pay attorney for his or her services a fixed, non-refundable retainer fee of $____ and $____ an hour after the first 10 hours of work."
Despite the language, this is actually an advanced fee and not a true retainer. Here's the bottom line:
Both are legal, but your business should know the difference before signing anything.
3. Retaining an Attorney Can Pay Off.
Having an attorney on retainer can help ease your stress for your business' future legal hiccups by:
Retainers can allow you to get exclusive right to the attorney you respect and trust with your business, and that peace of mind alone is incredibly valuable.
Need legal advice on how your small business should operate? Consult with an experienced business attorney about your options.
Editor's Note, June 28, 2016: This post was first published in June 2014. It has since been updated.