8.3 What Terms Should They Contain?
When drafting a Retainer Letter or Retainer Agreement, keep in mind that it should be clear, easy to understand and flexible enough to account for the particulars of the client's situation. The content of the Retainer Agreement should be tailored to the client and the type of matter - a sophisticated client may not need the same explanation as a person who is hiring a lawyer for the first time.
Although it is not wise to try to apply a single retainer template to all clients and types of situations, lawyers should consider including,
- the retainer does not begin until the letter or agreement is executed, returned to the lawyer and a money retainer is paid (but remember that you have an obligation to act to preserve a client's interests),
- the client's instructions,
- the authority to act (including authority for agents and experts and other parties where required),
- the scope of services to be performed, or not performed, as applicable,
- an explanation of how fees are calculated, what disbursements will be charged, and that taxes will be added to fees and disbursements,
- timelines for when you will send bills and your expectation for payment,
- where appropriate, timelines for when events will occur or are likely to occur,
- the method and frequency of communication with the client (e.g., you will strive to return phone calls and emails in a timely manner but the nature of your practice means you will not necessarily be able to return calls and emails the same day, etc.),
- if interest is charged on overdue bills, explain how it is calculated. (Make sure your interest provisions don't trigger the criminal rate of interest section of the Criminal Code; and that any interest charged is expressed as an annualized rate to comply with the Canada Interest Act),
- confirm critical instructions provided to the client at the initial meeting as well as crucial steps that need to be taken and by whom (i.e., don't let your client think you are going to take certain steps if you are not),
- terms under which the entire retainer will be terminated. Note that Code of Conduct addresses withdrawal of services (Rule 3.7 of the Code of Conduct).
- the client identification requirements in Rule 118.2 through 118.9 of the Rules of the Law Society of Alberta (See Module 7 for more information on these requirements),
- clarify what happens to any remaining funds when the matter is concluded or if the retainer is terminated before the matter is concluded and
- if there is a joint retainer or a third party is paying the legal fees, address what happens to any money left in the lawyer’s trust account at the end of the retainer and what happens if the retainer is terminated before the matter is concluded.
The Law Society has created an Interactive Retainer Letter Guide, taking you through provisions of a basic Retainer Letter. Remember that Retainer Letters must be tailored to the type of work you are doing, the particular matters for which you are retained and how you communicate with clients so a one-size-fits-all model is not appropriate. Clarity and completeness are more helpful than keeping the letter short.
As you work through the Modules of the Small Firm Practice Course, you will encounter sections which suggest that you consider addressing matters in your Retainer Letter. Our interactive Retainer Letter Guide does not address all of these possibilities. We recommend that you revise your Retainer Letter to reflect your client’s particular situation as you work your way through the Modules.
Did you know?
The Alberta Rules of Court have specific Rules governing Retainer Agreements and Contingency Fee Agreements. According to Rule 10.6 (1), a provision of a Retainer Agreement is void if it:
- purports to relieve a lawyer from liability for negligence or any other liability to which the lawyer might be subject as a lawyer, or
- purports to provide that an action, application or proceeding cannot be abandoned, discontinued or settled without a lawyers’ consent.
And according to Rule 10.6(2), a client is entitled to change lawyers or decide to self-represent at any time despite any agreement to the contrary.