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Decoding Retainers: Navigating the Two Faces of Legal Payments

Wait, What?!!! There are two different types of Retainers?

In one word, Yes! There are two types of retainers that can be paid to an Attorney or Law Firm. They are Operating Retainers and Trust Retainers. And the difference between them is where they are held and how they are used.

Operating Retainers: Immediate Access, Flexible Usage

An Operating Retainer refers to funds received from a client that are deposited in the Law Firm’s Operating account. When a retainer is paid specifically to the attorney for being available during a specific time period or for a specified matter, that retainer belongs to the attorney, as it is not a payment in advance for future service. It must be deposited into the law firm’s operating account.

Operating Retainers, or retainer fees, are payments made to attorneys held in the attorney’s general/Operating account until legal services are rendered. The attorney deducts their fees as services are performed. This arrangement offers several benefits, including immediate access to funds, useful for paying client case expenses such as filing and expert witness fees. Additionally, it eliminates the need for the attorney to hold the funds in a separate account, saving time and money.

Trust Retainers: Transparency and Client Control

A Trust Retainer refers to funds received from clients that are deposited into the Law Firm’s trust or escrow account. In most states, a retainer paid by a client in advance for unearned fees and future costs is considered the client’s funds. It must be deposited into the attorney’s trust account until the fees have been earned, and the client has reviewed the invoice for services provided. Exceptions to this rule exist in New York, New Jersey, and Illinois.

A Trust Retainer offers transparency and control to the client. They can monitor the amount of money left in the Trust account and request updates on billing. This type of retainer provides a sense of security, ensuring that the client’s money will be used only as legal services are performed.

In any case, it is important to carefully review the terms of any retainer agreement before executing it. The type of retainer chosen will depend on the purpose of the retainer and the specific needs of the client and law firm. Understanding these distinctions is crucial for navigating the intricacies of legal payment arrangements.

Call Juris Ledger today if you have any questions about your Law Firm’s financials. You reach us at (410) 469-2450 or visit us at to set up an appointment.

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