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Benefits of Hiring a Law Firm on a Retainer Scheme

March 31, 2020
1:58 pm

“Retainer scheme is a personal, economical, and practical solution to your constant legal needs.”

A general retainer agreement can be defined as an agreement between attorney and client in which the client agrees to pay a fixed sum to the attorney in exchange for the attorney’s promise to be available to perform, at an agreed price, any legal services that arise during a specified period. It is in the form of an option agreement. Since the general retainer fee is given in exchange for availability, it is a charge separate from fees incurred for services actually performed.¹ In practice, a retainer agreement encompasses the promise of the attorney, or a law firm, to provide legal services in the forms of legal due diligence and legal opinion.

Despite the demarcation between the different legal needs, a retainer agreement is proven beneficial to all types of clients. For said category, the retained attorney serves as a guide to assist the client in facing various legal issues related to the business. By contrast, for a corporate client, a retained attorney provides a fortification of the support by its in-house counsels. A law firm of considerable qualifications are reliable for a more thorough legal service and thus the credibility of which must not be undermined.

Retainer Agreement Keeps the Client Updated

Considering the dynamic nature of Indonesian law, modifications upon which are inevitable from time to time. The law is subject to constant changes in order to mirror the constant changes in society. Therefore, it is imperative that a business actor stays aware of any changes within the law, lest he or she becomes negligent in conducting his or her business. Without a retained attorney, a client would most likely fail to stay within the loop. In practice, most retainer agreements include a promise of periodic alerts made by the attorney about any news and updates which would affect the clients. Especially for the industries that are markedly susceptible to changes, a retainer agreement is the way to make sure that the client would never fail to comply with the prevailing law. A retainer fee is a small price to pay compared to the losses possibly incurred out of negligence.

Retainer Agreement Allows Clients to Gain Comprehensive Insights

Aside from ensuring an instant solution from the retained attorney, a retainer agreement entitles the client to obtain legal solutions pertaining to every and all legal aspects of his or her business. This is contrary to the terms found in project-based engagements, where the client is only allowed to obtain legal services in strict relation to the agreed matter. In a retainer scheme, the agreement does not contain any limitation to the scope of matters to be consulted with the attorney. A retainer client may come to the attorney with any inquiries on any legal field, e.g. manpower law or immigration law. Due to the finite scope of work in other schemes, the privilege of obtaining comprehensive insights is only found in the scheme of a retainer agreement.

Retainer Agreement is Customizable

A retainer scheme derives from an agreement between the attorney and the client. Therefore, any provisions contained therein are subject to negotiations beforehand. Clients are able to personalize the terms of the engagement during the preemployment period leading up to the agreement. The retainer agreement commonly determines the scope of work in the form of billable hours. This means that the client agrees to pay the attorney’s fees on an hourly basis. Usually, a retainer agreement puts a cap on the maximum amount of the billable hours for a fixed price, e.g. xxx hours per month for the price of xxx. Any billable hours exercised beyond the maximum amount would be deemed excess hours, and thus would be subject to an additional charge.

However, the client can easily circumvent this possibility by estimating the amount of legal services he or she might require within the retainer period. In the event the client is aware that he or she is in a fragile position thus needing a lot of legal advices, the client is encouraged to propose his or her own limit of the billable hours. On the other hand, in the event the client is certain that he or she is in a more secure position, he or she may negotiate for a smaller number of billable hours.

Furthermore, it is common for both parties to conduct an annual evaluation prior to every renewal of the retainer period. In the event the client is unsatisfied with the current terms regarding the maximum number of billable hours, the client is encouraged to revisit the agreement and propose a modification if needs be. Ultimately, a retainer agreement is patently flexible as the client is always able to personalize the terms contained therein; be it prior to the engagement or afterwards. A retainer agreement caters the needs of the clients in a personal way based on his or her preference.

Retainer Agreement Conduces A Long-standing Relationship between Both Parties

One benefit that is exclusive to the retainer scheme is that the retained attorney is very well acquainted with the client. This is because during the retainer period, the client is expected to confide all legal matters to his or her attorney. Therefore, the attorney is surely aware of every possible risk the client may face, or the client’s usual way of handling business. This kind of knowledge cannot be obtained through any other schemes without a very thorough and time-consuming due diligence, because only a retained attorney assists the client on a daily basis. Consequently, a retainer agreement allows each legal advice to be tailored personally to each client based on his or her strengths and weaknesses, as well as tendencies in doing business.

Retainer Agreement Provide Effective and Timely Solutions

As has been mentioned previously, by entering into a retainer agreement, the client pays an amount of fee in exchange for the attorney’s availability. Therefore, the client retains a sense of security against any possible complications in relation to his or her legal compliance, because the client is always able to request a guidance from the retained attorney on the matters with which he or she is concerned. Given the attorney’s consideration to remain available at the client’s beck and call, a retained attorney is obligated to respond to any and all inquiries made by the client during the retainer period.

¹ Lester Brickman and Lawrence A. Cunningham, Nonrefundable Retainers: Impermissible Under Fiduciary, Statutory and Contract Law, 57 Fordham L. Rev. 149 (1988), https://ir.lawnet.fordham.edu/flr/vol57/iss2/1, pg. 157 – 158.

Author: Yohana Veronica Tanjung

Gaffar & Co. is an Indonesian Boutique Law Firm that focused on Commercial law Area includes Dispute Resolution and Investment regulatory.

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