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The Classic Retainer – better cash flow, better client relations.

I often talk with attorneys about moving their billing from an hourly based system to a flat fee system or what I call a classic retainer system (i.e., a set monthly payment from a client to assure access to the attorney which is earned upon receipt). This is differentiated from a retainer that is held against future billings.

While I know few attorneys that use a classic retainer system, it does offer many advantages for both the attorneys and clients. For attorneys, a classic retainer agreement assures a reliable cash flow, it reduces administration costs associated with hourly billing, and it allows the attorney to focus on the client’s needs without being worried about tracking every minute of time spent with the client. For the clients, they can pick up the telephone without worrying about being charged for every call, they know the attorney they prefer will always be available, and, if the client receives value for their money, they will have a stronger, broader relationship with the attorney. Ed Poll’s Law Biz Tips dated November 4, 2008, has an excellent discussion of some of the ethical issues that must be considered when entering into a classic retainer agreement.

As you think about differentiating your services in this market consider offering alternative billing arrangements, including the use of classic retainers, to enhance your competitive edge. If this interests you, contact LOMAP to find sample fee agreements and additional resources related to the ethics of such fee arrangements in Massachusetts.