Retainer Agreement
Definition of "Retainer Agreement"
The definition for retainer agreement: work for hire contract that provides a client with a fixed number of work-hours from freelancers or lawyers. Even a real estate lawyer uses this type of contract. A retainer agreement is usually paid in advance, but recurring (monthly) payments are not unusual. This agreement is signed between a client and a professional before any work is completed. The professional agrees to make himself available according to a schedule within a period of time.
Retainer agreements provide benefits for both parties involved, and it’s a way to secure funds, given the fact that most are not full-time employees. It reduces risks on the one hand but brings along some disadvantages on the other hand. As part of the closing procedure, a real estate lawyer would sign a retainer agreement, also known as an engagement letter. Every service and every fee (refundable or nonrefundable) must be written down.
For example, a client hires a real estate lawyer to work for him 10 hours every month. If the lawyer needs 12 hours to complete his client’s tasks, the client will have to pay 2 more hours. If the lawyer works only 8 hours to fulfill the tasks, the client still has to pay for 10 hours of work. They only break even when the lawyer works exactly 10 hours. Every real estate lawyer must adequately define the scope of his engagement with his clients.
Freelancers and lawyers usually charge by the hour. For example, a real estate lawyer may charge anywhere between $150 and $350 per hour. So the client pays the retainer fee according to the terms specified in the retainer agreement.
To escape the “feast and famine” cycle, most freelancers offer their services at a slightly decreased rate in exchange for steady pay through retainer agreements. Clients see it is a way to hire someone without paying high payroll taxes while getting the job done at the best quality/price ratio.
Those who work in creative and support services know very well the definition of a retainer agreement. They are more likely to work in social media marketing, newsletter design, graphic design, content creation or web design. All retainers must keep track of the number of hours allotted to each customer and make sure they don’t work too much for the pay they receive.
Popular Insurance Terms
Marketing of insurance through independent agents; also called independent agency system. Independent agents usually represent several insurance companies and try to insure the risk ...
Search engine site that emphasizes the fields of environmental risk management, environmental engineering, environmental planning, physical and biological sciences, and various ...
Method of funding a pension plan under which a single premium payment is made to fund a single unit of benefit for one year of recognized service with the employer. For example, if the ...
In automobile insurance, coverage providing protection in the event of physical damage to the insured's own automobile (other than that covered under comprehensive insurance) resulting from ...
Liability reserve required to be maintained by the national association of insurance commissioners (naic) prior to 1992 for fluctuations in the values of investments in securities. Realized ...
Means of paying the cost of benefits of pension plan participants including retirement, death, and disability. ...
Law that stipulates the minimum reserve the life insurance company must maintain for its life insurance policies and annuity contracts. This law was first developed by the NAIC as a method ...
Insurance established under the federal Railroad Retirement Act for railroad employees, covering death, retirement, disability, and unemployment. Benefits are adjusted for cost of living ...
Two basic kinds of policies sold by health insurance companies: medigap insurance (medicare supplementary insurance); and medicare wraparound ...
Comments for Retainer Agreement
What are the disadvantages?
Aug 21, 2021 09:57:41Hey Heather! Thank you for reaching out to us. When it comes to the disadvantages of working through a retainer agreement, they generally have to do with time, communication, and expectations. The most commons is that you might get a lower income, but this depends on what is specified in the agreement, as in, how many hours you're expected to work a day and the length of the agreement. Also, the level of work can vary. However, you can clearly state the amount of time you are open to work for a week and hash out stuff such as deadlines, work scope, and expectations they should have.
Aug 23, 2021 10:30:03What happens once the retainer is paid back
Feb 25, 2021 02:59:16Hey Rachel! I do not fully understand your question. Do you mean what happens if the retainer fee is fully refunded? Typically a retainer fee is held by a third party in an escrow account. The fee is paid upfront, but it can't be accessed unit the services are fully performed. For example, some of the money might come back the client's way if the retainer fee covered a five-hour task that was solved in less than five hours. On the other hand, the client might need to pay more if the performed task required more than five-hours as stipulated in the contract.
Mar 01, 2021 10:02:21What is amount of retainer in Real Estate nowdays ( basic )?
Jul 28, 2020 07:40:00Hey, Raska! Your question is very broad and I assume you are referring to all service providers when it comes to real estate. There are multiple service providers in real estate such as lawyers, consultants, freelancers, and other professionals. If a retainer agreement is in place there is a retainer fee that needs to be paid and it doesn’t necessarily cover the entire cost of the service provided. It might be just a down payment on the future services rendered by that professional. Obviously the amount varies based on what services you request and how much hours it takes to finish the work. We already mentioned an example in the glossary with the lawyer that may charge anywhere between $150 and $350 per hour.
Aug 03, 2020 10:06:47Have a question or comment?
We're here to help.