Overview of Retainer Agreements in New York
Retainer agreements form the backbone of almost any law practice. They are contracts that specify the work to be done and the fees to be charged for that work. Much of the information in a retainer agreement is subsequently included in the client’s file and provides the basis for authorizations to get things done, such as authorizations to obtain medical records or sign a court document.
Retainer agreements are particularly important in New York, where there is a great deal of authority on what must be included in a retainer agreement , the degree to which a retainer up front can be charged and held, and what must be done with unused retainer money. Some matters just cannot be handled in New York unless appropriate authorizations are obtained from the client. Much of the information required for those authorizations is contained in the retainer agreement.
Most of the information required in retainer agreements must also be disclosed to the client under attorney-client trust accounting rules.
Essential Elements of a Retainer Agreement in New York
One of the first steps an attorney should take when entering into a relationship with a new client is preparing a retainer agreement that sets forth the terms and conditions of the relationship between the parties. As stated above, because of the rules of ethics applicable to attorneys in New York, it is critical that the terms of the engagement be reduced to writing so that both sides are clear as to their respective rights and obligations. The retainer agreement between the client and the attorney should contain the following basic items:
Scope of Services
Unlike written retainer agreements for debt settlement (which followed a very specific form required for regulatory purposes), retainer agreements for legal services can assume a variety of forms depending upon the attorney’s individual practice. In many cases, the legal matters being handled by the attorney can be complex in nature and may require a number of written stipulations. However, the main part of the retainer agreement should detail the scope of legal services to be provided. For example, is the attorney only being retained to provide legal advice, or will he be rendering other services such as obtaining documents, letters, and other tasks on the client’s behalf? In addition, are there any tasks that may be excluded from the attorney’s responsibility as part of the scope of legal services? As in any business, the devil is in the details and as much as possible, the attorney should be able to specify the scope of services within the retainer agreement itself.
Fee Structure
Another important aspect of the written retainer agreement is the attorney’s fee structure. While many attorneys charge flat fees for a number of services, others charge by the hour. Still others will charge a combination of fees depending upon the type of service being rendered. Regardless of the method used, it is important for the attorney to clearly specify whether the client’s payment is to be made on an ongoing basis while the legal services are rendered, or whether it will be paid 60 days after the task is rendered (and the invoice is sent). Finally, the retainer agreement should specify the method of payment: cash, check, or credit card; this is particularly important if credit cards are to be used to fund the retainer agreement.
Termination of Legal Services
The retainer agreement should also contain a termination clause, either for the attorney or client; sometimes you may find this clause referred to as a "cancellation clause". In addition to setting forth the circumstances in which either the attorney or client may terminate the representation, the clause should also set forth the parameters of the relationship or any restrictions often found in other retainer agreements, such as requiring the return of retainer funds at the conclusion of the matter. If the retainer funds are to be held in a dedicated account until needed, the retainer agreement should specify whether the attorney may withdraw all or just part of the retainer funds to pay his or her legal fees. The attorney should also consider containing a clause that specifies how the retainer funds may be returned in the event that all of the legal services have been completed, but not all of the retainer funds have been used.
Legality of Retainer Agreements in New York
On the topic of "Crafting a Sample Retainer Agreement for New York Clients", this section should cover the specific legal requirements and regulations governing retainer agreements in New York, including state-specific laws or ethical considerations: For retainer agreements in New York State, attorneys must be licensed in New York to practice, and must comply with the New York Code of Professional Responsibility, which requires that the "scope of work and fees to be charged" must be "defined with reasonable clarity." NY State RPC 1.5(b). Further, the "scope of representation and the basis upon which the lawyer’s fee is to be determined" must be communicated to the client and confirmed in writing. Id. Although there is some dispute as to whether the written retainer agreement requirement should be limited to "new clients," New York State courts have found the phrase "at the outset of the relationship" in the rule to mean within a reasonable time after the relationship is established. Regarding flexibility in this new request for written retainer agreement, NYC Justice Anil C. Singh has stated "I do not interpret this to mean that… attorneys must comply with 1.5(b) at the very moment of the initial or first meeting, leaving no room for flexibility under unforeseen circumstances." New York State Supreme Court, Kings County, Riverdale Stables v. Stadt, et al., 239 A.D.2d 211, 658 N.Y.S.2d 1002 (1997). The New York City Bar Association recommends the following concerning the written retainer agreements for legal services: The New York State Bar Association also offers sample form retainer agreements.
Typical Pitfalls in Retainer Agreements
When drafting a retainer agreement, you should be careful to avoid certain common pitfalls that can jeopardize your ability to collect on your attorney’s fees. Foremost among these is failing to meet the statutory requirements of the New York Judiciary Law § 475. Any retainer agreement for "continuing" services where the total anticipated fee will exceed $3,000 must be in writing. Client funds must be segregated from firm funds from the very beginning. If you will be receiving the retainer from the client as an advance against fees, the funds must be deposited to an Interest Bearing Escrow Account, rather than the Attorney Trust Account. (N.Y. C.P.L.R. §1207-a(e)&(f) and N.Y. Jud. Law § 497). If the fee is for continuing services and greater than $3,000, there are additional requirements. The agreement must set forth: (a) the terms of payment; (b) the scope of representation; and (c) the basis or rate of the minimum fee. (Jud. Law § 475(1)) If a retainer agreement fails to comply with these requirements it is void, unless one of the exceptions covered in § 475 is met. (See Solomon v. Shapiro & Simiroski, 102 Misc. 2d 828, 425 N.Y.S. 2d 992 (Sup. Ct., Kings County 1980). The New York appellate courts had created an exception to this rule regarding post-retainer agreements, but the Court of Appeals recently disallowed this exception. (See Solow v. Penrose Partners, LLC, 8 N.Y.3d 213, 832 N.E.2d 838, 831 N.Y.S. 2d 517 (2007)). You must bear in mind that the Court of Appeals has now held that all agreements for legal services must satisfy the terms of § 475. The failure to fulfill these requirements will keep you from collecting on fees that might have otherwise been due.
New York Retainer Agreement Sample Template
Sample retainer agreement filled in (with fictitious names and law firm name, of course) as an example for a New York client.
Legal Services Retainer Agreement
This Legal Services Retainer Agreement ("Agreement") is entered into this 1st day of December, 2015, by and between Your Future LLC, a licensed law firm located at Beautiful Offices at the Top of The Building, in the City of New York, NY, 00000 ("Law Firm") and Maya Goldstein of 123 Lane, Brooklyn, NY 11111 ("Client").
Client authorizes and appoints Law Firm to represent Client in connection with worker’s compensation matters, under the New York Workers Compensation Law.
The Client agrees and acknowledges that the following fees will apply for services to be provided by Law Firm, per matter (of course they can be adjusted as appropriate for the specific client and matter):
-For matters that will involve court appearances,
-If ever more than 4 hours are spent on my matter,
-If a travel time is incurred,
-in the case of third-party subrogation actions,
GIFTS AND EXPENSES: The Client agrees to reimburse the Law Firm for reasonable estimation expenses and gifts above and beyond the above hourly rates. Such gifts and expenses may include, but not be limited to filing fees, court fees, deposition appearance fees, court reporting fees, copying fees, process service fees, expenses incurred in transporting the Client to and from appointments or Court, and out-of-pocket expenses for lodging, meals, transportation, witness fees, fees for copiers, fax machines and telephone usage.
SUPPORTING DOCUMENTS: The Client further understands and agrees that this Agreement is contingent upon the Client’s cooperation with the Law Firm in providing documents pertaining to his/her claim and providing other assistance that may be needed. The Client agrees to provide his/her complete social security number; all documentation pertaining to the claim should be provided to the Law Firm, including but not limited to pay stubs, tax returns, medical bills and correspondence from any insurance carriers or other parties to comply with the requests of the Law Firm and/or Court.
REIMBURSEMENT: Notwithstanding the fee schedule outlined above , Client agrees to pay 50% of all proceeds recovered by the Law Firm with respect to this Agreement. This includes, but is not limited to, any settlement, verdict, or award. Client also agrees that 25% of the retainer fee paid to the firm is non-refundable. A refund will only be given on a pro-rata basis when the attorney-client relationship is severed by the client if the matter is a single issue case (i.e. permanent disability valuation). The full retainer fee is considered non-refundable when the matter is an accepted compensability issue (i.e. the case has been accepted for indemnity/medical benefits). In such a case the retainer is a deposit that the client is paying up front toward the firm’s bills. When a fee is earned, the amount of the retainer offset on account of the fees earned will be deducted.
Client to pay a deposit of $4,500.00 due upon signing. Upon receiving payment of the retainer fee, the Law Firm will represent the Client and all invoices must be paid in full before the law firm is authorized to disburse any portion of the proceeds. Should Law Firm need to incur additional costs for expert witnesses or complex research services, Client will receive notice and an opportunity to approve the additional costs before services are retained.
The Client agrees that once a settlement is reached, he/she is obligated to remit 50% of the net proceeds of the settlement (minus any costs advanced by the Law Firm) or judgment to the Law Firm according to the above-listed fee schedule. Authority is hereby granted to Law Firm to deduct, if not already deducted, all owed amounts from any settlement proceeds. A maximum cost for the legal services rendered to the Client shall not be allowed to exceed 50% of the final recovery.
COMPLAINTS: It is our goal to represent you vigorously and make you feel as comfortable as possible with our approach to your issues. If you have any questions or concerns with the manner in which you are being represented, please do not hesitate to ask us. Your satisfaction is important to us as we want to keep your business throughout the years. We will do everything possible to address any and all concerns, and encourage you to stay in close contact with our office.
Retainer Agreement for Different Areas of Practice
Your practice areas will affect your retainer agreement in different ways. For instance, a matrimonial client might require a different contract than an adoption client, since a matrimonial retainer agreement might need to include terms for any support or property settlements. In contrast, an adoption client might only need your services for the process of securing the adoption itself. With the recent decision in In the Matter of Dallas S., any long-term clients should be asked to sign a new retainer agreement if it has been more than 10 years since their last agreement was signed.
A real estate client’s retainer agreement might differ from other clients, as these transactions will require different courses of action and in some cases, a closing. Corporate law clients will most definitely have a different contract, as they are more likely to require continuous legal services, especially in the realm of intellectual property. It’s also a good idea to include specific scopes of work when your firm takes on new clients, as some clients might have unexpected expectations and other clients might assume that your firm will do any type of legal work.
When it comes to LONG documents, such as administrative rules, a shorter retainer agreement could be used. For example, if your client wants someone to review an agreement, you could have the retainer agreement stipulate which documents you will review and how many hours will be spent on their review.
Confirming the Client’s Understanding and Acceptance
As essential as every aspect of the sample retainer agreement is, it is equally important that you explain its provisions in a way that the client will understand, or which at least can make sense to the client. Practiced lawyers, who use a retainer agreement so often they can recite it by heart, sometimes forget that a brace of legal speak or Latin phrases might be understandable only to someone with a law degree. Efforts to explain the provisions must be more carefully explained to someone who is not familiar with them, or one who may not even have an eighth-grade education. And certainly, each client should be given a clear explanation of any concepts or points that are not self-evident. The clearer your client understands the concepts and points provided in the retainer agreement, the more likely your client will feel satisfied with its terms . And again, the more clearly the client understands the terms of the contract, the less likely it is a client will attempt to escape its obligations later on. As prescribed at other points in this article, prior to signing the sample retainer agreement, a client should be made to understand each and every one of its provisions. Take the time to discuss in detail the retainer agreement in its entirety, explaining each provision, or at least those most likely to be likely to be misconstrued. For example, you may want to explain in detail: The same applies if you are using a long retainer agreement. If you have added a simple retainer agreement to your menu of services and you discover that your initial clients tend to be confused and feel uncomfortable with it, consider perhaps employing it only with those who may need to be retainer to represent them in a long-term engagement, such as a business or a commercial case.