How does a retainer work in a divorce case?

How does a retainer work in a divorce case?

Some of the most frequently asked questions we get are about money, and how it all works when you hire a divorce lawyer. It’s a little extra confusing because different attorneys handle money differently, so, if you’re not already fairly familiar with how law firms do things, it can look a little wonky.

There are law firms that work on contingent fees (“no fee unless we get money for you!”), flat fees, and attorneys who, like us, do work on retainers and bill their work hourly.

You’re probably thinking, “Well, I’d like an attorney who does a contingent fee,” or “An hourly fee sounds nice and predictable,” but it’s not really something we have a whole lot of control over. Different lawyers practicing different types of law handle their fees differently, and it’s mostly down to the nature of their business. It’s not a “one size fits all” type thing, and it’s also not like we can just choose, for example, to start taking cases on a contingent fee. I’ll explain.

What’s a contingent fee? Can you take my case on a contingent fee?

A contingent fee is when an attorney doesn’t take money up front but, instead, takes a percentage of a settlement at the end of the case.

We see this most often with personal injury attorneys. They take your case, and then take somewhere in the neighborhood of 30-40% out of your final settlement.

We get lots of questions about contingent fees, and I can see the appeal – no fee up front! But personal injury cases (you know, car accident, slip and falls, that kind of thing) are very, very different from divorce cases, and this model doesn’t really work in the family law context.

For one thing, it’s not considered ethical. Our ethical rules prohibit us (family law attorneys, I mean) from taking cases on a contingent fee. So, yeah, for that reason, we won’t do it.

But, also, how would that even work? We take 30% of the assets you receive in the divorce? That’s an entire THIRD of your marital assets! That would probably, ultimately, cost you way, way more than hiring an attorney. Sure, we could potentially take a lesser percentage, but how do you determine what that percentage should be? Also, what kind of assets would a couple have to earn in order to qualify to pay their fees this way? There are plenty of divorce cases where the majority of what we divide is debt. Also, how do you take 30% out of a custody arrangement? It just…doesn’t work. (Which, incidentally, is probably why this is considered unethical.)

Personal injury is a different kind of law entirely. In a personal injury case, the attorney is looking at a case in terms of what the overall settlement value would look like. He knows that he is getting a percentage of that settlement. And it’s different money – it’s not taking 30% of a person’s life savings. It’s money that comes from the insurance company; it’s more or less a windfall to that person, and not representative of everything they’ve saved up over the course of their entire life.

It’s also why we don’t have free consultations. We’re not trying to interview YOU to see what your case is worth to us; we’re looking to give you legal advice for your situation. Ultimately, though, our time costs the same, regardless of the client, because we bill hourly.

But you can’t do a flat fee, either?

No, not really! I mean, theoretically it’s possible, but I think it’s probably most likely that you’d end up way over or way under paying for your representation that way. In family law, it’s hard to know how long a case will go on, especially from the initial consultation. It’s not like, for example, an immigration case or the drafting of a will, which follows a more predictable pattern. That’s where flat fee cases really work. In family law, there are too many variables, and it’s too hard to predict how long a case will take or what it will cost.

So, how does it work to take a case on retainer?

I like taking cases on retainer, because, in my opinion, it’s the most fair. A contingent fee wouldn’t work at all, like we’ve discussed, and a flat fee is too tricky.

With a retainer, you only pay for the work that is actually done. You pay an amount of money (the retainer) to an attorney up front to hire them, and then as work is done it’s billed from the retainer amount. If the account falls below a predetermined amount (set forth in the retainer agreement, which you will sign at the beginning of your representation), you replenish the account. If your account is closed (like, when your case ends, if you reconcile, or if you decide to go in another direction), whatever is left is refunded to you.

Attorneys who work on retainers bill hourly, so you pay for exactly what is done and how long it took. You get statements that set forth exactly what was done and how long it took.

It’s pretty straightforward, and that’s part of what I like best about it. On the surface, it can look like you might prefer something else but I think, at the end of the day, taking cases on retainers makes a lot of sense.

How do you determine retainer costs?

The cost of the retainer depends on the case. If it’s more complicated, the retainer will likely be higher. It also depends on the type of the case – separation agreement, contested divorce, custody, appeal, etc – and there can be a fair amount of variation, especially when it comes to litigated cases.

Each attorney is ultimately responsible for setting her own retainer fees, so it can vary even from attorney to attorney.

If you’re trying to figure out how much your case might ultimately cost, though, it’s not really the retainer that you need to look at. It’s the hourly rate each attorney charges.

Though hourly rates vary from attorney to attorney (depending on their experience, etc), they don’t vary from case to case.

I hope that helps! It can be really difficult (if not nearly impossible, to estimate total overall costs in a family law case), but having an idea of how it works can be really helpful. If you have more questions about attorney costs or how family law cases work, give our office a call at 757-425-5200.

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