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The meaning of “retainer” billing, compared to flat or fixed fee billing

An article in GC New York, Nov. 14, 2005 at 13, 21 explaining the term “fixed (flat) fees” gave examples only of phases in a specific law suit, such as $25,000 for discovery. It defined a “retainer” as where the client “engages the firm to handle all litigation for an agreed upon price either by matter or by time period.” Hence, $3,000 per case or $1.2 million for all cases handled in 2006.

My understanding of these terms diverges. Fixed fees can apply to portions or phases of a matter, agreed, but they can also apply to entire matters or bundles of matters.

As to retainers, a law department might agree to pay a fixed amount each month to a firm as a retainer, but at some time the two sides reconcile against actual fees and costs incurred by the firm. A retainer helps the cash flow of the firm, and might allow a prompt payment discount for the law department. A retainer does not imply flat or fixed fees. (See also my post of Aug. 26, 2005 about yawns from law departments on retainers paid quarterly in advance and Oct. 14 on retainers and prompt payment.)