How Does A Retainer Work
Being on retainer means that you’re “on-call” for a specified number of hours each week or month. The client agrees to pay you for these hours, whether he gives you work or not. Usually, service providers offer clients a reduced hourly rate for the security offered by being on retainer.
The term “retainer” is often used to describe any arrangement in which an artist agrees to provide his services regularly and on call at no charge — usually for less than full working capacity — in exchange for some form of compensation or other benefit. Often, this involves a payment per hour worked rather than a flat fee. This concept has been around since the beginning of time. For example, early court jesters were considered retainers because they served as entertainers for royalty. They also provided comic relief during times of stress. In modern usage, a retained agent represents a client who pays him (or her) a regular salary for providing representation in certain areas, while retaining control over when and how much time will be spent working.
In most cases, a retained agent works with one client at a time. However, there are exceptions where multiple agents can represent several clients simultaneously without violating their contracts.
Retainers come in many forms, including:
Hourly retainers – These arrangements typically involve an hourly rate or salary plus expenses such as travel, lodging, meals and parking. Hourly rates are typically lower than those charged by salaried employees. Many attorneys use hourly retainers. Some agencies hire two types of professional people: independent contractors who bill by the hour; and salaried employees who receive a fixed wage. Salaried employees may have other duties besides billing hours, such as maintaining office files, handling scheduling issues and taking care of administrative tasks. If your agency offers both kinds of people, it’s important to make sure all staff members understand what type of relationship they’ll enjoy.
Payment by project – Agents sometimes get paid only if they produce results. For instance, an attorney might ask a client to sign a contract stating that she will give him 50 percent of the gross proceeds from her case. He may then set up a trust fund for the client and require that she deposit 25 percent of the money received into this account monthly. Payments would continue until the funds reach $100,000 (the amount agreed upon). Other examples include real estate brokers who receive commission based on sales price, and personal injury lawyers who earn fees based on settlements. Payment by result is common among medical professionals, financial planners and others in fields that depend heavily on referrals.
Salary – An agent receives a salary instead of an hourly rate for performing specific tasks. Typically, salaries are higher than hourly rates but still below the level of salaried employees. Most private investigators, for example, receive a base salary plus overtime.
Fee or percentage – An agreement between a buyer and seller, businessperson and lawyer, or doctor and patient, for example, states that the person receiving the service must hand over a certain amount, often expressed as a percentage of the total transaction value. Fee agreements are typical among doctors, dentists and lawyers.
Dedicated space – Services provided by a legal assistant or paralegal are usually billed separately from the lawyer’s own services. To avoid double billing, the person doing the work makes sure to stay in the dedicated space assigned to her.
Other benefits – Clients may agree to cover the cost of training, equipment, advertising or marketing campaigns, supplies and other items.
A retainer may last anywhere from days to months depending on the nature of the relationship and the terms negotiated. But whatever its length, the basic idea behind retainers remains the same: To create a mutually beneficial relationship between parties that rely on one another for income. It’s also true that retainers do help protect workers’ rights, but the question arises whether the practice should exist at all. After all, isn’t it possible for an employee to quit? And even though employers don’t want freeloading artists hanging around their premises, aren’t they entitled to a break now and again?
Of course, the answer depends largely on the individual situation. Each case is unique, so it’s best to consult with an employment attorney about your particular circumstances before entering into a retainer agreement. While retainers can certainly cause problems, they’re generally viewed as fair ways to address the needs of both sides.
To learn more about retainers and related topics, follow the links on the next page.
According to the National Law Journal, a survey conducted by the American Association for Justice found that nearly 90 percent of respondents said they’d prefer to keep their current law firm if faced with losing their jobs. Only 10 percent of the participants chose a new employer within the same industry.
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