Periodic retainer

Added Thursday 17th March 2005

If the client is able to supply detailed information about its historic legal spend and is able to give assurance that its pattern of work is reasonably consistent, it is possible to work out an average overall fee for given past periods which can be used to calculate the amount of periodic retainer for a forthcoming period. It is a common feature of such arrangements that no guarantee is given by the client as to the quantity and type of instructions it will give.

A retainer arrangement operates as a fixed fee for all work arising from the retainer. There can be no conditions, exclusions or qualifications that allow the law firm to exceed the fixed amount, save in exceptional circumstances.

One of the most successful periodic retainer arrangements we negotiated was for a collective group of client departments of a local government body. Out of a starting field of 12 firms, five were invited to interview. The final play off was between two firms who were invited to put best offers forward on the basis of an annual retainer, on the one hand, just for environmental work generated from the various departments and on the other, for all the other legal work of the Council. The winning firm in each case was able to offer a discount on the previous year’s legal spend because it was recognised that there had been some exceptional legal issues that year which were unlikely to be repeated. There was obviously an element of risk and it was the firm that was prepared to share more of that risk that won through. The arrangement has been in place for three years and has provided a steady cash flow and profitable business for the law firm and a reliable service within budget for the client. This is the ideal combination.