What is the Benefit of having a Retainer Agreement for Outside Counsel?

It’s fairly straightforward to explain. Many companies are “outsourcing” certain services like accounting or human resources. Why not outsource legal counsel too using a retainer agreement? In brief, a “retainer” is an agreement that helps an organization have an attorney at its immediate disposal…without the substantial cost associated with having full time, in-house counsel. This arrangement not only facilitates a closer relationship between businesses and their counsel but also offers a myriad of advantages, from financial predictability to immediate access to specialized legal expertise at a lower overall cost.

Immediate Access to Legal Expertise

Do you really want to schedule that expensive consultation? Or just call "your" lawyer?

The need for specialized legal expertise on a prompt basis cannot be overstated. Legal retainer agreements fulfill this need by ensuring that businesses have immediate and unimpeded access to legal professionals who are not just well-versed in the broader legal landscape but possess niche expertise that aligns with the corporation's sector-specific challenges. This arrangement allows management staff to access specialized advice at need without breaking the bank. Legal counsel may be as diversified or focused as your business needs because you have the flexibility to choose and direct your outside counsel within the parameters of the retainer agreement.

Another benefit to using a retainer with outside counsel is that over time, these external attorneys become familiar with your business' operations, culture, and strategic objectives, and challenges. This allows them to offer tailored legal advice that dovetails seamlessly with the company's overarching goals.

For example, without a retainer, businesses would have to resort to “ad hoc” legal consultations that will lack the requisite background and deep understanding of the regular issues faced by your organization. The “time” bringing outside counsel up to speed will cost at the regular billing hourly rate. On the other hand, retained counsel will become familiar with your organization and will not only handle the matter under the regular retainer or charge a substantially reduced rate for associated legal work.

Enhancing Legal Cost Predictability and Management

Oh crystal ball...what will my legal budget be this year???

Cost predictability and management matter in any business organization. Unpredictability is counterproductive because it throws a wrench into budgetary planning and execution. In essence, a retainer agreement ensures that legal expenses remain consistent.

Furthermore, in exchange for a regular stream of revenue, the law firm that is retained usually reduces the billing rate for matters that exceed the agreement’s terms. This allows for better management of legal costs and frankly benefits the law firm also since it can rely on regular monthly revenue.

For example, if a business needs an access easement, they can hire an attorney to generate one. The new attorney will require substantial amounts of information to properly identify the parties, terms and the parameters of the property easement and will certainly charge not only for legal time but also for deed research, possibly survey work and recording fees. If the firm is on retainer, however, they will know the parties, the parameters and will usually have templates to work from thus greatly reducing the time and cost for obtaining the easement. In many cases, the deed research and recording fees will be included in the monthly retainer rather than billed in addition to attorney time. (In my experience, the difference is literally thousands of dollars.)

Ask yourself, how much have I spent before and how much can I save?

In conclusion, the implementation of legal retainer agreements offers a strategic advantage for businesses, ensuring immediate access to specialized legal expertise while significantly enhancing the predictability and management of legal costs. The close working relationship that grows over time increases the value of the arrangement and results in significant savings. If your business is not ready for a full time corporate counsel position, a legal retainer may be just the thing for you!

Curry Andrews, Attorney