How a Retainer Is Drawn Down

A retainer in its most common form is money paid in advance against work that has not been done yet. Until the work is done, it remains the client's money, and the professional conduct rules in most jurisdictions require it to be held separately from the firm's own funds.

This is why an unearned balance is refundable at the end of a matter. It was never the firm's to keep; it was held on account and drawn against as fees were earned.

The word is also used for other arrangements - a true general retainer that secures availability, or a periodic fee for ongoing access - and those behave differently. The structure that applies is the one written in the engagement letter, not the one the word usually implies.

Time is recorded against the matter as work is performed. At a billing cycle, recorded time is reviewed, adjusted, and turned into an invoice. The invoice is then applied against the retainer balance, which falls by that amount.

The sequence matters. Money moves from the client account to the firm when an invoice is issued for work already done, not when the retainer is received. Recorded time that has not yet been billed is not yet earned.

Disbursements - filing fees, court costs, expert charges, courier and search fees - are usually drawn from the same balance. A client tracking the balance against fees alone will consistently be surprised by how fast it falls.

Engagement letters commonly set a floor - a balance below which the client is asked to top the retainer back up to its original level. It exists so that work does not have to stop while funds are arranged.

For the client, the threshold is a useful early warning. Reaching it means the matter has consumed most of what was estimated for the stage, which is the natural moment to ask what remains to be done and what it is expected to cost.

For the firm, it manages the risk of performing work that cannot be collected. Neither purpose is served if the threshold is buried in the engagement letter and never discussed again.

A retainer statement should show what was there, what was invoiced, what was drawn, and what remains. Where a balance does not reconcile, the usual explanations are disbursements posted separately, an invoice covering a longer period than expected, or time recorded in one cycle and billed in the next.

Timekeeping conventions also matter to how a bill reads. A firm billing in tenths of an hour and a firm billing in quarters can record the same work and produce different totals, because every discrete task rounds up to the minimum increment.

None of this is unusual, and all of it is answerable. A retainer balance is an account, and an account that cannot be explained is worth asking about while the matter is live rather than at the end.