Each year, I review dozens of retainer agreements drafted by Maryland law firms. Here’s my list of the six most common problems I find in Retainer Agreements:
1. The language in the Retainer Agreement is ambiguous: I reviewed a contingency fee agreement which was so poorly drafted that it was impossible to determine whether the client owed a 1/3rd or a 40% contingency fee.
2. The Retainer Agreement contains an unenforceable provision: I have encountered quite a few retainer agreements that state that if the law firm sues the client for fees owed, then the law firm is entitled to an award of attorney’s fees in the amount 15% of the amount due. Such a provision is unenforceable.
3. The Retainer Agreement has a provision that violates the Maryland Lawyers’ Rules of Professional Conduct: Many law firms state in their Retainer Agreement that some or all of the initial retainer paid by the client is “earned when paid”. Such a provision is unenforceable, unless the law firm has explained in writing the disadvantages of depositing the retainer into the law firm’s business account as well as the advantages of depositing the retainer into the Attorney Trust Account.
4. The Retainer Agreement contains repugnant language: I recently encountered a Retainer Agreement that states that the client will be charged double the specified hourly rate if the client telephones the attorney at his or her phone number, even if the attorney had requested that the client call him or her at home.
5. The Retainer Agreement states the law firm will bill in fifteen minute intervals: Most law firms bill in 6 minute increments. With a 15 minute interval, a law firm can bill a client for 1 hour of time, even if the lawyer performed four discrete 2 minute tasks in the course of a day. It is patently unfair for a client to be charged for one hour of work when the attorney has actually spent less than 10 minutes rendering legal services.
6. The Retainer Agreement is signed “under seal” by the client: Most Retainer Agreements in Maryland request that the client sign it “under seal” without explaining the significance of signing the agreement “under seal”. By having the client sign the Retainer Agreement “under seal”, the law firm has extended the time for it to sue the client for fees owed from 3-years to 12-years.
