What Is a Lawyer Retainer and How Does It Work in Canada?

In Canada, "retainer" has two meanings. The retainer agreement is the written contract that sets out what a lawyer will do for a client and how they will be paid. The retainer deposit is money the client pays upfront, which the lawyer holds in a regulated trust account and uses to pay invoices as work is completed. Most lawyers require both before starting work on a file.

Understanding both meanings helps avoid two common misunderstandings: assuming the deposit is the total cost of the case, and assuming everything not written down is included in the lawyer's work.

The retainer is one step in hiring a lawyer. For the full process, see the guide to finding and hiring a lawyer in Canada.

The Retainer Agreement

A retainer agreement, sometimes called an engagement letter, is the contract between a client and their lawyer. It protects both sides by putting expectations in writing before work begins.

What a good retainer agreement includes

• Scope of work. Exactly what the lawyer will do, and what is not included. For example, a family law retainer might cover negotiating a separation agreement but exclude a court application or appeal.
• Who will work on the file. The responsible lawyer and any junior lawyers, clerks or students, along with each person's hourly rate.
• Fee arrangement. Hourly, flat fee, contingency or limited scope, with the details of how each is calculated.
• Estimate. The expected total cost or a range, and the factors that could change it.
• Disbursements. Which out-of-pocket expenses will be charged in addition to fees.
• Deposit. The amount required upfront and when it must be topped up.
• Billing. How often invoices are sent, what detail they include and when payment is due.
• Interest. Whether interest is charged on overdue accounts.
• Communication. How and how often the client will be updated.
• Ending the relationship. How either side can end the agreement and what happens to the file and any remaining deposit.

Before signing

Read every page and ask about anything unclear. Some terms, such as the deposit amount, billing frequency or a payment plan, may be open to discussion. Keep a signed copy. If the scope of work changes later, for example because a negotiation turns into a court case, the change should be confirmed in writing.

Contingency fee agreements

Contingency fee agreements must be in writing, and some provinces set specific requirements. Ontario, for example, requires a standard form contingency fee agreement. The agreement should clearly state the percentage, how it may change by stage, how disbursements are handled and who keeps any legal costs awarded by the court.

For more on how lawyers price their work, see how much a lawyer costs in Canada.

The Retainer Deposit and Trust Accounts

How the deposit works

1. The client pays the deposit to the lawyer before work begins.
2. The lawyer places the money in a trust account, separate from the firm's own money.
3. The lawyer does the work and sends the client an invoice.
4. Once the invoice is sent, the lawyer transfers the billed amount from trust to the firm's account.
5. When the deposit runs low, the lawyer may ask for a further deposit before continuing.
6. When the matter ends, any unused money left in trust is returned to the client.

Why trust accounts matter

Law societies across Canada strictly regulate trust accounts. Lawyers must keep detailed records, can only withdraw client money for permitted purposes such as paying a delivered invoice, and are subject to audits. Mishandling trust money is one of the most serious forms of lawyer misconduct. If a lawyer steals from a trust account, law society compensation funds can reimburse clients.

How much is a typical deposit?

There is no standard amount. It depends on the type of matter, the expected cost of the early stages of work and the lawyer's practice. A deposit for a simple transaction may be a few hundred dollars, while a contested family or litigation file may require several thousand. The deposit usually covers the first stage of work, not the whole case.

The deposit is not the total cost

A common surprise is that the final bill exceeds the original deposit. The deposit is security for future work, not a price cap. Ask for an estimate of the total cost and request updates when the estimate is likely to be exceeded.

Reviewing invoices

Invoices should show who did what work, when, for how long and at what rate, along with disbursements and taxes. Review each invoice as it arrives and ask about anything unclear right away. Problems are easier to resolve early than at the end of a matter.

Types of Retainers

Full retainer

The lawyer handles the whole matter from start to finish. This is the most common arrangement for litigation, criminal defence and complex transactions.

Limited scope (unbundled) retainer

The lawyer handles only specific tasks, such as reviewing a settlement offer, drafting a document or preparing for one court appearance. The client handles everything else. This can significantly reduce costs, particularly in family law and small claims matters. The agreement must clearly list the included tasks so there is no confusion about who is responsible for the rest.

Flat fee retainer

One set price covers a defined task, such as a home purchase, a simple will or an uncontested divorce. The agreement should state what is included and what would trigger extra charges.

Criminal defence lawyers commonly use flat fees for each stage of a case. See how much a criminal lawyer costs for typical amounts.

Contingency retainer

The lawyer is paid a percentage of the amount recovered, usually in personal injury or some employment cases, and often nothing if the case is lost. A deposit is usually not required, although the client may still be responsible for some disbursements.

Ending a Retainer

A client can generally end the relationship with their lawyer at any time, for any reason. The client usually remains responsible for fees and disbursements for work already done. Any unused deposit is returned. The new lawyer normally requests the file directly from the previous one.

Lawyers can also end a retainer, but only in certain circumstances, such as non-payment, a breakdown in the relationship or a conflict of interest. Close to a trial date or in criminal matters, a lawyer may need the court's permission to withdraw. For more on handling problems, see the section on what to do if things go wrong in the guide to finding and hiring a lawyer.

For the full process, including file transfers and disputed bills, see how to change lawyers or file a complaint.

Frequently Asked Questions

Is a retainer deposit refundable?

Any part of the deposit that has not been used to pay for completed work and disbursements is generally refundable when the matter ends or the relationship is terminated.

Do I have to pay a retainer deposit?

Most lawyers require one for hourly files. Flat fee and contingency arrangements may require a smaller deposit or none at all.

Can the lawyer use my deposit before doing any work?

No. Money in trust can only be transferred to the lawyer after the work is done and an invoice has been delivered, or for disbursements paid on the client's behalf.

What if I disagree with a bill paid from my deposit?

Raise it with the lawyer first and ask for a detailed breakdown. If the issue is not resolved, most provinces allow a client to have a lawyer's bill reviewed by a court officer, subject to strict time limits.

Should I sign the retainer agreement at the first meeting?

There is no need to rush. Take the agreement home, read it carefully and ask questions before signing, unless an urgent deadline makes speed necessary. The questions to ask a lawyer before hiring cover what to confirm about fees and billing.

Ready to compare lawyers? Search LawyerDirectoryCanada.ca by practice area, province and city, and check each lawyer's licence before signing a retainer.