Indiana Divorce Power: What is a "retainer"?

Let’s face it. No one ever wants to hire a lawyer. Okay that might be a little harsh. How about this: no one ever chooses to have legal issues that may require a lawyer to intervene. That’s a little better.

But when you do have those legal issues, especially divorce, it is nice to have a little information about what you are getting into. Having the knowledge is of itself a huge advantage. Just like Mom told all of us growing up — ‘knowledge is power.’ With that in mind, I would like to introduce a new series of posts entitled, “Indiana Divorce Power.” Using knowledge and information to help you become better informed about issues surrounding your Indiana divorce and related family law issues. Knowledge truly is POWER.

First today I want to talk about terms used by lawyers to describe how you will be charged during a divorce. From my experience most lawyers will charge you a “retainer” to begin the process of your divorce.

Simply stated, think of a retainer as paying in advance for the lawyer’s services. Once you pay a retainer, then the lawyer will bill his hourly rate against that retainer. Let’s try an example.

Say you call the lawyer and he quotes you a retainer of $1000 and his hourly rate is $150 per hour. That lawyer is required by ethical rules governing lawyers in Indiana to place that $1000 into an interest-bearing trust account for safe keeping. He has not earned that money yet! So to make sure your money stays safe until the lawyer earns it by rendering his services, the rules require that the retainer be placed into a separate trust account. Society places great trust in lawyers and so there are extensive and additional rules that all attorneys in Indiana must follow. Placing your money into a trust account until the fees are actually earned is just one of them.

Okay - so you paid your $1000 retainer and the divorce attorney quotes you an hourly rate of $150 per hour. He tells you that he has exactly one hour of work to do on your case. After he completes the one hour of work, he is allowed by the rules to take $150 from the trust account and pay himself for the work he has completed. In our example, you now have $850 remaining in your trust account. This process continues as he works on your case.

If the lawyer works on your case, and your retainer becomes depleted, most law firms will simply send you a monthly statement indicating how much time was spent on your case and how much you owe. There is no way to predict what a divorce will cost. It really does depend on the individual facts of your case. Each case is different. The best way to get information about pricing is to contact the lawyer and discuss your family law issues. Our law firm offers a free consultation so certainly feel free to pick up the phone and call us at (317) 848-5353.

Don’t get confused about a retainer versus a “flat fee.” A flat fee is a set amount for the service provided and that set amount will not increase. This type of fee agreement is sometimes offered in simple divorce cases where there are no children, limited assets, and both parties have agreed on how they will separate property, etc. In those limited circumstances a lawyer may offer you a flat fee price to perform the services for you. It never hurts to ask if your case is one where a flat fee is appropriate.

Beware of the ”Slick Willy” SUPER LOW retainer

I got a call the other day from a very distraught person who wanted to discuss their ongoing divorce case. She was on the verge of tears because she had just gotten a bill from her lawyer. She was complaining to me about the bill, and then it dawned on me why she was so frustrated: the lawyer had offered her (in my opinion) a falsely low retainer fee.

But the issue here was that the lawyer had only lowered the retainer. This gave the woman (in my opinion) the false impression that the services were more affordable than what they actually were. In our example above, it would be as if the lawyer asked for a $250 retainer, and then worked on your case that month and sent you a bill for $850. I would be frustrated too! In the lawyer’s defense – I don’t think he necessarily overcharged her – but by asking for such a low retainer the impression is that you are hiring a lawyer that will cost you less money – when that is actually not the case at all. His hourly rate did not change at all – and so your bill will be the same.¬†Attorneys are business people. In tough economic times, law firms suffer economically the same way that any other business suffers. A natural reaction to tough times is to lower prices to try to at least make your services more affordable to those who need them.

That being said, most lawyers I know will accept payment plans for the retainer. If money is very tight as it is for everyone – don’t be afraid to ask to have your retainer broken up into payments. In our example above, ask if $500 down and $500 in a couple of weeks would be acceptable. Attorneys are genuinely compassionate people and more often than not will work with you to achieve your legal goals in a way that you can afford.

If you would like to discuss your Indiana divorce and/or family law issues, call an experienced family law firm today. Bowen Law, LLC focuses on Indiana divorce and all family law issues, and we offer a free consultation. (317) 848-5353.