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Legal Retainers

Legal Retainers

November 3, 2006
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" The goal is receive value for your money. "

Recently, XBIZ World Magazine asked several adult industry attorneys, "What should an adult professional look for in a retainer agreement with a lawyer?"

Here's what they had to say:

"It is very important to establish and maintain a healthy relationship, and in doing so, the agreement should be in writing. The financial terms and the duties of the attorney under the agreement should be precisely drawn to avert any misunderstanding or disappointment. The agreement should provide an inexpensive and rapid procedure to resolve any fee disputes with the minimum of bruised feelings — for example, arbitration before a panel of the Chicago Bar Association. Try to get a fixed package price from the attorney for limited engagement work, and you will likely save money. Some states prohibit attorney billing by any means other than an hourly charge, and in some cases this probably works to the disadvantage of the client. Agree on how long records are to be maintained. Agree on who will own the copyright in materials written for you.

The term 'retainer' is used in several different ways that sometimes are inconsistent with one another. A 'pure retainer' buys nothing other than the attorney's availability to do work and his commitment to making sure that he is available to work for you. A 'drawing retainer' is placed into a client trust account and remains there until the attorney provides services, bills the client and draws the funds to pay a statement. The client is responsible for replenishing the sum on deposit in an agreement that is to go on with continued services. The term retainer also is used to describe a flat fee to provide some kind of service. Finally, retainer also can describe the written retainer agreement itself. The client and the attorney need to make sure that each understands the other, and the way to do that is to describe the mutual duties and responsibilities in the retainer agreement."

— J.D. Obenberger, J.D. Obenberger & Associates

"The goal is receive value for your money. Here are five important things to look for:

Designate Counsel — If you're engaging a particular attorney (as opposed to an entire law firm), make sure the retainer requires that your chosen counsel actually works on your matter. In other words, avoid any bait and switch. Toward this end, the retainer should say only Attorney X is to work on your case or, alternatively, a team consisting of Attorneys X, Y and Z. While there are good (and economical) reasons for involving other attorneys (routine tasks, expertise, etc.), write in a provision that other staffing is acceptable provided it is discussed and approved by you in advance. Also, make sure each attorney specifies his hourly rate.

Budgeting — Require budgets for contemplated tasks, and demand discussion (and approval by you) of any work plan before time/costs are incurred. Doing so will force counsel to think through and justify strategies to be pursued.

Billing — Require monthly bills that detail all time and costs. A proper invoice should designate which particular attorney performed which particular tasks. All time should be specified in 1/10 hour increments. A bill 'For Services Rendered' is not acceptable absent supporting detail.

Costs — Require that any direct costs incurred on your behalf, including copies, messenger fees, postage, faxes, etc., be billed to you at the attorneys' own cost. (They're attorneys, for goodness' sake, not resellers of office supplies!) Also, require that any savings/discounts on 'bulk' services be passed along to you.

Insurance — The retainer agreement should specify that counsel carries malpractice insurance in an amount commensurate to your engagement. That way, if there's a screw-up, at least there's a safety net to protect your investment."

— Michael Bruce Abelson, Abelson/Herron LLP

"The thing that the question presumes is that businesses/people in the industry have a retainer with an attorney in the first place. Many businesses/ people I have learned over my years in the business have never had a retainer agreement with an attorney, which is a violation of the Code of Professional Responsibility. No attorney is supposed to be handling any legal matters for any client, in the adult industry or any other industry, without a retainer agreement.

In terms of what types of items belong in a retainer agreement, obviously the first thing is the rate being charged — will it be a flat figure amount or a separate hourly rate for partners and for associates or a blended hourly rate (same hourly rate for all attorneys) or any combination thereof. Those rates should be clearly set forth. If there is a retainer charge, that also needs to be set out, in addition to whether it is a retainer to be billed against an hourly or a retainer to obtain the services of the law firm and then billed in addition for actual services. Furthermore, all incidental charges should be established, if applicable (photocopies, faxes, postage, travel expenses, online research etc.).

The retainer agreement should be in writing and should at least attempt to describe the services the law firm will render, if known. There also should be a provision as to which laws apply to govern the provisions of the agreement, and that the law firm does not guarantee success as to any litigation or related matter. There also should be some indication of how often the client will be billed, if the client is delinquent on payment, will there be interest charged, and who is authorized to execute the agreement and their powers to execute and bind."

— Eric M. Bernstein, Eric M. Bernstein & Associates


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