What is a Retainer Agreement or Engagement Letter?

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In New Jersey, it is mandatory in family court matters that a lawyer provide to clients a contract called a retainer agreement or engagement letter.  If a lawyer fails to provide you with this document, that should be a red flag.  Some of the agreements are very simple and others quite complex. The most important things in the agreement are how you will be billed and any policies the firm has that affect your matter.

Here are a few possible elements of the engagement letter:

Description of legal services to be provided:  there are a lot of things that can come up in a family court matter. Sometimes you start out with a simple divorce and a number of motions or other hearings pop up. The description of services lays out what you are paying for, and therefore what you are NOT paying for, so that if something else comes up you may be required to produce more funding for it to be covered.

Schedule of fees:  Who in the firm is billed out at what rates.

Retainer policies:  Often, your retainer does not represent the full amount you will pay in the matter. The agreement should lay out how you will refresh that fund if it becomes necessary.  Many lawyers require an “evergreen” retainer, meaning you replenish the same amount when it gets low. Some will work with you on monthly payments toward that retainer.

What Happens if You Don’t Pay:  In New Jersey a lawyer can charge a maximum of 12% per year interest on overdue balances.  If bills remain unpaid and collection efforts are required, New Jersey law permits the firm to collect an amount equal to the amount due, all court costs, plus 20% of the outstanding amount as a collection fee, pursuant to the case of First Morris Bank v Roland Offset Services 357 NJ Super. 68 (App. Div 2003 January 22, 2003).  Furthermore, as set forth by the Court decision of Hrycak v Kiernan, a reasonable attorney fee shall be paid if collection, fee arbitration, or proceedings to enforce fee arbitration are instituted.  Fee arbitration is also required if there is an unresolvable fee dispute, such as you disagree with the charges on your bill.  There are fee arbiters in every county in New Jersey that can be appealed to when you cannot agree, but always reach out to your attorney first if you have a concern, as there may be an error, or the lawyer may be willing to negotiate the issue.

Costs and Expenses:  What the firm charges for postage, mileage, or other costs of managing your case. Usually the firm will also bill you for court costs. Currently in New Jersey, it costs between $250-275 to file a divorce, $30 for many types of motions. These costs are subject to change by state law, but your lawyer will usually pay them from your retainer and you will find them on your bill.  Sometimes, particularly if your retainer is running low, you may be required to pay directly and in advance for serving the other side, or for fees that the office incurs on your behalf.

Billing policies:  Not all engagement letters include this, but there may be some explanation of how frequently you will receive a bill, or what the firm’s polices are regarding billing. One thing you will definitely want to know is in what increments the firm bills time for hourly matters. The standard is usually 1/10 of an hour, or .6 minutes.  This is the minimum charge a person working on your case will charge for any action they take on the case. So, for example, if your lawyer reads and responds to an email from you, and your lawyer charges $250 an hour, that will cost $25 and will come off your bill.  If the paralegal is billing at $125, the same email exchange will cost $12.50.  This may seem like an unfair policy because of the fact that it may not take that whole 6 minutes to complete the task, but bear in mind that there are many things that go into your matter that lawyers frequently don’t charge for and it does balance out.  For example, my firm does not charge for leaving voicemail…that could be three minutes unbilled time. We also don’t charge for travel time to and from court, which can be up to an hour. Because lawyers sell time, every minute of our day has a financial value that has to be accounted for in some way.  Before you react negatively to a bill, keep in mind the overall time it may be taking for your matter to be handled in the firm.  Do, however, question bills that seem to be overtly over what seems appropriate. For example, if you know you were on the phone with your lawyer for 12 minutes (and you should be keeping track) and they bill you for 20, that’s probably inaccurate. If they say that it took them 8 minutes to type up notes after the phone call, that might be true, but they should be breaking up those charges so you know what you are really being charged for.

Demand an itemized and clear bill for every hourly matter on a regular basis. Our firm produces bills every 30 days.  Some firms do it on a 90 day basis.  Ask before you sign the retainer how often you will be billed, and hold them to it (at least generally…a few days difference should not be an issue.  Reality:  smaller law firms especially crawl to a halt when a major case is happening, and billing may be put on the back burner to complete client matters. You want this, because some day it might be YOUR case and you don’t want them not preparing for your trial because they are billing their clients).  When you receive a bill, go over it carefully and make sure there is nothing on it that you think is out of bounds. Clarify with your attorney at signing who you should speak to about billing disputes, and whether you are charged for that.

It is important that you read all the terms of the retainer agreement and question anything you don’t understand.  This is a legal and binding contract.

To learn more about what you can expect from your lawyer, check out Lynda’s new book, Breaking Up: Finding and Working with a New Jersey Divorce Attorney.

For a free consultation about your legal matter, call us at (856) 227-7888, or contact us at [email protected]. We have locations in Camden, Burlington, and Gloucester counties, and are happy to discuss your options.




The above is not specific legal advice nor does it create a lawyer-client relationship. Do not rely upon it without consulting an attorney to see how the information presented fits your unique circumstances.

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