Letter to Attorney

Dear Attorney,

I hope this message finds you well. I would like to inquire about your retainer's fee, as I am considering obtaining legal representation for ongoing matters that may arise in the future. Could you kindly provide me with information regarding your rates, payment terms, and any other pertinent details related to your legal services on a retainer basis?

I understand the importance of having legal counsel readily available, and I want to ensure that I have a clear understanding of the financial arrangements involved. Your assistance on this matter would be greatly appreciated.

Thank you for your time and attention. I look forward to your response.

Sincerely,
[Concerned Individual]

Legal Retainers: A Comprehensive Guide Under Philippine Law

A retainer's fee is a common arrangement in legal practice, whereby a client pays a lawyer an upfront fee in exchange for future legal services. This type of fee structure allows the lawyer to remain available to handle the client's legal matters as they arise. In the Philippines, the use of retainers is prevalent, particularly for individuals and businesses that require ongoing legal advice and representation.

This article will explore the concept of retainer's fees, their legality under Philippine law, the ethical standards that govern their use, and the practical implications of entering into such an agreement with legal counsel. It aims to offer a thorough understanding of what a retainer entails and the various legal dimensions that accompany it.

1. What is a Retainer's Fee?

A retainer's fee is a payment made by a client to a lawyer to secure their services for a period of time. It is an advance payment that ensures that the lawyer is available to handle the client’s legal needs as they come up, and it often covers a range of legal tasks, from advisory services to actual litigation.

In essence, it is not a single, one-time payment for a specific case or legal issue but a recurring arrangement that provides the client with access to the lawyer's expertise over an extended period. The client benefits from having priority access to the lawyer, while the lawyer is assured of compensation for being "on-call" for the client’s legal needs.

The retainer may be:

General Retainer – Paid to secure legal services on an ongoing basis, regardless of whether any specific legal work has been done.
Special Retainer – Paid for a specific case or set of tasks.

In the Philippines, retainers are common among businesses that require continuous legal advice, such as for regulatory compliance, drafting contracts, or employment-related issues. Individuals, too, may find retainers useful, particularly for matters related to family law, estate planning, or real estate transactions.

2. Legal Basis of Retainers in the Philippines

The legality of retainer agreements is governed by several key pieces of legislation and ethical rules. Specifically, the Civil Code of the Philippines (Republic Act No. 386), as well as various provisions in the Code of Professional Responsibility and Rules of Court, provide guidance on the use of retainers.

a. Civil Code of the Philippines

Under the Civil Code, contracts, including those for legal services, are governed by the principles of autonomy of will and freedom to contract (Article 1306). This means that as long as the agreement is lawful, it may be customized by the lawyer and client according to their preferences.

A retainer agreement is, at its core, a contract of service. It is enforceable under Philippine law as long as both parties have given their consent, the terms are clear and fair, and no public policy is violated. A retainer may include terms about the scope of services, the duration of the retainer, and the fee structure.

b. The Code of Professional Responsibility

The Code of Professional Responsibility provides ethical standards for lawyers in the Philippines. Lawyers must uphold integrity, competence, and loyalty in all their dealings with clients. Specifically, Rule 20.01 requires that a lawyer shall be entitled to a just and reasonable compensation for services rendered.

Furthermore, lawyers are prohibited from entering into agreements for unreasonable fees (Canon 20). What constitutes "unreasonable" is a matter for the court to decide, but fees must reflect the complexity of the legal work, the lawyer’s skill and experience, and the financial situation of the client.

Lawyers must also avoid "charging double," which means they cannot bill clients twice for the same legal task—once through the retainer fee and again by billing for services rendered.

c. Rules of Court

The Rules of Court address the issue of attorney’s fees, including retainers. Under the Rules of Court (Rule 138, Section 24), the lawyer is entitled to compensation based on their agreement with the client. This section is particularly relevant in cases where disputes arise between lawyers and clients regarding retainer agreements.

In case of disputes regarding the fairness or reasonableness of the fee, the court may be called upon to determine whether the retainer agreement adheres to ethical and legal standards.

3. Determining the Reasonableness of a Retainer's Fee

The amount of a retainer fee can vary significantly, depending on several factors. There is no standard retainer fee in the Philippines, as the fee is largely dictated by the lawyer’s experience, the complexity of the client’s legal needs, and the geographic location. The following are common considerations in determining a reasonable retainer fee:

Nature and Complexity of Legal Work: If the legal work involves highly specialized knowledge, such as intellectual property law, corporate law, or tax law, the retainer fee may be higher. The more complex the legal issue, the more time and effort the lawyer will need to invest.
Lawyer's Experience: Lawyers with extensive experience and expertise are likely to charge higher retainer fees. A lawyer who has been practicing for many years or who is recognized as an expert in a particular area of law will typically command higher fees than a lawyer who is just starting out.
Client’s Needs and Expectations: The scope of legal services required by the client will also affect the retainer fee. For instance, a business that needs regular legal consultations, contract drafting, and representation in court will likely pay a higher retainer fee than an individual who only needs occasional legal advice.
Time Commitment: Lawyers may consider how much time they will need to devote to the client on a regular basis. If the lawyer is expected to be available at all times for immediate legal assistance, the fee may reflect this level of availability.
Economic Conditions: The financial capacity of the client, as well as the prevailing economic conditions in the region, can also influence the fee. Lawyers may adjust their fees to account for the client's ability to pay, especially in cases involving small businesses or individuals with limited resources.

Negotiating the Retainer Fee

It is important to note that retainer fees are often negotiable. Clients should feel free to discuss their budget and expectations with the lawyer. A lawyer may be willing to adjust their fee based on the long-term nature of the relationship or the client’s particular needs.

4. Types of Retainer Agreements

There are several types of retainer agreements that clients and lawyers can enter into:

Flat Fee Retainer: The lawyer is paid a set fee for a specific period, regardless of how many services the client actually uses. This type of retainer is ideal for clients who prefer predictability in their legal costs.
Hourly Retainer: In this arrangement, the lawyer bills the client based on the number of hours worked. The retainer is essentially an advance payment against future services, and the client is billed periodically as the lawyer completes work.
Contingency Retainer: In some cases, lawyers may agree to a contingency retainer, where the lawyer is paid a percentage of the money recovered in a legal dispute. This arrangement is common in personal injury cases but is generally not used for business clients or other areas of law.
Hybrid Retainer: Some agreements may combine elements of the flat fee and hourly retainer. For example, a client may pay a flat fee for general advisory services, with additional hourly rates for litigation or specialized work.

5. Termination and Renewal of Retainer Agreements

Most retainer agreements are set for a specific period, such as one year, and are renewable at the discretion of both parties. Either party can terminate the retainer agreement, but there are usually provisions for notice periods and settlement of any outstanding fees.

Lawyers have an ethical obligation to provide a client with reasonable notice before terminating a retainer agreement, especially if the client relies heavily on the lawyer’s services. Termination clauses in retainer agreements often specify how much notice is required and under what circumstances the retainer can be ended.

6. Advantages of a Retainer Agreement

For clients, a retainer agreement offers several advantages:

Priority Access: The lawyer is "on-call" for the client, providing a sense of security that legal help is always available.
Cost Efficiency: Clients can budget more easily, knowing in advance how much they will spend on legal services.
Trust and Relationship Building: Over time, the lawyer develops a deep understanding of the client’s business or personal affairs, leading to more tailored and effective legal advice.

For lawyers, retainer agreements provide financial stability and allow them to allocate time more efficiently across their client base.

7. Conclusion

The use of retainer fees in the Philippines is a widely accepted practice, governed by a combination of contractual freedom, ethical standards, and legal guidelines. Both clients and lawyers benefit from the predictability and security that retainer agreements offer, as long as they are carefully negotiated and executed in compliance with the law.

For those considering entering into a retainer agreement with a

lawyer, it is essential to understand the various factors that can affect the cost, scope, and terms of the agreement. Legal counsel can be an invaluable resource, and a well-structured retainer arrangement ensures that both parties are clear about their rights and obligations.