How to set up and manage a client retainer at the start of a matter
A client retainer — money paid by the client before work begins — is one of the most practical tools a practice has for managing cash flow and reducing the risk of unpaid fees. Asking for one at the right moment, in the right amount, and with the right documentation is what makes it work.
How much to ask for
There is no standard figure that fits every matter, but the most reliable approach is to tie the retainer to the work expected in the first phase. A common range is between 30% and 50% of the estimated total fees, adjusted upward if the matter involves significant disbursements early on — land registry fees, search costs, counsel's fees, or agent charges — that the practice would otherwise need to fund from its own cash.
What matters most is that the figure is defensible. If a client asks why you are requesting a particular amount, you should be able to explain it in terms of the work ahead and the foreseeable costs, not just invoke a policy. That explanation also signals to the client that the practice has already thought about what the matter involves and what it will cost — which is reassuring, not confrontational.
When to ask
Before work starts. This is the rule, and it admits very few exceptions.
In practice, the retainer request goes out as part of the matter-opening process, alongside the client care letter and the engagement terms. The matter does not open — and the fee earner does not begin substantive work — until the retainer has been received, or until the client has confirmed in writing when it will arrive.
Practices that wait until after the first meeting, or until the client is already expecting a first draft, find themselves in a weak position if the client later delays payment or the matter collapses before completion. A retainer requested before any work is done is a straightforward business term. One requested after the first few hours of work is a harder conversation to have.
How to document it
A retainer only works as a management tool if it is properly recorded. That means:
- Confirm the amount in writing. The client care letter or a separate letter of engagement should state how much is required, for what purpose, and by when. A verbal request creates no record and no obligation.
- Give clear payment instructions. Bank details, the reference to include, and the accepted payment methods should be in the same communication as the request — not sent separately after a follow-up call.
- Record receipt in the matter file. When funds arrive, note the date, amount, and payment reference. This is the baseline from which fees will be drawn down as the matter progresses.
- Maintain a running balance. As fees are billed against the retainer, the file should show what has been applied and what remains. A fee earner who does not know the retainer balance cannot judge whether a top-up is coming due — or whether the client has already been running on empty for two weeks.
How to apply fees against the retainer
Two approaches are common in practice. The first is periodic billing — issuing a bill at regular intervals or at natural stages of the matter, applying it against the retainer, and showing the client the running balance. This keeps the client informed and reduces end-of-matter surprises.
The second is deferred settlement — holding the retainer until completion and applying it against the final bill. This is simpler to manage in short conveyancing matters, but leaves the client without any visibility of costs until the end.
For longer matters, periodic billing is almost always the better approach. Clients who receive regular bills are less likely to dispute the final account and more likely to provide further funds when asked without friction.
When to request a top-up
If the matter runs longer than expected, or additional work arises that was not in scope, the original retainer may run low before completion. The time to ask for a top-up is before the balance runs out — not after.
The request should be straightforward:
- What has been applied so far, and why the matter has required more work than originally estimated.
- How much is needed to continue.
- By when it is required to avoid interruption to the matter.
This message does not need to be formal or lengthy, but it does need to be sent while the practice still has standing — not when it is already working without financial cover and the client can sense that.
What goes wrong
Most problems with retainer management are not caused by bad estimates. They are caused by gaps in process: retainers requested verbally and never confirmed in writing, matters opened before funds arrive, balances not tracked between billing cycles, and top-up requests sent weeks after uncovered work has already accumulated.
A clear intake protocol, applied consistently from the first moment of matter opening, eliminates most of these problems before they start. The retainer is not a favour the client grants — it is part of the engagement terms, and it deserves the same rigour as any other document in the matter file.
At VerifyAct we build tools to help practices stay organised and error-free. Get in touch if that sounds useful.