When should you ask for a retainer: before work starts, at engagement sign-off, or by milestone?

The retainer should be collected before any work begins. That is the short answer. A practice that waits until completion to collect fees — or that trusts a good working relationship to ensure payment — takes on a risk that frequently ends with a matter file full of unbilled time and an unpaid invoice.

That said, the right moment depends on the type of matter and how the engagement is structured. There are three collection points that work in practice.

Before work starts

A retainer paid before any work begins is the cleanest model. The client transfers an estimated amount at the outset, which is held in the practice's client account and drawn down as the matter progresses.

The advantages are clear: fee earners are working on pre-funded time, the client understands the approximate cost from day one, and there is no end-of-matter invoice to chase.

The one risk is miscalculating the amount. If the initial retainer is too low and the matter becomes more complex, the practice has to return to the client for a top-up mid-matter — which creates friction at an inconvenient point. The solution is to build in a buffer of around 15 to 20 percent above the baseline estimate, and to agree at the outset that a further request will be made if the scope changes materially.

At client care letter sign-off

Some practices prefer not to request payment before the client has signed anything, reasoning that an early payment request can deter instruction. In those cases, sign-off on the client care letter — the document that records the terms of engagement, scope of work, and fee estimate — is the natural point to collect the retainer.

This model has the advantage of a signed record before any money moves, which is useful if the matter file is ever reviewed later. The disadvantage is that the practice has already spent time on the initial call, preliminary title or document checks, and drafting the letter itself before receiving anything.

If this moment is chosen, the client care letter must state explicitly: the retainer amount, the deadline for payment, and what happens if funds are not received — typically that work does not commence until cleared funds are in the client account.

By milestone as the matter progresses

On longer matters — a conveyancing transaction that extends over several months, a business sale with multiple parties, or a complex commercial lease — it can make more sense to split billing across stages tied to progress.

For example: an initial draw at instruction, a second payment on completion of due diligence and document review, and a final draw on completion or exchange. Each stage should be set out in the engagement letter: the trigger event, the payment window, and whether the practice will pause work if a milestone payment is not received before moving to the next stage.

This model spreads the cashflow risk across the matter, but it requires active management: the interim bill must go out at the right moment, payment must be chased if it does not arrive promptly, and the fee earner and practice manager need to agree in advance on what happens if a stage payment is missed.

What the engagement letter must answer

Whichever timing model the practice chooses, the client care letter should resolve four questions before any work begins:

• What is the retainer amount?
• When is it due — a specific date or a trigger event in the matter?
• When will the final bill be raised?
• What happens if the client does not pay on time?

If the letter does not answer these four questions, any conversation about fees later in the matter will be harder than it needs to be.

The pattern practices repeat

The most common mistake is not collecting a retainer at all. The practice completes the work, raises the final bill, and the real negotiation about the fee begins at that point — when the client already has what they needed and the practice is negotiating from a weak position.

A retainer, even a partial one, changes that dynamic. A client who has committed funds has a stake in seeing the matter progress without interruption. And a practice working on pre-funded time has the freedom to give each matter proper attention without fee collection running as a background concern throughout.

At VerifyAct we build tools to help practices stay organised and error-free. Get in touch if that sounds useful.