When you speak with a lawyer about your case, they may ask you to pay a deposit or retainer. These two terms are often used interchangeably, but they have very different meanings and purposes. In this article we’ll explore the difference between a legal deposit and retainer.
What’s the Difference Between Deposits and Retainers?
When it comes to legal fees, there are two very different types of payments that you may encounter: a retainer and a deposit. A retainer is a fee paid to an attorney for a specific case or matter. It’s intended as an upfront payment that covers the costs of working on your case throughout its duration. On the other hand, deposits are required by courts or other public bodies in exchange for being allowed to file documents with them (for example, filing paperwork with the court).
What is a Deposit?
A deposit (a.k.a court fund) is a payment made by a law firm to a court or other public body in exchange for being allowed to file documents with them. The document itself is also called a deposit, and it can be in the form of cash, check or money order. Simply put, It’s a fee paid to the court as a security deposit, in exchange for filing documents or registering your case with them.
Please note that if deposits to the court are not reclaimed after 3 years, the money will be considered abandoned property.
What is a Retainer?
A retainer is a fee paid to a law firm to cover the cost of their legal services. It’s an advance payment for future work and can be refunded if you change your mind about hiring the attorney. The amount of your retainer will depend on several factors, including:
- The type of case (criminal vs civil)
- The complexity of your case
- How much time it takes for the attorney to complete their work – Lawyers who use the most up-to-date Matter Management methods are the most ideal choice
- Your attorney’s standards
How Much is the Standard Amount for a Deposit or Retainer?
A deposit is a payment made to an attorney at the beginning of a case. It can be as much as $500, but it’s usually around $250 or less. A retainer is paid after an attorney has been retained and usually ranges from $500 to $5000.
Why Are There Two Different Terms Used in the Legal Industry?
You might be wondering why there are two different terms used in the legal industry. The answer is that they aren’t really separate, but rather different types of fees.
Retainers are often confused with deposits because they both involve paying money up front before any work has been done on your case but there’s an important distinction between them: depositions don’t count toward what has been paid back out! So if your lawyer charges $1000 per hour and works 40 hours on their end before taking any depositions from opposing counsels’ side(s), then 20 hours will go towards reimbursing their time spent preparing for those depositions; however anything after those initial 40 hours won’t be reimbursed unless agreed upon beforehand.
How Do I Know if a Law Firm Uses Deposits or Retainers for My Case?
If you’re not sure whether or not a law firm uses deposits or retainers, ask them. It’s best to find out before you hire them so that you have time to consider other options if it doesn’t work for your case.
- Ask the law firm how they handle fees: Some attorneys will take a retainer up front and then charge monthly payments throughout the duration of your case, whereas others require payment in full at the start of each month or quarter (depending on how long your matter takes). If this is important to you and especially if it isn’t something that would fit into your budget, it’s worth asking up front how much money they require up front versus how much they expect from monthly payments later on down the road.
- Ask if they have a trust account: While some firms do both deposits and retainers, many don’t keep any money at all until after services have been rendered; instead, they only collect what is due after completing their work for clients. If this sounds like something worth considering for yourself as well then make sure that every dollar goes directly into an escrow account before being dispersed as needed throughout each case.
The Proper Legal Term for a Retainer is “Trust Account”
The proper legal term for a retainer is “Trust Account.” A trust account is a separate legal entity where money is held for a client, to be used for their benefit. It must be kept separate from the attorney’s operating account and cannot be commingled with any other funds.
The reason you want to know about this distinction between deposits and retainers is because if you pay someone in cash on their behalf, it’s almost certainly going into their general operating account and therefore not protected by law as an asset they can use if they get sued or go bankrupt! This can lead to disaster if your contractor goes out of business before finishing the job (or even worse: leaves town with your deposit).
The legal industry is full of jargon and confusing terms. However, the difference between a deposit and retainer is not as complicated as it seems. The main point that this article tries to make is that a retainer is an amount of money that an attorney keeps on hand so there are no unexpected expenses during your case. This means that if anything comes up unexpectedly (like filing fees), your lawyer will cover them without having to ask for additional payment from you first. On the other hand, if you pay a deposit fee then it will be returned when your case concludes successfully or settles out of court