Free Retainer Agreement Template
In this article, we explore the fundamentals of Retainer Agreements and their importance in business relationships. You’ll also find a handy downloadable template to help you create your own effective agreement with ease.
What Is A Retainer Agreement?
A retainer agreement is a legal contract between a professional (like a lawyer, consultant, or freelancer) and a client. In essence, the client pays in advance for work to be specified later.
This agreement ensures the professional’s availability over a predefined period, while providing the client with a known cost for the services.
Why Use a Retainer Agreement?
Retainer agreements offer numerous benefits. For professionals, they provide a predictable income stream, enabling better budgeting and financial planning.
For clients, they secure the professional’s time and expertise, often at a discounted rate compared to ad-hoc services.
3 Types of Retainer Agreements
There are generally three types of retainer agreements:
- General Retainer: The client pays for the professional’s availability, regardless of whether any actual work is done.
- Special Retainer: The client pays for a specific job or project.
- Evergreen Retainer: The retainer is continually replenished to ensure the professional is always available.
How Does a Retainer Agreement Work?
The specifics of a retainer agreement can vary, but they generally involve the following steps:
- Both parties agree on the services to be performed and the duration of the agreement.
- The client pays the retainer fee upfront.
- The professional provides the agreed-upon services.
- The professional deducts their fees from the retainer amount. If the retainer is depleted before the agreement’s end, the client may need to replenish it.
Key Elements of a Retainer Agreement
To ensure that the agreement serves both parties effectively and efficiently, there are several key elements that it should contain.
- The scope of services to be provided.
- The duration of the agreement.
- The retainer fee and payment terms.
- How unused funds will be handled.
- Any additional terms or conditions.
How to Write a Retainer Agreement: A Step-by-Step Walkthrough
Creating a Retainer Agreement doesn’t have to be a complicated process. With our Retainer Agreement template, you can easily draft a contract that protects both parties involved. Below is a step-by-step guide to help you navigate the key sections of the template.
Step 1: Scope of Services
In this section, clearly outline the services the consultant will provide. The more detailed you are, the less room there is for misunderstandings later on.
Step 2: Retainer Fee and Reimbursable Expenses
Specify the retainer fee and how it will be invoiced. Also, clarify which expenses are reimbursable and set a threshold for expenses requiring pre-approval.
Step 3: Relationship of Parties
This section establishes whether the consultant is an independent contractor or an employee. This is crucial for tax and legal liabilities.
Step 4: Termination Clauses
Outline the conditions under which the agreement can be terminated. This could include a breach of contract or a specified notice period for voluntary termination.
Step 5: Dispute Resolution
Indicate the method for resolving any disputes—be it arbitration, mediation, or negotiation.
Step 6: Ownership of Work
Specify that all work products created by the consultant will be the exclusive property of the company.
Step 7: Confidentiality
Include a clause that mandates the consultant to maintain the confidentiality of all information obtained during the term of the agreement.
By focusing on these key sections, you’ll be able to draft your own Retainer Agreement. Ready to get started? Create your free Retainer Agreement template today.