What Is a Service Retainer Agreement?

A service retainer is an advance payment for expected services. It is commonly used in the legal arena when you hire an attorney. When you agree to pay a service retainer, you place the provider of the service on retainer. Your provider will draw up a service retainer agreement or an engagement letter, which you must sign to move forward.



A significant benefit of a service retainer agreement is that you know upfront how you and your provider will proceed. If the agreement is for an attorney/client relationship, for example, your attorney will offer a convenient process of payment for the services he will provide when you sign the service retainer agreement. You are assured of the full attention of your lawyer throughout the case as you have made a commitment to render payments according to the terms of the agreement ahead of time. Further, you know, upfront, what is expected of you and what you can expect from your provider.


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A service retainer agreement may contain a number of elements depending on the discussions by both parties. Typically, the contract will contain the names of the parties, contact details and locations. Along with itemizing the services that your service provider will perform, the service retainer agreement also lists the agreed-upon rate for each service and details how payments are to be made, including the consequences for late or nonpayment. The agreement will also outline the terms and conditions of the agreement, including expenses that you must pay and those that your provider will absorb.



A well-crafted service retainer agreement can be an asset for all involved because it serves as a clear outline of service expectations. The retainer agreement outlines the processes and policies to which the parties will adhere as they work together. It helps to minimize misunderstandings because it outlines everyone's roles and details a direct link between payments and services. It can also provide savings, as some providers offer discounts to clients while on retainer.



Service retainer agreements also state how and when the contract terminates. For example, many service agreements allow either party to terminate the agreement. The termination clause usually includes a stipulation that a notice of termination must be in writing. Further, terminations must usually occur within a certain number of days after you give notice. The agreement will likely state that you are responsible for all the fees, costs and other disbursements incurred through the date of termination. Ultimately, the terms of termination vary and depend on the parties involved.



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