Q. If I don't take retainers, I won't need a trust account at all. Can't I avoid this whole problem by billing for my work after it's completed?
A. You can—if you wish to trade one problem for a more significant problem.
There's no law saying you have to open a trust account if you don't receive funds that must be deposited into one. If you don't take retainers, take settlement checks or hold third-party funds, you may not need one at all. You could always bill clients after the work has already been done so that the money can go directly into your operating account without any trust deposits of any kind.
That's simple enough – as long as your clients actually pay the bill. You may not have the chore of trust account management. But you may have the chore of collecting. You will have clients who get sticker shock once they receive a bill from you and may refuse to pay all or part of it. Maybe they won't have the funds when the bill comes due.
Retainers keep the attorney-client relationship in alignment, managing client expectations and setting things straight so you and your client can continue to smile as matters progress. Retainers are an excellent way of not only ensuring that you get paid, but it's also an excellent client management device.
A lot of times a client will say, "it's the principle of the thing! I want to sue! I need to collect this!" – and they don't appreciate the true expense of litigation.
Wouldn't you rather have that dollars-and-cents discussion up front? And why not punctuate it by requesting a retainer sufficient to do the job?
Actions speak louder than words. Rather than postpone a tense discussion over litigation expense, if your fee agreement requires a substantial financial commitment up front, then the client has an understanding that if he or she wants to invest in that litigation, the client's going to have to invest in that litigation up front.
Why should you take 100% of the risk, and risk never getting paid at all? Requesting retainers – taking those funds into trust – is not just a way of securing your fee. It's a way of bringing the client to a true dollars-and-cents decision that will impact the course of the case and whether the client truly wants to pursue it.
If the client doesn't have to pay any money up front, a lot of times a client will say, "sure, go for it" – not really appreciating the financial commitment that will be required. If you require that financial commitment up front, you may find a client who no longer thinks it's about the "principle of the thing," but about "principal and interest."
Retainer's work. And all you need to do to take them is to manage your trust account properly. Don't forgo that device simply because you don't think you're capable of balancing your trust checkbook.