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Can clients take action when a lawyer mishandles their retainer?

On Behalf of | May 18, 2023 | Legal Malpractice |

Hiring an attorney is often a very expensive decision. New clients often commit thousands of dollars in the form of a retainer to have a lawyer to assist them with a legal issue. A legal retainer is a large upfront payment that reflects the amount of work a lawyer believes their client’s case will require.

Lawyers should hold retainers in special escrow accounts separate from their personal bank account or their law office’s bank account. They will then bill against the balance in that retainer account for the hours of service that they provide to their clients. The client will receive detailed billing statements and will receive any balance remaining back after they finish working with the lawyer. If the situation takes longer to resolve, they may need to make additional payments.

Sometimes, when an individual finally resolves a drawn-out legal issue, they begin to question whether their lawyer handled the retainer that they paid appropriately. Can a client take action over the mismanagement or misappropriation of retainer funds?

Improper practices with retainers might be malpractice

People think of major mistakes or personal negligence when they think of professional malpractice, and there’s a little question that errors on the part of a lawyer could lead to a malpractice claim against them. However, malpractice can also involve a deviation from best practices and legal standards for a profession.

There are many legal and ethical rules already in place regarding the use of a client’s retainer. From the requirement to keep it in a separate account to the obligation to provide a thorough accounting of every claim submitted against the retainer’s value, there are numerous rules that determine how a lawyer uses the retainer paid by their clients.

In scenarios where lawyers do not properly manage or bill against those funds, the clients affected may be in a position to pursue a malpractice claim. Particularly in scenarios where lawyers improperly billed and kept more of the retainer than they should have, clients may be in an actionable position after uncovering questionable financial practices on the part of their attorney.

Seeking legal guidance and pursuing a legal malpractice claim over retainer issues can potentially allow affected clients to be compensated for unacceptable behavior on the part of counsel and can possibly inspire the lawyer involved to change their habits.