# Retainer engagement letter: advance-fee, evergreen and true retainers [Home](/) / [Engagement letter templates](/templates/engagement-letters) / Retainer By [Arthur Teboul](/authors/arthur-teboul), Founder, DokuTrak. Published 2026-11-04, updated 2026-11-04. > **In brief:** A retainer engagement letter says which kind of retainer the client pays, where the money sits until it is earned, how and when you draw on it, and what happens to the unearned balance when the engagement ends. Name the type first, because the trust account and refund rules follow from it. ## The template: Retainer engagement letter **Not advice.** This page is general information, not tax, legal or HR advice. Rules change: check the cited source and ask your own professional before you rely on it. Last reviewed October 25, 2026. Keep one retainer type in the second clause and delete the others, then check each clause against your state’s trust account and fee rules. This is a starting point, not legal advice. ```text [Firm name] [Firm address] [Date] [Client name] [Client address] Re: Retainer for [matter description] Dear [Client name], The matter This letter covers the retainer for [matter description]. The scope of our work, our duties and yours are set out in [our engagement letter dated (date) / the clauses below]. If the two conflict, this letter governs the retainer. Type of retainer Option A, advance fee: you will pay [amount] as an advance against future fees and costs. Option B, evergreen: you will pay [amount] and keep the balance at that level as described below. Option C, true retainer: you will pay [amount] solely to secure our availability for [period or matter]; it is not payment for any work. Where the money is held We will deposit an advance or evergreen retainer in our client trust account at [bank]. It remains your money until we earn it. [Interest on the account is handled under our state’s rules for client trust accounts.] How we draw on it Each month we will send you a statement listing the work done, who did it, the time spent, the costs incurred, the amount we are transferring from trust to pay it, and the balance left. We will make the transfer [number] days after the statement unless you dispute it. Disputed amounts If you dispute a charge, tell us in writing. We will leave the disputed amount in trust until we settle the dispute, and we will transfer only the part you do not dispute. Topping up the retainer (optional) For an evergreen retainer, whenever a statement shows a trust balance below [floor amount], you will pay enough to bring it back to [target amount] within [number] days. If you do not, we may pause work that is not urgent after giving you written notice. Rates and costs Our hourly rates are: [name or role], [rate]; [name or role], [rate]. We bill in increments of [increment]. Costs such as filing fees and expert fees are [drawn from the retainer / paid from a separate cost deposit of (amount)]. Final invoice and refund When the matter ends, or if either of us ends the engagement early, we will apply the retainer to our final invoice and refund any unearned balance within [number] days, with a final statement. Earned fees are measured by our time records at the rates above. True retainer terms (optional) A true retainer is earned when paid and is not refundable, because it pays only for our availability. You confirm that we explained this to you before you signed, and that fees for any work we do are billed separately. Payment by someone else (optional) If [payer name] pays the retainer for you, our duties run to you alone. The payer will not direct our work or receive your confidential information without your consent, and any refund goes to [you / the payer] as you instruct in writing. Ending the engagement You may end our engagement at any time by telling us in writing. We may withdraw as our professional rules permit. Either way, we will return your file and any unearned funds promptly. Your agreement Please sign and return a copy of this letter with the retainer payment. We will start work once both have arrived. Very truly yours, [Attorney or professional name] [Firm name] Signature: ____________________ Date: __________ Agreed: [Client name] Signature: ____________________ Date: __________ ``` Download: [Word](https://dokutrak.com/downloads/pseo-v2/f2-engagement-letters/retainer.docx) · [PDF](https://dokutrak.com/downloads/pseo-v2/f2-engagement-letters/retainer.pdf) ## Three things people call a retainer The word covers three different deals, and each one is handled differently. A letter that uses the word without saying which deal it means invites a dispute. An **advance-fee retainer** is money paid up front as security for fees not yet earned. It stays the client’s money until you earn it. An **evergreen retainer** is an advance-fee retainer that the client tops back up whenever the balance falls below a set floor. A **true retainer** is a fee paid only to secure your availability, not for any work. California, for example, defines it as a fee paid to ensure the lawyer’s availability for a period or a matter, and not as payment for services ([California Rules of Professional Conduct, Rule 1.5, Fees for Legal Services (with executive summary)](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.5-Exec_Summary-Redline.pdf)). | Type | Whose money until earned | Where it is held | Refund at the end | | --- | --- | --- | --- | | Advance-fee retainer | The client’s | Client trust account | Unearned balance returned | | Evergreen retainer | The client’s | Client trust account, replenished | Unearned balance returned | | True retainer | Yours on receipt, if the state allows and the client agrees in writing | Operating account | Not refundable where the rule allows it | ## Where an advance fee must sit For lawyers, the state’s safekeeping rule controls this. California’s Rule 1.15 requires funds held for a client, including advances for fees, costs and expenses, to go into an account labeled as a trust account ([California Rules of Professional Conduct, Rule 1.15, Safekeeping Funds and Property](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.15.pdf)). Your state’s version may differ in detail, so check it before you copy any clause. Drawing on the money follows from the same rule. Once part of the trust money becomes yours, you must withdraw it at the earliest reasonable time, and you may not leave your own money mixed with the client’s ([California Rules of Professional Conduct, Rule 1.15, Safekeeping Funds and Property](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.15.pdf)). If the client disputes a draw, the disputed part stays in trust until the dispute is resolved ([California Rules of Professional Conduct, Rule 1.15, Safekeeping Funds and Property](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.15.pdf)). So the letter should say three things in plain words: the money goes into the trust account; you draw it when you send a statement showing the work; and you hold any disputed amount until the dispute ends. The rule also requires you to account to the client in writing for the funds you hold ([California Rules of Professional Conduct, Rule 1.15, Safekeeping Funds and Property](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.15.pdf)), which the monthly statement does. ## How an evergreen retainer is topped up Write the replenishment rule as numbers the client can check. Set a target balance, a floor, and a number of days to pay after a statement shows the balance below the floor. For example: keep [target amount] in trust, top it up within ten days whenever a statement shows less than [floor amount]. Then say what happens if the client does not top it up. A common answer is that you may pause non-urgent work after written notice, and that the last retainer may be applied to the final invoice. Write both, so neither comes as a surprise. ## Refunds, and the word “nonrefundable” When the engagement ends for any reason, California requires the lawyer to refund promptly any part of a fee paid in advance that has not been earned ([California Rules of Professional Conduct, Rule 1.16, Declining or Terminating Representation](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.16.pdf)). The same rule excludes a true retainer paid only to secure availability ([California Rules of Professional Conduct, Rule 1.16, Declining or Terminating Representation](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.16.pdf)). That makes “nonrefundable” a risky label. In California, a fee may be called earned on receipt or nonrefundable only if it is a true retainer and the client agrees in writing after disclosure ([California Rules of Professional Conduct, Rule 1.5, Fees for Legal Services (with executive summary)](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.5-Exec_Summary-Redline.pdf)). Elsewhere the rule may be stricter. Unless your state clearly allows it, leave the word out and write a refund clause instead. Write the refund method too. Say that earned fees are measured by your time records at the rates in the letter, and that you send the balance with a final statement within a set number of days. ## Retainers outside law firms Accountants, bookkeepers and consultants use the same word for a different thing: a fixed monthly fee for a set of services, such as monthly bookkeeping and one advisory call. That is a subscription, not a trust deposit, and no client trust account is involved. For those firms, the letter needs a different set of clauses. List what the monthly fee covers, the volume it assumes, the overage rate, and when the fee is reviewed. Bill in advance, and say whether unused hours carry over. If a client prepays a large sum for future work, treat it like an advance and say what is refunded if the engagement ends early. ## Questions people ask ### What is the difference between a retainer and a deposit? An advance-fee retainer works like a deposit: it stays the client’s money until earned. A true retainer pays only for availability and, where the state allows it and the client agrees in writing, is earned on receipt ([California Rules of Professional Conduct, Rule 1.5, Fees for Legal Services (with executive summary)](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.5-Exec_Summary-Redline.pdf)). ### Is a retainer fee refundable? The unearned part of a fee paid in advance must be refunded when the engagement ends, under rules such as California’s Rule 1.16 ([California Rules of Professional Conduct, Rule 1.16, Declining or Terminating Representation](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.16.pdf)). A true retainer paid only for availability is the exception. ### Can a client back out of a retainer agreement? Yes. A client can end the engagement at any time. The lawyer keeps what was earned and refunds the unearned balance of any advance ([California Rules of Professional Conduct, Rule 1.16, Declining or Terminating Representation](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.16.pdf)). The letter should say how earned fees are measured. ### Is a letter of engagement the same as a retainer agreement? They are often one document. The engagement letter sets the scope and terms; the retainer clauses add how money paid in advance is held, drawn and refunded. ## Sources - [California Rules of Professional Conduct, Rule 1.15, Safekeeping Funds and Property](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.15.pdf): Funds held for a client, including advances for fees, go into a trust account; the lawyer withdraws its portion once fixed, keeps disputed amounts in trust and accounts in writing. - [California Rules of Professional Conduct, Rule 1.16, Declining or Terminating Representation](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.16.pdf): On termination, the lawyer promptly refunds any part of a fee paid in advance that has not been earned, except a true retainer. - [California Rules of Professional Conduct, Rule 1.5, Fees for Legal Services (with executive summary)](https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.5-Exec_Summary-Redline.pdf): A fee may be called earned on receipt or nonrefundable only if it is a true retainer and the client agrees in writing; a true retainer secures availability only. ## More on this topic - [Engagement letter template (general)](/blog/engagement-letter-template) - [Disengagement letter template](/blog/disengagement-letter-template) - [Engagement letter templates by service](/templates/engagement-letters) ## About the author Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. [Arthur Teboul](/authors/arthur-teboul). How this page was made (methodology): it is built from the primary sources listed under Sources, and every rule and figure on it links to the source it comes from. Last updated October 25, 2026. Spotted an error or a rule that changed? [Contact us](/contact). ## Ask once. DokuTrak does the chasing. - Your client uploads from one link, with no account and no password. - Reminders go out on a schedule, by default 2, 5, 10 and 14 days after the request, until the file arrives. - You accept every file or mark it for re-upload, and your client gets the note by email. The AI never accepts a file. 14-day free trial, no card. Add one only to keep going. [Request these documents with DokuTrak](https://app.dokutrak.com/sign-up?docs=contract%2Cinvoice)