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You have taken the file. The scope is clear, the client is keen, and then the money question arrives. Do you ask for a fixed deposit up front and bill against it, or do you set an evergreen retainer that the client tops up as you go? The wrong answer here does not show up on day one. It shows up three months in, when the trust balance is empty, the work is half done, and nobody wants to have the awkward conversation.
This is an FAQ for the questions firms actually ask about retainers, and how to write a policy that clients accept and that your accounts can live with.
Deposit Versus Evergreen in One Minute
A deposit retainer is a single sum you ask for at the start. It goes into trust, and you draw it down as you bill. When it is gone, it is gone, and you either ask for another one or carry a receivable. An evergreen retainer is a floor. The client funds trust to an agreed amount, and every time your billing pulls the balance below that floor, they top it back up to full. The deposit depletes in one direction. The evergreen replenishes on a trigger.
Neither is better in the abstract. The right choice depends on the file.
| Feature | Deposit retainer | Evergreen retainer |
|---|---|---|
| Best for | Short, defined scope; flat-fee-ish work | Ongoing litigation, long files, uncertain scope |
| Cash flow | Front-loaded, then depletes | Steady, self-replenishing |
| Client friction | One ask, one payment | Repeated top-up requests |
| Risk of running dry | Higher on long files | Lower if the trigger works |
Most small firms use both, matched to the matter. A simple incorporation or a will takes a deposit. A contested family file or a multi-year commercial dispute takes an evergreen. If you want a wider view of how billing choices ripple through the practice, our Billing and Trust hub collects the rest.
What Belongs in Trust and What Does Not
This is where retainer policy meets your obligations to the law society, so get it right. Money a client gives you before you have earned it is trust money. It stays in the trust account until you have done the work, rendered an invoice, and transferred the earned portion to your general account. The retainer deposit and every evergreen top-up land in trust first.
What is not trust money: fees you have already billed and the client has paid against an invoice, and a true flat fee only once your jurisdiction's rules let you treat it as earned. Rules on flat fees and on when funds are earned vary by province, so confirm the current requirements with your law society before you set a firmwide practice.
Warn. Never transfer from trust to general without a rendered invoice, and never let a transfer take the trust balance below zero. A negative trust ledger for any single client is a trust shortage, and that is a reportable problem, not a bookkeeping quirk.
If you are shaky on the mechanics of moving money out cleanly, walk through our step-by-step trust reconciliation before you tighten your retainer terms. And if you ever find yourself short, handle it the way we describe in managing a trust shortage the right way, promptly and on the record.
Setting the Replenishment Trigger
An evergreen retainer only works if the top-up request goes out before the tank is empty. That means picking a trigger, and the trigger is not "when we run out." Two numbers do the work: the floor (the balance the client agrees to maintain) and the trigger point (the balance at which you send the top-up notice).
- Set the floor to cover a realistic month of work. If the file runs at roughly four thousand dollars a month, a floor near that keeps you a month ahead.
- Trigger the top-up at fifty to sixty per cent of the floor, not at zero. That leaves you a cushion while the client arranges payment, which rarely happens the same day.
- Automate the alert. A person watching balances by hand will miss one. Whether you use the Trust accounting tools in A1 CMS or a spreadsheet with a hard rule, the trigger should fire on its own.
The point of the buffer is simple. You want to stop work, if it comes to that, while there is still money in trust for the wind-down, not after you have already worked for free.
Wording the Policy in the Engagement Letter
A retainer policy that lives in your head is not a policy. It has to be in the engagement letter, in plain words, agreed before the first hour is docked. The client should never be surprised by a top-up request, because the mechanism was spelled out on day one.
The client agrees to maintain a retainer balance of $X in trust. When billing reduces the trust balance below $Y, the client will restore it to $X within ten business days of our written request. We may suspend work on the matter if the balance is not restored, after reasonable notice.
Say what the retainer is for, that it sits in trust, that unearned funds are returned at the end, and what happens if a top-up is not paid. Tie the numbers to the specific matter rather than a generic firm figure. For the deeper question of how you frame fees and expectations in writing so clients do not push back later, our piece on writing narratives clients do not question is worth a read.
Tip. Keep the retainer clause and the fee clause in separate, clearly labelled paragraphs. When a client rereads the letter under stress, they should find the money terms in seconds.
Handling the Client Who Runs Dry
It will happen. A good client hits a rough patch, the top-up does not arrive, and you are mid-file with a deadline looming. Your policy is what keeps this from becoming a fight.
- Send the notice early and calmly. Reference the clause, state the balance, and give the ten-day window. No accusation, just the mechanism working as agreed.
- Offer a path, not just a wall. A short payment arrangement or a smaller top-up to cover the immediate task keeps the relationship intact and the file moving.
- Know your suspension and withdrawal rules. You cannot down tools in a way that prejudices the client, and court deadlines and law society duties still bind you. Confirm the withdrawal rules in your jurisdiction before you stop.
- Document every step. If a fee dispute follows, the record is your defence.
When a top-up conversation does tip into a genuine disagreement about the bill, our guide to handling a fee dispute calmly covers the ground.
The retainer policy you choose is about cash flow, but more than that it is about setting expectations clearly enough that the money conversation never becomes a surprise. Pick the model that fits the matter, put unearned funds in trust, set a trigger that fires before empty, and write terms your client can reread and still agree with. Do that, and the awkward month-three conversation mostly stops happening. For more on running a tidy billing practice, keep an eye on the A1 team's posts.
