Earned upon Receipt in a Retainer Agreement

Earned Upon Receipt in a Retainer Agreement: What It Means and How It Works

Retainer agreements are common arrangements in the legal, marketing, and consulting industries, among others. They typically involve a client paying a fee upfront to secure the services of a professional or firm for a certain period of time. Retainer agreements can vary in their terms and structures, but one important concept to understand is “earned upon receipt.”

What does “earned upon receipt” mean?

Earned upon receipt is a payment term that specifies that the funds received by the service provider are considered earned as soon as they are received. This means that the provider does not have to wait until they have completed any work or reached any milestones to consider the fee earned.

In a retainer agreement, this term may be included to ensure that the service provider is compensated for their time and availability, even if the client does not request any specific services or deliverables during the retainer period.

For example, a lawyer may require a retainer fee at the start of a case to cover their time and expenses as they prepare for trial. If the client decides to settle the case before trial, the lawyer has still earned the retainer fee, even if they did not provide any additional services beyond the initial consultation and preparation work.

How does earned upon receipt work in a retainer agreement?

The specifics of earned upon receipt can vary depending on the terms of the retainer agreement. However, some common elements may include:

– The amount and timing of the fee: The retainer agreement should specify how much the client will pay and when they will pay it. If the fee is earned upon receipt, then it will usually be due before any services are provided.

– The scope of services: While the fee may be earned upfront, the provider is still expected to perform the services that the client has requested and agreed upon. The retainer agreement should outline what services will be provided and how they will be delivered.

– Termination and refund policies: If the client decides to terminate the retainer agreement early, the provider may still be entitled to the full fee. Alternatively, the retainer agreement may specify a partial refund if services have not yet been provided or if the termination is due to a breach by the provider.

– Communication and reporting: The provider should keep the client informed about their work and progress, even if the fee has already been earned. Regular check-ins, reports, and updates can help ensure that the client feels they are getting value for their investment.

Overall, earned upon receipt can provide a sense of security and stability for service providers who work on retainer. By receiving the fee upfront, they can allocate their time and resources more effectively and avoid the uncertainty of waiting for payment after services have been provided. However, clients should also be aware of what they are paying for and what their rights and obligations are under the retainer agreement. Clear communication and transparency can help ensure a successful working relationship.