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Retainer Fee

Definition: An amount of money that acts as a fee pre-payment; the remainder is refunded to the client

Retainer fees generally come into play when you hire an attorney. If you anticipate you'll be contacting your attorney with a lot of routine questions, you should considering hiring--and paying--them on retainer. That means paying them a monthly fee that entitles you to all the routine legal advice you need.

A close cousin of the retainer payment method is the "prepaid legal plan." Prepaid legal plans have been compared to HMOs because they offer certain basic services for a monthly retainer fee. Prices range from as little as $10 per month to $70 or more; in return, an entrepreneur gets a package of services such as unlimited phone consultation with a lawyer, review of three contracts per month, up to 10 debt collection letters per month and discounts on other legal services.

Typically, prepaid legal services contract with one law firm in each state to handle routine matters. Because the service is usually the firm's biggest client, small-business owners using the service receive a warmer welcome than they might at a big law firm. Specialists are usually available at reduced rates.

When considering a prepaid legal service, here are some factors to consider:

With these caveats in mind, a prepaid legal service firm could be just what a business on a budget needs.