FLAT-RATE ATTORNEY RETAINERS

On the face of it, a flat-rate retainer seems simplicity itself: You know what you're paying each month. The client is billed a flat monthly fee, no matter the number of hours the attorney puts in, according to David Berkey, a partner at Gallet Dreyer & Berkey. Some lawyers charge a flat monthly fee for basic work, such as answering letters and interpreting corporate documents, but may charge more for litigation, mortgage refinancing or work that is out of the ordinary.

The flat rate has been around a long time, but it's not popular with most attorneys. And no wonder: A flat rate usually means more work for less money. Wagner, for instance, recalls a lease negotiation with which he was involved under a flat-rate retainer.

"As they were negotiating, they had a board member who was just not sophisticated at all and she just didn't know what the hell she was doing. She would negotiate with two different companies at the same time and have me draft leases for both, which had been included in my retainer. So I did probably six or seven leases for them. It was just a disaster for me because I was getting $600 a month and they ran up a bill that probably was close to $100,000. So, I finally notified them, after almost all the leasing was done, ‘I can't include this anymore.'"

"The trouble is you get the people who want the $500 retainer and they think it's going to cover everything including private legal advice for every shareholder in the building," adds James Samson, a partner at Samson Fink & Dubow. "And that cannot possibly be so…. Or to put it another way, the guy who's willing to sign that kind of agreement is somebody who's not busy and why would you want a lawyer who's not busy?"

With such retainers, says Samson, "somebody's going to be unhappy and somebody's going to be a loser because the work is either going to be a lot more — making the attorney unhappy — or a lot less — making the board unhappy. If what they're looking for is a reduction in legal fees, that should be addressed in the time charges or the number of times they call you. If what they're looking for is the budgeting, well, it is not something that actually keeps the legal fees down by much, because you're not going to get $10,000 worth of work for $5,000. Certainly not from a busy lawyer."

Berkey warns that you could actually pay more, once exclusions from the arrangement are included. Others note that you may also end up paying for a lawyer when you don't need him — although Warren Schreiber, board president at Bay Terrace Cooperative Section I, a 200-unit garden apartment complex in North Beach, Queens, says this hasn't been a problem with his co-op's flat-rate deal.

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