A Guide to Evergreen Retainers for Law Firms

Want to ensure your law firm gets paid—and paid on time? Try using an evergreen retainer.

Evergreen retainers simplify the process of settling invoices on schedule, and the system is straightforward: Your client provides an original retainer held in trust against which legal services are billed—and when their trust account hits a predetermined minimum balance, they replenish the funds.

This system ensures that there are always enough funds in trust to get invoices paid on time—a big positive for your law firm cash flow. Evergreen retainers also offer a great solution for clients who may not be able to put down a large balance in trust at the start of their case.

Here’s everything you need to know about using evergreen retainers at your law firm:

How to use evergreen retainers at your law firm

An evergreen retainer requires two key elements: clear client communication, and a solid process for tracking trust accounts and minimum balances.

Include an evergreen retainer clause in fee agreements

Your fee agreement, or retainer agreement, must communicate how the evergreen retainer will work using an evergreen retainer clause, which should specify:

  • The minimum balance required in the client’s trust account.
  • When the client must replenish funds, and by how much.

The minimum balance you agree upon may be the same across all cases, or it may be chosen on a case-by-case basis depending on the scope of work and what your client can afford.

You may also state that work on the case may cease if a client fails to honor the evergreen retainer clause. This can provide an extra guard against less-than-timely trust top-ups.

If you’re not sure where to start with your evergreen retainer clause, consider these examples from the Texas Bar Association and the Lawyers Mutual Insurance Company of Kentucky. Additionally, Interbill provides the following example:

Client agrees to an advance retainer deposit of $2500 paid with the execution of this agreement and further agrees to replenish the retainer with a $1500 payment when the retainer balance reaches or is less than $1000.

Above all, be clear about the process. Communication is key to building a strong client relationship, and helps guard against future misunderstandings and unpaid bills.

Create a system for monitoring balances

It’s your job to let your clients know when their trust funds are at or below the minimum balance required—so make sure you have a system in place to track balances and notify clients when it’s time to top up funds.

Software programs can be a big help here. For example, with Clio’s Evergreen Management feature suite, you and/or your staff can receive automated notifications when a client’s trust account drops below the minimum balance. From there, you can easily send a new Trust Request to the client.

For example, if you’re at a larger firm, you may want to set notifications to go to a legal assistant or your accounting team, with well-defined instructions to send a request for additional funds.

Keep invoices and requests for trust funds clear

Make sure clients get a copy of all invoices. While you may be approving invoices and applying client trust funds to pay them, you have a duty to tell your client what they’re being billed for.

Clarify the difference between invoices and requests for additional trust funds—especially if an invoice totals more than the amount left in trust, and the client needs to both pay the invoice and replenish their evergreen retainer.

When to use evergreen retainers

Evergreen retainers are useful when a client can’t pay—or would prefer not to pay—a larger single retainer up front. For example, if a client balks at paying a $20,000 retainer up front, an evergreen retainer with a minimum trust balance of $4,000 might be more manageable. This way, your firm can keep its cash flow healthy without putting an extra strain on the client.

Benefits of using evergreen retainers

Evergreen retainers can make a big difference for your law firm through:

  • Improved cash flow. With evergreen retainers, you’ll have funds available in trust, so you won’t have to wait to get paid.
  • Improved collections. The 2017 Legal Trends Report found that using trust accounts positively affected collections for family law matters: Matters with associated trust accounts had an 85% collection rate, compared to 70% for those that didn’t. Evergreen retainers make it more affordable for more clients to pay via trust, potentially helping to improve collections.
  • Improved client experience. A clear evergreen retainer agreement and process can help set expectations for clients about what they’ll be billed for, and when.
  • Streamlined accounting. With the right technology to support you, implementing evergreen retainers makes tracking trust accounting easier. Systems that notify you to request additional client funds when trust accounts dip below a certain threshold provide an extra guard against account overdraws.

Using evergreen retainers for smoother practice management

Evergreen retainers can be a boon for your law firm’s finances, and can make paying for legal services more affordable and predictable for your clients. With a clear agreement, explicit processes, and the right software systems, evergreen retainers can work for your firm.

With Clio’s Evergreen Management feature suite, it’s never been easier to set up and manage evergreen retainers. Learn more about Evergreen Management.

Learn more about Evergreen Management

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