Updated on March 8th, 2023
A consulting retainer agreement is a contract wherein a client pays a consultant an upfront fee to secure future work. The agreement outlines the professional relationship and specifies the services to be rendered, start dates and deadlines, confidentiality provisions that the consultant must follow, and their independent contractor status.
A retainer is an advance payment for the consultant’s services. These fees can be paid periodically and may be refundable or non-refundable.
Retainer agreements are categorized into two types: “pay-for-work” and “pay-for-access.” The type of retainer implemented will depend on the industry, the parties’ relationship, and the client’s needs.
- Used to establish an ongoing working relationship between the parties.
- The consultant is paid a retainer for future services or hours (“deliverables”).
- If the retainer is to be paid periodically, the parties establish the services or amount of work expected during each payment term.
- Retainer fees can rollover (i.e. the fees can be applied to the next pay term).
- The client pays a retainer for access to the consultant’s expertise and advice.
- The retainer must be paid regardless of whether the consultant provides services.
- No specified services or amount of hours in the contract.
- Used by clients who have a high level of trust in a consultant’s knowledge and skills.
Clients that regularly require a consultant’s services benefit from a retainer as it secures the contractor’s availability. In turn, consultants are given financial stability, allowing them to focus on their current clients instead of searching for new sources of income. Furthermore, implementing a retainer demonstrates that the client is invested in the professional relationship and will continue to do business with the consultant.