diff --git "a/4bc62eb4-678b-48cc-8e7c-ce5a524f0279.json" "b/4bc62eb4-678b-48cc-8e7c-ce5a524f0279.json" new file mode 100644--- /dev/null +++ "b/4bc62eb4-678b-48cc-8e7c-ce5a524f0279.json" @@ -0,0 +1,40 @@ +{ + "interaction_id": "4bc62eb4-678b-48cc-8e7c-ce5a524f0279", + "search_results": [ + { + "page_name": "Retainer Fee - Overview, How Retainer Agreements Work, Importance", + "page_url": "https://corporatefinanceinstitute.com/resources/accounting/retainer-fee/", + "page_snippet": "A retainer fee is an upfront cost paid by an individual for the services of an advisor, consultant, lawyer, freelancer, or other professional.A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process. Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes. Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.", + "page_result": "\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nRetainer Fee - Overview, How Retainer Agreements Work, Importance\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\nCorporate Finance Institute \n
\n\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n\n\n
\n
\n
\n
\n
\n
\n\nHome › Resources › Accounting › Retainer Fee
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Table of contents
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n

Retainer Fee

\n

Upfront cost paid by an individual for specific professional services

Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.\n

\nStart Free\n

\n
\n
\n
\n
\n
\nWritten by\n\nCFI Team\n\n
\n
\n
\n
\n

What is a Retainer Fee?

\n

A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process.

\n

\"Retainer

\n

Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes.

\n

How Retainer Agreements Work

\n

Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.

\n

The attorney will then invoice the client at the end of the month, and transfer the fee from the special account into his account. If the case takes more work than is covered by the retainer, the attorney will bill the client for more. However, if the case takes less time than the initial estimate, the attorney will refund the client the excess amount.

\n

The majority of bar associations prohibit attorneys from charging a retainer fee that represents more hours than a case is likely to require. Clients maintain the right to end legal representation whenever they want during the contract if they are unhappy with the attorney.

\n

Once the agreement is terminated, the client may claim the balance of the retainer fee after paying the attorney an amount equivalent to the number of hours worked. Therefore, clients should clarify with the attorney if they notice a “non-refundable” clause regarding retainer fees in the agreement.

\n

Example of a Retainer Agreement

\n

Once a client signs a representation agreement with an attorney stipulating the retainer fee, the client is required to deposit the fee in a special account. Any time the attorney works on the case, he keeps track of the hours spent and invoices the client at the end of the month.

\n

For example, the attorney may project that he will spend 10 hours, at an hourly rate of $100, amounting to a $1,000 retainer fee. If in the first month, the lawyer spends four hours on the case, he will charge $400 against the $1,000 retainer fee, leaving a balance of $600. If the attorney completes the case in the second month after spending another three hours, he will charge $300 against the remaining fee, leaving a balance of $300.

\n

The billing includes the time spent making phone calls, sending faxes, and preparing records. If all pending issues have been addressed and there is no extra fee, the client gets a refund of the remaining $300.

\n

After the retainer fee is depleted, the attorney may bill the client in several ways. The first option is to enter into a contingency fee agreement with the client. A contingency fee agreement provides that the lawyer does not get paid unless he wins the case. If the case ends in favor of the client, the attorney takes a percentage of the amount awarded by the court.

\n

Such an option mainly applies in tort and personal injury cases where the client demands a settlement from the other party. The client and attorney must first agree about the payment plan in advance and put it in writing.

\n

If the client needs an attorney for a long-term relationship, the client may engage the attorney on a retainer basis. The retainer is usually a fixed amount that the client commits to pay the attorney on a monthly basis in exchange for the opportunity to engage him in the future when legal issues come up.

\n

Such agreements are common among businesses such as tech companies, restaurants, and hospitals that may be threatened with a legal suit by one of their customers. Hiring a lawyer on a retainer basis is usually a cheaper option than hiring an in-house attorney.

\n

Earned Retainer vs. Unearned Retainer Fee

\n

An unearned retainer fee refers to the amount of money deposited in a retainer account before the commencement of work. The amount serves as a guarantee by the client to pay the attorney upon completion of the agreed work. The attorney cannot claim the retainer fee until he has completed the work and invoiced the client. Any remaining retainer fee after paying the hourly attorney fees should be returned to the client.

\n

Earned retainer fee refers to the amount that is transferred from the special account to the attorney’s operating account after completing an agreed task. The amount that the lawyer will receive per hour is usually agreed upon before the commencement of the work and indicated in the retainer fee agreement.

\n

The earned retainer fee is paid every month until the case is closed. Sometimes, the lawyer may be paid according to the milestones he has completed, for example, 25% after the pre-trial process, 60% after the hearing, and 100% when the case is determined and closed.

\n

Importance of a Retainer Fee

\n

A retainer fee compensates the attorney for his expertise and reputation. When hiring an attorney, clients choose an attorney with a good reputation in the legal profession to help them win a case. Choosing the right attorney can sometimes help the client obtain a settlement without even going to court.

\n

Also, the retainer fee aims to protect the attorney from unforeseen circumstances in the future that can prevent clients from meeting their obligations. Once the case has started, the attorney can charge any costs against the retainer fee instead of asking the client to provide extra funds.

\n

If an unexpected event occurs during the court process that prevents the client from being able to pay out any more money, the attorney can receive some compensation for the work performed through having received the retainer fee.

\n

More Resources

\n

Thank you for reading CFI’s guide to a Retainer Fee. For further information, we offer the following resources:

\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Get In-Demand Finance Certifications
\n
\nLearn More\n
\n
\n
\n
\n
\n\n\n
\n
\n\n
\n\n
\n
\n
\n\nCorporate Finance Institute \n
\n
\n\n\n\n\n\n
\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nBack to Website\n
\n
\n0 search results for ‘’\n
\n
\n
\n
\n
\n\nPeople also search for:\n\n\nexcel \n\nFree \n\nfree courses \n\naccounting \n\nESG \n\nBalance sheet \n\nDCF \n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nExplore Our Certifications
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCommercial Banking & Credit Analyst (CBCA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCapital Markets & Securities Analyst (CMSA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCertified Business Intelligence & Data Analyst (BIDA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nFinancial Planning & Wealth Management (FPWM)\u2122
\n\n
\n\n
\n
\n
\n
\n\n
\nFinTech Industry Professional (FTIP)\u2122
\n\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nResources
\n
\n
\n\n
\n
\n\nSee All Resources\nSee All\n\n
\n
\n
\n
\n
\nPopular Courses
\n
\n
\n\n
\n
\n\nSee All Courses\nSee All\n\n
\n
\n
\n
\n
\n
\n
\n
\nRecent Searches
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nSuggestions
\n
\n
\n
\n\nFree Courses \n\nExcel Courses \n\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae \n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Create a free account to unlock this Template

\n
\n

Access and download collection of free Templates to help power your productivity and performance.

\n
\n
\nCreate a Free Account\n
\n
\n

Already have an account? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Supercharge your skills with Premium Templates

\n
\n

Take your learning and productivity to the next level with our Premium Templates.

\n

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance\u2014as well as CFI's full course catalog and accredited Certification Programs.

\n
\n
\nDiscover Paid Memberships\n
\n
\n

Already have a Self-Study or Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Access Exclusive Templates

\n
\n

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

\n
\n
\nDiscover Full-Immersion Membership\n
\n
\n

Already have a Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n \n
\n\n", + "page_last_modified": " Wed, 13 Mar 2024 09:04:33 GMT" + }, + { + "page_name": "Retainer Fee - Overview, How Retainer Agreements Work, Importance", + "page_url": "https://corporatefinanceinstitute.com/resources/accounting/retainer-fee/", + "page_snippet": "A retainer fee is an upfront cost paid by an individual for the services of an advisor, consultant, lawyer, freelancer, or other professional.A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process. Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes. Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.", + "page_result": "\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nRetainer Fee - Overview, How Retainer Agreements Work, Importance\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\nCorporate Finance Institute \n
\n\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n\n\n
\n
\n
\n
\n
\n
\n\nHome › Resources › Accounting › Retainer Fee
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Table of contents
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n

Retainer Fee

\n

Upfront cost paid by an individual for specific professional services

Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.\n

\nStart Free\n

\n
\n
\n
\n
\n
\nWritten by\n\nCFI Team\n\n
\n
\n
\n
\n

What is a Retainer Fee?

\n

A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process.

\n

\"Retainer

\n

Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes.

\n

How Retainer Agreements Work

\n

Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.

\n

The attorney will then invoice the client at the end of the month, and transfer the fee from the special account into his account. If the case takes more work than is covered by the retainer, the attorney will bill the client for more. However, if the case takes less time than the initial estimate, the attorney will refund the client the excess amount.

\n

The majority of bar associations prohibit attorneys from charging a retainer fee that represents more hours than a case is likely to require. Clients maintain the right to end legal representation whenever they want during the contract if they are unhappy with the attorney.

\n

Once the agreement is terminated, the client may claim the balance of the retainer fee after paying the attorney an amount equivalent to the number of hours worked. Therefore, clients should clarify with the attorney if they notice a “non-refundable” clause regarding retainer fees in the agreement.

\n

Example of a Retainer Agreement

\n

Once a client signs a representation agreement with an attorney stipulating the retainer fee, the client is required to deposit the fee in a special account. Any time the attorney works on the case, he keeps track of the hours spent and invoices the client at the end of the month.

\n

For example, the attorney may project that he will spend 10 hours, at an hourly rate of $100, amounting to a $1,000 retainer fee. If in the first month, the lawyer spends four hours on the case, he will charge $400 against the $1,000 retainer fee, leaving a balance of $600. If the attorney completes the case in the second month after spending another three hours, he will charge $300 against the remaining fee, leaving a balance of $300.

\n

The billing includes the time spent making phone calls, sending faxes, and preparing records. If all pending issues have been addressed and there is no extra fee, the client gets a refund of the remaining $300.

\n

After the retainer fee is depleted, the attorney may bill the client in several ways. The first option is to enter into a contingency fee agreement with the client. A contingency fee agreement provides that the lawyer does not get paid unless he wins the case. If the case ends in favor of the client, the attorney takes a percentage of the amount awarded by the court.

\n

Such an option mainly applies in tort and personal injury cases where the client demands a settlement from the other party. The client and attorney must first agree about the payment plan in advance and put it in writing.

\n

If the client needs an attorney for a long-term relationship, the client may engage the attorney on a retainer basis. The retainer is usually a fixed amount that the client commits to pay the attorney on a monthly basis in exchange for the opportunity to engage him in the future when legal issues come up.

\n

Such agreements are common among businesses such as tech companies, restaurants, and hospitals that may be threatened with a legal suit by one of their customers. Hiring a lawyer on a retainer basis is usually a cheaper option than hiring an in-house attorney.

\n

Earned Retainer vs. Unearned Retainer Fee

\n

An unearned retainer fee refers to the amount of money deposited in a retainer account before the commencement of work. The amount serves as a guarantee by the client to pay the attorney upon completion of the agreed work. The attorney cannot claim the retainer fee until he has completed the work and invoiced the client. Any remaining retainer fee after paying the hourly attorney fees should be returned to the client.

\n

Earned retainer fee refers to the amount that is transferred from the special account to the attorney’s operating account after completing an agreed task. The amount that the lawyer will receive per hour is usually agreed upon before the commencement of the work and indicated in the retainer fee agreement.

\n

The earned retainer fee is paid every month until the case is closed. Sometimes, the lawyer may be paid according to the milestones he has completed, for example, 25% after the pre-trial process, 60% after the hearing, and 100% when the case is determined and closed.

\n

Importance of a Retainer Fee

\n

A retainer fee compensates the attorney for his expertise and reputation. When hiring an attorney, clients choose an attorney with a good reputation in the legal profession to help them win a case. Choosing the right attorney can sometimes help the client obtain a settlement without even going to court.

\n

Also, the retainer fee aims to protect the attorney from unforeseen circumstances in the future that can prevent clients from meeting their obligations. Once the case has started, the attorney can charge any costs against the retainer fee instead of asking the client to provide extra funds.

\n

If an unexpected event occurs during the court process that prevents the client from being able to pay out any more money, the attorney can receive some compensation for the work performed through having received the retainer fee.

\n

More Resources

\n

Thank you for reading CFI’s guide to a Retainer Fee. For further information, we offer the following resources:

\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Get In-Demand Finance Certifications
\n
\nLearn More\n
\n
\n
\n
\n
\n\n\n
\n
\n\n
\n\n
\n
\n
\n\nCorporate Finance Institute \n
\n
\n\n\n\n\n\n
\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nBack to Website\n
\n
\n0 search results for ‘’\n
\n
\n
\n
\n
\n\nPeople also search for:\n\n\nexcel \n\nFree \n\nfree courses \n\naccounting \n\nESG \n\nBalance sheet \n\nDCF \n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nExplore Our Certifications
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCommercial Banking & Credit Analyst (CBCA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCapital Markets & Securities Analyst (CMSA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCertified Business Intelligence & Data Analyst (BIDA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nFinancial Planning & Wealth Management (FPWM)\u2122
\n\n
\n\n
\n
\n
\n
\n\n
\nFinTech Industry Professional (FTIP)\u2122
\n\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nResources
\n
\n
\n\n
\n
\n\nSee All Resources\nSee All\n\n
\n
\n
\n
\n
\nPopular Courses
\n
\n
\n\n
\n
\n\nSee All Courses\nSee All\n\n
\n
\n
\n
\n
\n
\n
\n
\nRecent Searches
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nSuggestions
\n
\n
\n
\n\nFree Courses \n\nExcel Courses \n\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae \n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Create a free account to unlock this Template

\n
\n

Access and download collection of free Templates to help power your productivity and performance.

\n
\n
\nCreate a Free Account\n
\n
\n

Already have an account? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Supercharge your skills with Premium Templates

\n
\n

Take your learning and productivity to the next level with our Premium Templates.

\n

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance\u2014as well as CFI's full course catalog and accredited Certification Programs.

\n
\n
\nDiscover Paid Memberships\n
\n
\n

Already have a Self-Study or Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Access Exclusive Templates

\n
\n

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

\n
\n
\nDiscover Full-Immersion Membership\n
\n
\n

Already have a Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n \n
\n\n", + "page_last_modified": " Wed, 13 Mar 2024 09:04:33 GMT" + }, + { + "page_name": "Retainer Fee Meaning, Uses, How It Works, and Example", + "page_url": "https://www.investopedia.com/terms/r/retainer-fee.asp", + "page_snippet": "A retainer fee is an amount of money paid upfront to secure the services of a lawyer, consultant, freelancer, or other professional.A retainer fee is an amount of money paid upfront to secure the services of a consultant, freelancer, lawyer, or other professional. A retainer fee is most commonly paid to third parties that the payer has engaged to perform a specific action on their behalf. Portions of retainer fees can be refunded if services cost less than initially planned. A retainer fee is an advance payment a client makes to a professional, and it is considered a down payment on the future services rendered by that professional. Regardless of occupation, the retainer fee funds the initial expenses of the working relationship. These fees, almost always paid upfront, only ensure the receiver's commitment. In addition, retainer fees usually do not represent the total final cost of the services provided. A retainer fee is a payment made to a professional, often a lawyer, by a client for future services. A retainer fee is a payment made to a professional, often a lawyer, by a client for future services. Retainer fees do not guarantee an outcome or final product.", + "page_result": "\n\n\n\n\n\n\n\n\n\n\nRetainer Fee Meaning, Uses, How It Works, and Example\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n\n\n\n\n\n
\n\n
\n
\n\n
\n
\n\n\n
\n\nTrade\n
\n
    \n
  • \n
    \n
    \n\n\n\n\n
    \n
    \n
    \n\n\n\nPlease fill out this field.\n\n\n
    \n
    \n
    • \n
\n
\n
\n
\n
\n
\n
\n
\n
Table of Contents\n
\n
Table of Contents\n\n\n
\n
  • What Is a Retainer Fee?
    • \n
  • Understanding Retainer Fees
    • \n
  • Example
    • \n
  • Earned vs. Unearned
    • \n
  • FAQs
    • \n
  • The Bottom Line
\n
  • Corporate Finance
    • \n
  • Corporate Finance Basics
\n

Retainer Fee Meaning, Uses, How It Works, and Example

\n

\n
\n
\nBy\n
The Investopedia Team\n
\n
\n
\n\n\n
\nFull Bio\n
\n
    \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
\n
\nInvestopedia contributors come from a range of backgrounds, and over 24 years there have been thousands of expert writers and editors who have contributed.\n
\n
\n
\nLearn about our \neditorial policies\n
\n
\n
\n
Updated February 25, 2024
\n
\n\n\nReviewed by\n
Amy Drury\n
\n
\n
\n\n\n
\n
\n\n\nReviewed by\nAmy Drury\n
\nFull Bio
\nAmy is an ACA and the CEO and founder of OnPoint Learning, a financial training company delivering training to financial professionals. She has nearly two decades of experience in the financial industry and as a financial instructor for industry professionals and individuals.\n
\n
\n
\nLearn about our \nFinancial Review Board\n
\n
\n
\n
\n\n\nFact checked by\n
Suzanne Kvilhaug\n
\n
\n
\n\n\n
\n
\n\n\nFact checked by\nSuzanne Kvilhaug\n
\nFull Bio
\nSuzanne is a content marketer, writer, and fact-checker.\u00a0She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.\n
\n
\n
\nLearn about our \neditorial policies\n
\n
\n
\n
\n
\n
\n\n\n
\n

Investopedia / Theresa Chiechi

\n
\n
\n
\n\n\n
Trending Videos
\n
\n
\n

What Is a Retainer Fee?

\n

A retainer fee is an amount of money paid upfront to secure the services of a consultant, freelancer, lawyer, or other professional. A retainer fee is most commonly paid to third parties that the payer has engaged to perform a specific action on their behalf.\n

\n
\n

These fees, almost always paid upfront, only ensure the receiver's commitment. In addition, retainer fees usually do not represent the total final cost of the services provided.\n

\n
\n

Key Takeaways:

\n
  • A retainer fee is a payment made to a professional, often a lawyer, by a client for future services.
  • Retainer fees do not guarantee an outcome or final product.
  • Portions of retainer fees can be refunded if services cost less than initially planned.
\n

Understanding Retainer Fees

\n

A retainer fee is an advance payment a client makes to a professional, and it is considered a down payment on the future services rendered by that professional. Regardless of occupation, the retainer fee funds the initial expenses of the working relationship. For this reason, these fees usually remain separate from the hourly wages of the consultant, freelancer, or lawyer. This ensures that money is not used for personal purposes before fully performing services.\n

\n
\n

The most common form of retainer fee applies to lawyers who, in most cases, require potential clients to provide an upfront retainer fee.\n

\n
\n

\n

Retainer fees do not guarantee an outcome or final product.

\n

Example of a Retainer Fee

\n

A lawyer may charge a $500 retainer fee. If the lawyer charges $100 an hour, the retainer covers all services up to the five-hour limit. The lawyer then bills the client for the cost of any additional hours they invest on behalf of the client.\n

\n
\n

So, if a trial case takes 10 hours, the lawyer charges the client an additional $500, which comes to $1,000 when including the retainer. If the client's case is resolved before reaching the five-hour limit, the lawyer refunds the remaining portion of the retainer to the client.\n

\n
\n

Earned Retainer Fees vs. Unearned Retainer Fees

\n

An unearned retainer fee refers to the initial payment held in a retainer account before any services are provided. Retainer fees are earned once services have been fully rendered.\n

\n
\n

In the example above, the retainer is considered unearned until the court case is closed and finalized. These unearned fees do not belong to the person performing the tasks\u2014in this case, the lawyer\u2014until work begins. Any unearned retainer fees that are not used can be returned to the client.\n

\n
\n

Earned retainer fees are the portion of the retainer that the lawyer is entitled to after work begins. Earned retainer fees may be granted to the lawyer bit by bit, depending on the number of hours worked. Retainer fees can also be distributed based on tasks or milestones. For instance, a lawyer may receive 25% of the retainer fee after completing the pre-trial process.\n

\n
\n

How Much Should a Retainer Fee Be?

\n

It depends on the industry of the professional you're retaining the services of and their compensation expectations. Generally, it should be close to the professional's hourly rate multiplied by the hours they expect to work.

\n
\n
\n

How Do You Calculate a Retainer Fee?

\n

Retainer fees can be calculated by estimating the hours needed to complete or maintain the project the professional is hired for and multiplying it by their hourly rate. Some professionals might charge an amount per expected service.

\n
\n
\n

How Much Is a Lawyer Retainer Fee in the US?

\n

Retainer fees vary by specialty, ranging from hundreds to thousands of dollars depending on what they are retained for.

\n
\n
\n

The Bottom Line

\n

A retainer fee is a down payment on a professional's services to ensure you have priority. Retainer fees are usually charged by lawyers, accountants, and consultants to maintain their continued services.\n

\n
\n
\n
\n
Article Sources
\n
\n
\n
\n
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our\neditorial policy.
\n
    \n

  1. Federal Trade Commission. "Hiring a Lawyer."

    2. \n
\n
\n
\n
Open a New Bank Account
\n
\n
×
\n
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
\n
Sponsor
\n
Name
\n
Description
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Open a New Bank Account
\n
\n
×
\n
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Related Terms
\n
Mandatory Binding Arbitration Definition, Examples, and FAQ\n
Mandatory binding arbitration requires the parties to resolve contract disputes before an arbitrator rather than through the court system.
\nmore
\n
Stipend: Definition, How It Works, Types, and Example\n
A stipend is a set amount of money that may be provided to individuals to help them offset expenses.
\nmore
\n
Licensing Fee: Definition, How It Works, vs. Royalty, and Examples\n
A licensing fee is a sum of money paid to an entity for the right to engage in a particular line of business or to use certain intellectual property. Learn how it's used.
\nmore
\n
Understanding Earned Income and the Earned Income Tax Credit\n
Earned income includes wages, salaries, bonuses, commissions, tips, and net earnings from self-employment. On your taxes, it is treated differently than unearned income.
\nmore
\n
Independent Contractor: Definition, How Taxes Work, and Example\n
An independent contractor is a person or entity engaged in a work performance agreement with another entity as a non-employee.
\nmore
\n
Wage Expense: The Cost to Pay Hourly Employees\n
A wage expense is the cost incurred by a business to pay hourly employees and is recorded as a line item that may also include payroll tax and benefits expenses.
\nmore
\n
\n
\n\n
\n
\n
\n\n\n
\n
    \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
\n
\n\"TRUSTe\"
\n
\n
  • #
    • \n
  • A
    • \n
  • B
    • \n
  • C
    • \n
  • D
    • \n
  • E
    • \n
  • F
    • \n
  • G
    • \n
  • H
    • \n
  • I
    • \n
  • J
    • \n
  • K
    • \n
  • L
    • \n
  • M
    • \n
  • N
    • \n
  • O
    • \n
  • P
    • \n
  • Q
    • \n
  • R
    • \n
  • S
    • \n
  • T
    • \n
  • U
    • \n
  • V
    • \n
  • W
    • \n
  • X
    • \n
  • Y
    • \n
  • Z
\n
\n\n\n\n
\n
\nInvestopedia is part of the Dotdash Meredith publishing family.\n
\n
\nPlease review our updated Terms of Service.\n
\n
\n
\n
\n\n\n\n\n\n\n\n\n\n", + "page_last_modified": "" + }, + { + "page_name": "Retainer Fee - Overview, How Retainer Agreements Work, Importance", + "page_url": "https://corporatefinanceinstitute.com/resources/accounting/retainer-fee/", + "page_snippet": "A retainer fee is an upfront cost paid by an individual for the services of an advisor, consultant, lawyer, freelancer, or other professional.A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process. Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes. Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.", + "page_result": "\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nRetainer Fee - Overview, How Retainer Agreements Work, Importance\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\nCorporate Finance Institute \n
\n\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n\n\n
\n
\n
\n
\n
\n
\n\nHome › Resources › Accounting › Retainer Fee
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Table of contents
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n

Retainer Fee

\n

Upfront cost paid by an individual for specific professional services

Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.\n

\nStart Free\n

\n
\n
\n
\n
\n
\nWritten by\n\nCFI Team\n\n
\n
\n
\n
\n

What is a Retainer Fee?

\n

A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The fee is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the commitment of the service provider but does not usually represent all the fees for the entire process.

\n

\"Retainer

\n

Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the fee is sometimes deposited in a different account than the account of the receiver to ensure that the funds are not used for other purposes.

\n

How Retainer Agreements Work

\n

Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the fee is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.

\n

The attorney will then invoice the client at the end of the month, and transfer the fee from the special account into his account. If the case takes more work than is covered by the retainer, the attorney will bill the client for more. However, if the case takes less time than the initial estimate, the attorney will refund the client the excess amount.

\n

The majority of bar associations prohibit attorneys from charging a retainer fee that represents more hours than a case is likely to require. Clients maintain the right to end legal representation whenever they want during the contract if they are unhappy with the attorney.

\n

Once the agreement is terminated, the client may claim the balance of the retainer fee after paying the attorney an amount equivalent to the number of hours worked. Therefore, clients should clarify with the attorney if they notice a “non-refundable” clause regarding retainer fees in the agreement.

\n

Example of a Retainer Agreement

\n

Once a client signs a representation agreement with an attorney stipulating the retainer fee, the client is required to deposit the fee in a special account. Any time the attorney works on the case, he keeps track of the hours spent and invoices the client at the end of the month.

\n

For example, the attorney may project that he will spend 10 hours, at an hourly rate of $100, amounting to a $1,000 retainer fee. If in the first month, the lawyer spends four hours on the case, he will charge $400 against the $1,000 retainer fee, leaving a balance of $600. If the attorney completes the case in the second month after spending another three hours, he will charge $300 against the remaining fee, leaving a balance of $300.

\n

The billing includes the time spent making phone calls, sending faxes, and preparing records. If all pending issues have been addressed and there is no extra fee, the client gets a refund of the remaining $300.

\n

After the retainer fee is depleted, the attorney may bill the client in several ways. The first option is to enter into a contingency fee agreement with the client. A contingency fee agreement provides that the lawyer does not get paid unless he wins the case. If the case ends in favor of the client, the attorney takes a percentage of the amount awarded by the court.

\n

Such an option mainly applies in tort and personal injury cases where the client demands a settlement from the other party. The client and attorney must first agree about the payment plan in advance and put it in writing.

\n

If the client needs an attorney for a long-term relationship, the client may engage the attorney on a retainer basis. The retainer is usually a fixed amount that the client commits to pay the attorney on a monthly basis in exchange for the opportunity to engage him in the future when legal issues come up.

\n

Such agreements are common among businesses such as tech companies, restaurants, and hospitals that may be threatened with a legal suit by one of their customers. Hiring a lawyer on a retainer basis is usually a cheaper option than hiring an in-house attorney.

\n

Earned Retainer vs. Unearned Retainer Fee

\n

An unearned retainer fee refers to the amount of money deposited in a retainer account before the commencement of work. The amount serves as a guarantee by the client to pay the attorney upon completion of the agreed work. The attorney cannot claim the retainer fee until he has completed the work and invoiced the client. Any remaining retainer fee after paying the hourly attorney fees should be returned to the client.

\n

Earned retainer fee refers to the amount that is transferred from the special account to the attorney’s operating account after completing an agreed task. The amount that the lawyer will receive per hour is usually agreed upon before the commencement of the work and indicated in the retainer fee agreement.

\n

The earned retainer fee is paid every month until the case is closed. Sometimes, the lawyer may be paid according to the milestones he has completed, for example, 25% after the pre-trial process, 60% after the hearing, and 100% when the case is determined and closed.

\n

Importance of a Retainer Fee

\n

A retainer fee compensates the attorney for his expertise and reputation. When hiring an attorney, clients choose an attorney with a good reputation in the legal profession to help them win a case. Choosing the right attorney can sometimes help the client obtain a settlement without even going to court.

\n

Also, the retainer fee aims to protect the attorney from unforeseen circumstances in the future that can prevent clients from meeting their obligations. Once the case has started, the attorney can charge any costs against the retainer fee instead of asking the client to provide extra funds.

\n

If an unexpected event occurs during the court process that prevents the client from being able to pay out any more money, the attorney can receive some compensation for the work performed through having received the retainer fee.

\n

More Resources

\n

Thank you for reading CFI’s guide to a Retainer Fee. For further information, we offer the following resources:

\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Get In-Demand Finance Certifications
\n
\nLearn More\n
\n
\n
\n
\n
\n\n\n
\n
\n\n
\n\n
\n
\n
\n\nCorporate Finance Institute \n
\n
\n\n\n\n\n\n
\n\n\n\n\n\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nBack to Website\n
\n
\n0 search results for ‘’\n
\n
\n
\n
\n
\n\nPeople also search for:\n\n\nexcel \n\nFree \n\nfree courses \n\naccounting \n\nESG \n\nBalance sheet \n\nDCF \n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n
\n
\n
\n
\n
\n
\nExplore Our Certifications
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCommercial Banking & Credit Analyst (CBCA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCapital Markets & Securities Analyst (CMSA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nCertified Business Intelligence & Data Analyst (BIDA)\u00ae
\n\n
\n\n
\n
\n
\n
\n\n
\nFinancial Planning & Wealth Management (FPWM)\u2122
\n\n
\n\n
\n
\n
\n
\n\n
\nFinTech Industry Professional (FTIP)\u2122
\n\n
\n\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nResources
\n
\n
\n\n
\n
\n\nSee All Resources\nSee All\n\n
\n
\n
\n
\n
\nPopular Courses
\n
\n
\n\n
\n
\n\nSee All Courses\nSee All\n\n
\n
\n
\n
\n
\n
\n
\n
\nRecent Searches
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nSuggestions
\n
\n
\n
\n\nFree Courses \n\nExcel Courses \n\nFinancial Modeling & Valuation Analyst (FMVA)\u00ae \n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Create a free account to unlock this Template

\n
\n

Access and download collection of free Templates to help power your productivity and performance.

\n
\n
\nCreate a Free Account\n
\n
\n

Already have an account? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Supercharge your skills with Premium Templates

\n
\n

Take your learning and productivity to the next level with our Premium Templates.

\n

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance\u2014as well as CFI's full course catalog and accredited Certification Programs.

\n
\n
\nDiscover Paid Memberships\n
\n
\n

Already have a Self-Study or Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n\n
\n
\n
\n

Access Exclusive Templates

\n
\n

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

\n
\n
\nDiscover Full-Immersion Membership\n
\n
\n

Already have a Full-Immersion membership? Log in

\n
\n
\n
\n
\n
\n
\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n \n
\n\n", + "page_last_modified": " Wed, 13 Mar 2024 09:04:33 GMT" + }, + { + "page_name": "How Much Board of Directors Members Get Paid and What They Do", + "page_url": "https://www.investopedia.com/articles/wealth-management/040416/retired-execs-what-do-corporate-boards-pay.asp", + "page_snippet": "If you have the right skill set, a seat on a company board can be a lucrative and stimulating way to spend some of your time.According to the company's 2021 proxy statement, Walmart\u2019s compensation program for outside directors offers base compensation of a $175,000 annual stock grant and a $100,000 annual retainer. Outside directors who hold certain board positions receive an additional annual retainer: $35,000 for the lead independent director; $25,000 for audit committee members and for compensation, nominating, and governance committee members; and $20,000 for strategic planning and finance committee chairs and for technology and eCommerce committee chairs. Non-employee directors also receive an annual cash retainer of $100,000. The board chair receives an additional $200,000; the audit committee chair receives an additional $35,000; the compensation committee chair receives an additional $30,000, and the nominating committee chair receives an additional $25,000. Here are a couple of examples of what Fortune 500 companies pay their board members. According to the company's 2021 proxy statement, Walmart\u2019s compensation program for outside directors offers base compensation of a $175,000 annual stock grant and a $100,000 annual retainer. As an outside director, you could bring a fresh perspective to a corporate board and leverage your years of experience as an executive into a satisfying new project that still leaves you with enough time to do your day job or enjoy your retirement. The Boston Globe reports that the average time commitment to serve on a board is fewer than five hours per week.", + "page_result": "\n\n\n\n\n\n\n\n\n\n\nHow Much Board of Directors Members Get Paid and What They Do\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n\n\n\n\n\n
\n\n
\n
\n\n
\n
\n\n\n
\n\nTrade\n
\n
    \n
  • \n
    \n
    \n\n\n\n\n
    \n
    \n
    \n\n\n\nPlease fill out this field.\n\n\n
    \n
    \n
    • \n
\n
\n
\n
\n
\n
\n
\n
\n
Table of Contents\n
\n
Table of Contents\n\n\n
\n
  • What Companies Seek
    • \n
  • How to Get Noticed
    • \n
  • Director Responsibilities
    • \n
  • Examples of Top-Paying Boards
    • \n
  • The Bottom Line
\n
  • Careers
    • \n
  • Salaries & Compensation
\n

How Much Board of Directors Members Get Paid and What They Do

\n

\n
\n
\nBy\n
Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

\" tabindex=\"0\" data-inline-tooltip=\"true\"> Amy Fontinelle\n
\n
\n
\n\n\n
\nFull Bio\n
\n
    \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
\n
\n

Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

\n
\n
\n
\nLearn about our \neditorial policies\n
\n
\n
\n
Updated October 22, 2022
\n
\n\n\nReviewed by\n
Ebony Howard\n
\n
\n
\n\n\n
\n
\n\n\nReviewed by\nEbony Howard\n
\nFull Bio\n
\n
    \n
  • \n \n\n\n
    • \n
\n
\nEbony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries.\n
\n
\n
\nLearn about our \nFinancial Review Board\n
\n
\n
\n
\n\n\nFact checked by\nKirsten Rohrs Schmitt\n
\n
\n
\n
\n\n\n
Trending Videos
\n
\n
\n

Serving on a corporate board of directors can be a lucrative side gig or second career for high-profile executives and recent retirees. Board membership is less stressful and time-consuming than earlier positions board members have taken on, while still offering an impressive income.\n

\n
\n

The median compensation for members of private company boards of directors was $44,850 in 2021, according to a global study by Lodestone Global. That's actually a 5% increase from the year before.\n

\n
\n

It goes a lot higher from there. Compensation for board members can easily reach $300,000 to $500,000 a year, according to Veritas, an executive compensation consulting service.\n

\n
\n

Not surprisingly, the most lucrative seats go to directors at S&P 500 companies. Average compensation in 2018 at those firms was $304,856, according to Reuters. That's a 43% increase over 10 years. That year's top payer was Goldman Sachs Group Inc., which paid its directors an average of $599,279.\n

\n
\n

Board members in general, by the way, participated in an average of 7.9 meetings, in person or remotely, during the year.\n

\n
\n

If you\u2019re interested in pursuing a board seat, here\u2019s what you need to know about what boards are looking for, how to get noticed, and what to expect as compensation.\n

\n
\n

\n
  • Corporate boards are made up of highly successful executive outsiders.
  • They range from recent retirees and people nearing retirement to younger people who've experienced early successes in business.
  • By learning about the backgrounds of existing board members, you can extrapolate what they may be looking for in new ones.
\n

What Companies Seek in a Board Member

\n

You can sometimes learn what companies seek in their board members by reading the company\u2019s annual proxy statement. For example, some of the qualities Wal-Mart says it\u2019s looking for in board members include: \"outstanding achievement in their professional careers; broad experience and wisdom; personal and professional integrity; ability to make independent, analytical inquiries; experience with and understanding of the business environment; willingness and ability to devote adequate time to Board duties.\"\n

\n
\n

The proxy statement also says the company is seeking \u201cexpertise in governance, strategy, development, and execution\u201d; people who understand \u201cfinancial, operational and strategic issues facing large retail companies\u201d; global or international business experience; technology and e-commerce experience; marketing, brand management or public relations experience; finance, accounting, or financial reporting experience; or regulatory or legal experience. \n

\n
\n

Diverse Candidates Sought

\n

The more qualifications you can bring to the table, the better. In recent years, companies have also begun to seek ethnic and gender diversity on their boards.\n

\n
\n

These descriptions are fairly generic. By learning about the backgrounds of existing board members, you can extrapolate what the company is probably looking for in new ones.\n

\n
\n

Attractive qualities include experience in high-level work for the federal government, positions as a CEO or director, experience founding and running a successful startup, and experience on other boards.\n

\n
\n

Look for a gap in expertise that might be left when a current board member steps down. Could you fill that gap?\n

\n
\n

Youth Is Not a Barrier

\n

Boards aren't entirely made up of retirees and people nearing the end of their careers. You will compete for board positions with people who have been extremely successful at a young age.\n

\n
\n

Walmart's current board members include Cesar Conde, 47, chair of NBCUniversal, and Marissa Mayer, 46, who is well-known for the high positions she achieved at Google and Yahoo.\u00a0\n

\n
\n

How to Get Noticed

\n

Your strategy to get noticed and be considered for board membership should be similar to the strategy it takes to secure any high-level position.\n

\n
\n

\u201cMake sure you develop a board resume that positions you as qualified for the corporation\u2019s board,\u201d says Ren\u00e9e Hornbaker, who currently serves on the boards of Eastman Chemical Company, The Freeman Company, and Tri Global Energy. \u201cMake sure your resume states what you will specifically bring to the table as a board member.\u201d \u00a0\n

\n
\n

Search Firms Can Help

\n

Executive search firms can streamline the process since they\u2019ll know about available positions. Hornbaker suggests giving your resume to search firms you\u2019ve dealt with in the past and letting them know you're interested in obtaining a board position.\u00a0\n

\n
\n

\u201cFinally, make sure you are networking and letting people know what boards you are suitable for, while also leveraging contacts you might have with the companies that you might be interested in,\u201d Hornbaker says.\u00a0\n

\n
\n

Networking Is Key

\n

You'll want to pursue networking both online and offline. For online networking, Mark Rogers, CEO of BoardProspects.com, recommends his site, a board-recruitment network akin to LinkedIn. Its members include current board members, aspiring board members, and corporations looking to hire board members. Complement your online networking with face-to-face connections at events, conferences, and social gatherings, he says. Opening up lines of communication to a second- or even third-degree connection could lead to an excellent fit for the board position you seek. \n

\n
\n

Hornbaker also recommends becoming educated on the fundamentals of governance and directorship through a program such as the National Association of Corporate Directors Director Professionalism\u00ae program.\n

\n
\n

Once you find a good prospect, you must be nominated by the nomination committee, then approved by shareholder election. \n

\n
\n

Director Responsibilities

\n

Only outside directors get compensation specifically for serving on the board. Inside directors, who are mostly C-suite level executives, don't receive additional compensation.\n

\n
\n

Hornbaker says pay depends on the complexity of the company, whether it's public or private, the number of meetings it entails, and the amount of responsibility involved.\n

\n
\n

As a board member, your responsibilities would typically include preparing for and attending board meetings, and reviewing company filings and materials, she says, as well as advising management on a wide range of matters, including succession, strategy, compensation, and acquisitions.\u00a0\n

\n
\n

Representing Shareholders

\n

Rogers adds, \u201cBoard members are the representatives of the shareholders, and it is their fiduciary duty to oversee the affairs of the corporation, including overall performance and fiscal strength, and to serve as a consultant for management\u2014particularly with respect to the strategic and operational directives of the company.\u201d \n

\n
\n

Formal board meetings where all the directors are present typically occur four to six times per year, depending on the company.\u00a0\n

\n
\n

\u201cObviously, if there is a crisis or a strategic issue\u2014for example, an acquisition\u2014the number of hours for a director can dramatically increase,\u201d Rogers says.\u00a0\n

\n
\n

Hornbaker says attending committee meetings might be another responsibility. \u201cFor example, audit committees have regular meetings before public filings,\u201d she says. \u201cAnother example would be compensation meetings to discuss compensation plans and awards.\u201d\n

\n
\n

Examples of Top-Paying Boards

\n

 Here are a couple of examples of what Fortune 500 companies pay their board members.\n

\n
\n

Walmart Inc.

\n

According to the company's 2021 proxy\u00a0statement, Walmart\u2019s compensation program for outside directors offers base compensation of a $175,000 annual stock grant and a $100,000 annual retainer.\n

\n
\n

Outside directors who hold certain board positions receive an additional annual retainer: $35,000 for the lead independent director; $25,000 for audit committee members and for compensation, nominating, and governance committee members; and $20,000 for strategic planning and finance committee chairs and for technology and eCommerce committee chairs.\n

\n
\n

Apple Inc.

\n

Apple\u2019s non-employee directors each receive approximately $250,000 worth of restricted stock units per year, which are granted at the annual shareholder meeting and vest on Feb. 1 of the following year.\n

\n
\n

Non-employee directors also receive an annual cash retainer of $100,000. The board chair receives an additional $200,000; the audit committee chair receives an additional $35,000; the compensation committee chair receives an additional $30,000, and the nominating committee chair receives an additional $25,000.\n

\n
\n

Non-employee directors also get every new Apple product for free on request and can purchase more at a discount.\u00a0\n

\n
\n

To find out what any publicly held company pays its board members, read the company\u2019s annual proxy statement, available from its corporate website or the Securities and Exchange Commission website.\n

\n
\n

The Bottom Line

\n

As an outside director, you could bring a fresh perspective to a corporate board and leverage your years of experience as an executive into a satisfying new project that still leaves you with enough time to do your day job or enjoy your retirement. The Boston Globe reports that the average time commitment to serve on a board is fewer than five hours per week.\n

\n
\n

Aside from the financial compensation, your reward will be having substantial input into major decisions made by the company, such as executive hires, policies on dividends and stock options, and executive pay\u2014all while representing the best interests of management and shareholders.\n

\n
\n
\n
\n
Article Sources
\n
\n
\n
\n
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our\neditorial policy.
\n
    \n

  1. Lodestone Global. "Private Company Board Compensation Survey."

    2. \n

  2. Veritas. "Looking at Board of Directors Compensation: What Do Board Members Do to Earn Large Salaries?"

    3. \n

  3. Reuters. "U.S. company directors compensated more than ever, but now risk backlash."

    4. \n

  4. Walmart. "2020 Proxy Statement," Page 12.

    5. \n

  5. Walmart. "2021 Proxy Statement."

    6. \n

  6. Forbes. "Marissa Mayer."

    7. \n

  7. Deloitte. "The Types of Directors," Pages 1-2. Download required.

    8. \n

  8. U.S. Securities and Exchange Commission. "Definitive Proxy Statement, Apple 2021."

    9. \n

  9. Boston Globe. "Few Hours, Soaring Pay for Corporate Board Members."

    10. \n
\n
\n
\n
Open a New Bank Account
\n
\n
×
\n
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
\n
Sponsor
\n
Name
\n
Description
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
Related Terms
\n
Inside Director: What It Is, How It Works, Conflicts of Interest\n
An inside director is a board member who is an employee, officer, or direct stakeholder in the company.
\nmore
\n
Board of Directors: What It Is, What Its Role Is\n
A board of directors (BofD) is the governing body of a company that is elected by shareholders to provide guidance, set strategy, and oversee management.
\nmore
\n
Proxy Definition, How It Works, Statements, Benefits, and Example\n
If you are unable to attend your company's annual general meeting, consider using a proxy to represent you.
\nmore
\n
Chief Executive Officer (CEO): What They Do vs. Other Chief Roles\n
A chief executive officer (CEO) is the highest-ranking executive of a firm. CEOs act as the company's public face and make major corporate decisions.
\nmore
\n
Incorporation: Definition, How It Works, and Advantages\n
Incorporation is the legal process by which a business entity is formed. A corporation is a separate legal entity from its owners.
\nmore
\n
Non-Executive Director Role and Responsibilities Defined\n
A non-executive director is a member of a company's board of directors who is not part of the executive team.
\nmore
\n
\n\n\n
\n
    \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
  • \n \n\n\n
    • \n
\n
\n\"TRUSTe\"
\n
\n
  • #
    • \n
  • A
    • \n
  • B
    • \n
  • C
    • \n
  • D
    • \n
  • E
    • \n
  • F
    • \n
  • G
    • \n
  • H
    • \n
  • I
    • \n
  • J
    • \n
  • K
    • \n
  • L
    • \n
  • M
    • \n
  • N
    • \n
  • O
    • \n
  • P
    • \n
  • Q
    • \n
  • R
    • \n
  • S
    • \n
  • T
    • \n
  • U
    • \n
  • V
    • \n
  • W
    • \n
  • X
    • \n
  • Y
    • \n
  • Z
\n
\n\n\n\n
\n
\nInvestopedia is part of the Dotdash Meredith publishing family.\n
\n
\nPlease review our updated Terms of Service.\n
\n
\n
\n
\n\n\n\n\n\n\n\n\n\n", + "page_last_modified": "" + } + ] +} \ No newline at end of file