Money Matters: Handling the Financials in Your Expert Retainer Agreement

The easiest and safest way to ensure that there aren’t any misunderstandings regarding an expert’s fees is by drafting a comprehensive retainer agreement or engagement letter. Like any contract, the retainer should address all the important terms of payment in a comprehensive and clear manner. Below are some tips to ensure that all financial aspects of the agreement are solidified.

Define the Scope of Performance

First and foremost, an expert needs to know the expectations and scope of their work before a fee can be decided. The type of work that an expert may perform can vary widely. It depends on a number of factors such as the complexity of the issues, the volume of records to be reviewed, and the intricacy of the opinions that need to be rendered. Some experts may be expected to review voluminous documentary evidence (i.e. a physician and medical records) while others may be required to conduct experiments or collect data (i.e. an engineer testing a product alleged to be defective). Because an expert’s work can range so greatly, a retainer agreement should outline exactly what is expected of the expert, as well as setting forth a general timeline for when work is expected to be completed.

Secondly, it’s important to note the critical distinctions between testifying witnesses and non-testifying expert consultants. Because an expert can be of great value at any point during litigation, it is possible that their services may be needed exclusively outside the courtroom. In this case, the work expected from these individuals—as well as the duration of their agreement—may be different than that of a testifying expert. Once these parameters are established, an expert’s fees can be addressed more accurately and efficiently.

Establish the Compensation Rate

All retainer agreements should specify the expert’s rate of compensation, including whether their payments will be made as a flat or hourly rate. Flat fees present certain pitfalls for both parties if the work performed is not considered proportionate, but these fees also provide an assured number which helps avoid surprises. When charging a flat fee, it is all the more important to detail the work to be performed. If charging an hourly fee, the agreement should specify any differentiation in rates such as hourly rates for in-court versus out-of-court time.

Other agreements may set forth a retainer of a certain amount, which is to be worked against until the expert reaches a certain number of hours. In the case of these types of retainers, a provision concerning the procedure for the replenishment of the retainer can help ensure that an expert is appropriately compensated.

Because experts can be compensated at vastly different rates, dependent upon factors such as experience, training, and education, the agreement should ensure that any and all fees are clearly stated, rather than leave any aspect of payment to be determined.

Set a Timeline

If the duration of the retainer is relatively lengthy, the retainer should provide for periodic billing statements so that the attorney is not blindsided by unexpected costs. It is helpful to create a schedule by which an expert is expected to submit their invoices and an attorney is expected to pay. Some schedules may go by date, others may depend upon reaching certain points in the work (i.e. sending an invoice after every 10 hours worked or after every 200 pages of documents are reviewed). A retainer should clearly establish how and when an expert will submit their invoices (i.e. through a third-party service, time management software, or informal email, etc), and by what time they expect to be paid.

Don’t Forget Expenses

An expert is entitled to be reimbursed for any expenses incurred during the course of their work. A retainer should be careful to enumerate the types of expected expenses. Some expenses, such as mailings, shipping fees, printing, copying documents, and travel costs, may be considered more typical than the more case-specific expenses that can pop up depending upon the complexity and subject matter of the case. Though experts and attorneys cannot predict all expenses, a retainer can help define those for which an expert should be reimbursed. Just like an expert’s compensation, a retainer should provide for periodic billing statements that include the cost of expenses and means of reimbursement.

Settle the Logistics

Some administrative tasks associated with expert billing are simple but easily overlooked and may result in delayed payment. To the extent these matters can be handle in advance, it saves time down the line. For example, an expert should clearly establish their preferred form of payment (i.e. check, direct deposit, money transfer app, etc) and any identifying information they need to provide in order to ensure the payment is made (i.e. account numbers, app usernames, etc). As a payee, an expert should ensure that the attorney has their complete and correct company (or individual) name as well as their billing address. Lastly, experts should complete a W-9 form and provide their tax identification number to simplify payment and tax issues.