There are many "themes and variations" of retainer billing. The following examples represent the more common types of retainer billing scenarios along with possible ways to handle the situations.

Example 1: Nonrefundable Retainer
An attorney agrees to represent a client in a criminal defense matter and requires a $10,000 nonrefundable, non-replenishable retainer for fees and costs. If fees and costs exceed $10,000, the attorney will bill the client for additional fees and costs. The client writes a check for the full retainer amount on his first visit.

Trust When the $10,000 payment is received, enter a deposit in Tabs3 Trust Accounting (Trust). As work proceeds, you will need to manually add check or EFT transactions in Trust with the This is a payment to our firm check box selected to transfer funds to the Tabs3 Billing account. By doing this, the Tabs3 Billing statement balance will always show a zero balance until the trust balance is depleted. Trust account retainer activity will be shown at the end of the statement (detail, summary or none). Once the matter is closed, if any funds are left over, cut a check with the This is a payment to our firm check box selected for the amount remaining in the trust account. Then, in Tabs3, enter a fee (or cost) transaction for the remaining amount. Run a final statement for the client and update it.
Tabs3 Billing
Client Funds 		Either set up the client with a $10,000 Fund Balance on the A/R & Fund Balances tab of the Client matter or enter a $10,000 client funds deposit. In the Client Funds section of the A/R & Fund Balance tab, leave both the Minimum Balance and Target Balance fields at $0.00 and leave the One Time Retainer check box cleared. If the Fund Application option is set to Automatic All, Tabs3 Billing will automatically generate payments from the Client Funds account to pay current fees and costs when a statement is generated. Client Funds activity can be shown at the end of the statement (detail, summary or none). Once the matter is closed, if any funds are left over, enter a fee (or cost) transaction for the remaining amount. Run a final statement for the client and update it.

Example 1a: Nonrefundable Non-Replenishable Retainer
This example is identical to Example 1 except the client does not pay the retainer up front. You want to bill the client for the retainer.

Trust The retainer can be billed on a statement by entering $10,000 in the Trust trust account record's "Desired Minimum Balance" field and the "Tabs3 Billing Target Balance" (or "Tabs3 Billing Amount to Bill") fields. After billing the retainer, edit the "Tabs3 Billing Target Balance" (or "Tabs3 Billing Amount to Bill") field to $0.00 so another retainer is not billed the next time you run a statement.
Tabs3 Billing
Client Funds 		Select the One Time Retainer check box on the A/R & Fund Balances tab of the Client matter. Set up the client with a Retainer Amount of $10,000 and an Amount to Bill of $10,000. Specify a Statement Format of Summary. The client's statement will then reflect $10,000 due for the retainer. When the retainer amount is paid, enter a deposit using the Client Funds program. This will automatically reduce the Amount to Bill by the amount of the deposit. The client's next statement will reflect the amount paid as well as any remaining retainer amount due.

Example 2: Refundable Retainer
An attorney agrees to represent a client and requires a $10,000 refundable retainer for fees. Any funds left over once the matter is closed will be refunded to the client.

Trust Same as Example 1, except once the matter is closed, if any funds are left over, simply write a check to the client.
Tabs3 Billing
Progress Billing 		Select the Progress Billing check box on the Billing Preferences tab of the Client matter. Enter the retainer using a Type 6 (progress fee) transaction. Bill and update the client. Clear the Progress Billing check box. Enter the payment. Enter fees and costs as required. Run a statement when required. The previous balance will be $10,000. Let's say fees are $12,000. A line showing "Adjustment for Prior Billings" will show -$10,000. The payment of $10,000 and a Balance Due of $2,000 will print on the statement. If fees were only $9,000, then a credit balance of $1,000 would print on the statement. Use the Payment Adjustment program to refund the credit balance. Then, write a check to the client.
Tabs3 Billing
Client Funds

Same as Example 1, except once the matter is closed, if any client funds are left over, enter a Withdrawal transaction in the Client Funds matter equal to the remaining amount of client funds. Write a check to the client for this amount.

Note: Client Funds is designed to be used for non-refundable retainers. Refundable retainers can be entered, but using a trust accounting system (such as Tabs3 Trust Accounting) is recommended to better comply with state bar recommendations.

Example 3: Monthly Retainer Plus Fees
A client agrees to pay the firm $2,000 a month for a retainer. Any legal fees incurred during the month will be billed in addition to the monthly retainer.

Tabs3 Billing This example does not require the use of client funds transactions. Enter a recurring Type 0 (normal) or Type 5 (miscellaneous) transaction in the amount of $2,000 to bill the monthly retainer. Recurring transactions are entered by specifying Save in the Status field of the transaction. Enter fees and costs normally as they occur. Run statements.

Example 4: Nonrefundable Retainer
An attorney agrees to represent a client in a divorce and requires a one-time nonrefundable $1,000 retainer to be applied toward fees and costs. Fees and costs will be billed as they are incurred. Fees and costs beyond the retainer amount will be due upon receipt of an invoice.

Trust Same as Example 1 (except the retainer is $1,000 instead of $10,000).
Tabs3 Billing
Progress Billing 		Select the Progress Billing check box on the Billing Preferences tab of the Client matter. Enter the retainer using a Type 6 (progress fee) transaction. Bill and update the client. Clear the Progress Billing check box. Enter the payment. Enter fees and costs as required. Run a statement when required. The previous balance will be $1,000. An Adjustment for Prior Billings of -$1,000 will print on the statement. The payment of $1,000 will print on the statement. If the fees are $1,250, then the balance due will be $250. If the fees are less than $1,000, use the Write-Up/Write-Down program to write-up the fees to $1,000.00.
Tabs3 Billing
Client Funds 		Same as Example 1 (except the retainer is $1,000 instead of $10,000).

Example 5: Replenishable Retainer
A client agrees to maintain a $3,000 retainer balance. Fees and costs are to be paid out of the retainer. The client will replenish the retainer balance when billed.

Trust Enter $3,000 in the trust account's "Tabs3 Billing Target Balance" and "Desired Minimum Balance" fields. Enter fees and costs in Tabs3 Billing as they are incurred. Transfer funds as required to the client's account and run a Tabs3 Billing statement. A balance of $0.00 will appear on the statement (provided fees and costs billed for the period do not exceed $3,000). The Tabs3 Billing statement will show "Please remit $_________" following the detail or summary trust activity. The amount will be the amount required to replenish the $3,000 target balance. (Tip: If you only want the client to replenish the retainer account when it goes below, say $1,000, you could enter $1,000 in the trust account's "Desired Minimum Balance" field instead of $3,000.)
Tabs3 Billing
Client Funds 		On the A/R & Fund Balances tab of the Client matter, enter $3,000 in the Minimum Balance field and set the Fund Application to Automatic All. Enter fees and costs in Tabs3 Billing as they are incurred. When a statement is generated, a payment from client funds will automatically be generated to pay fees and costs. A balance of $0.00 will appear on the statement (provided fees and costs billed for the period do not exceed $3,000). The Tabs3 Billing statement will show "Please remit to Replenish Client Funds Balance" and the amount shown will be the amount required to replenish the $3,000 balance. (Tip: If you only want the client to replenish the retainer account when it goes below, say $1,000, you could enter $1,000 in the "Minimum Balance" field and enter $3,000 in the "Target Balance field.)

Example 6: Monthly Retainer Covers Fees
A client agrees to pay the firm $2,000 a month on retainer. Any fees incurred during the month will be paid from the retainer. Any retainer left over will be held in escrow for future legal fees.

Trust Enter $2,000 in the trust account's "Tabs3 Billing Amount to Bill" field. Enter an amount greater than $2,000 in the trust account's "Desired Minimum Balance" field. If an amount is not entered in the "Desired Minimum Balance", no retainer will be billed. Therefore, if you want to ensure that $2,000 is billed each month for a year, you can enter an amount as large as $24,000. Bill the client monthly. Following the detail/summary Trust activity on the statement, the message "Please remit $2,000" will be printed. When the client pays the $2,000, enter a $2,000 deposit in Trust. Transfer funds as required to the client's account in Tabs3 Billing.

Example 7: Recurring Nonrefundable Retainer
A client agrees to pay the firm $2,000 a month on retainer. Any fees incurred during the month will be paid from the retainer. Any retainer left over will be considered as income for the law firm to keep. Any fees over and above $2,000 will be billed.

This example requires you to decide how you want the excess retainer applied and also requires monthly adjustments. For example, if the client's fees for the month are $500, which timekeeper, category and transaction code will receive credit for the $1,500 billed productivity? You could write-up the $500 to $2,000, which would prorate the excess amongst the timekeepers billing the $500. Or, you may want to enter a separate fee transaction for the $1,500 to specific timekeepers, categories and transaction codes.

Trust Enter $2,000 in the trust account's "Tabs3 Billing Amount to Bill" field and the "Desired Minimum Balance" field. If an amount is not entered in the "Desired Minimum Balance", no retainer will be billed. Bill the client monthly. Following the detail/summary Trust activity on the statement, the message "Please remit $2,000" will be printed. When the client pays the $2,000, enter a $2,000 deposit in Trust. Transfer $2,000 each month to the client's account in Tabs3 Billing.

Example 8: Nonrefundable Retainer
An attorney agrees to take a personal injury case on a contingency basis. The client pays all expenses regardless of the outcome. The attorney requires a $5,000 nonrefundable retainer in advance for expenses. As funds are depleted (depending on the status of the matter), the attorney will: 1) front additional costs on behalf of the client; 2) ask the client to pay an additional retainer; or 3) bill the client on a monthly basis.

Trust

When the retainer is received, enter a corresponding deposit in Trust. Since funds will need to be transferred to Tabs3 Billing for expenses as required, Tabs3 Billing statements will always show a 0.00 balance until the trust is depleted. When entering a check or EFT (with the This is a payment to our firm check box selected) in Trust for the expense portion of the statement, make sure you specify a Tabs3 Billing expense payment transaction code (i.e., Type 3 and Transaction Type of Expense). Trust account retainer activity will be shown at the end of the statement (detail or summary).

Note: If desired, the retainer can be billed on a statement by entering $5,000 in the Trust account record's "Desired Minimum Balance" field and the "Tabs3 Billing Amount to Bill" fields. After billing the retainer, edit the "Tabs3 Billing Amount to Bill" field to 0.00 so another retainer is not billed the next time you run a statement.
Tabs3 Billing
Client Funds

Select the One Time Retainer check box on the A/R & Fund Balances tab of the Client matter. Set up the client with a Retainer Amount of $5,000 and an Amount to Bill of $5,000. Specify a Statement Format of Summary and select a Fund Application of Automatic Cost Pymt or Automatic Exp Pymt. The client's statement will then reflect $5,000 due for the retainer. When the retainer amount is paid, enter a deposit using the Client Funds matter. If only a portion of the retainer is paid, the client's next statement will reflect the amount paid as well as the remaining retainer amount due.

The client must be assigned a statement template with a Fee Format of Info Only (i.e., fees will not be billed but may be printed on statements). Bill the client as required. Statements will reflect expenses due and an automatic payment from client funds equal to the expenses due. Once the retainer is depleted, the firm can: 1) bill another expense retainer; 2) bill the client's expenses on an ongoing basis; or, 3) continue to pay the expenses and bill the client but add ending statement notes indicating that the amount due should not be paid and that the statement is for informational purposes and will be paid out of the settlement amount. In the third situation, the billed expenses will continue to accrue and age in accounts receivable. (Tip: To avoid overstated accounts receivable figures once the retainer is depleted, if desired, the firm can run draft statements instead of final statements for this client until settlement time.)