Retainership Agreement for Lawyer, Advocate or Professional Consultant
A retainership agreement records the terms on which a business, institution or individual engages an advocate, lawyer or other professional for continuing services in return for an agreed retainer fee. A well-drafted agreement should define the scope of services, fee and payment cycle, expenses, confidentiality, conflicts, taxes, excluded work, termination and responsibility for pending assignments.
What is a retainership agreement?
A retainer is commonly used where a client needs recurring access to professional services without appointing the professional as a permanent employee. The professional may agree to remain available for a stated class of work, provide a defined number of hours or assignments, or undertake specified advisory services during each billing period.
The agreement should not assume that every retainer fee is necessarily paid in advance. Depending on the commercial arrangement, the fee may be payable in advance, monthly in arrears, against invoice, or according to another agreed billing cycle. The agreement should expressly state when the fee becomes due and what services are included in it.
Applicable legal provisions
Important clauses in a retainership agreement
A practical retainership agreement should clearly state the parties and effective date; professional status of the retainer; detailed scope of work; excluded services; response or availability expectations where agreed; monthly or periodic fee; taxes and TDS; reimbursement of approved out-of-pocket expenses; billing and payment period; confidentiality; conflict-of-interest obligations; ownership and return of client documents; use of associates or staff where permitted; separate terms for litigation or special projects; duration; termination notice; treatment of incomplete assignments; dispute-resolution mechanism; notices; governing law; and amendment requirements.
Special considerations when the retainer is an advocate
An advocate-client retainership is not merely a commercial consultancy. The advocate remains subject to the Advocates Act, 1961 and the applicable Bar Council of India Rules. Contractual language should therefore be consistent with professional independence, confidentiality, conflict rules and duties owed to the court and client.
No success-contingent litigation fee: Rule 20 of Part VI, Chapter II of the Bar Council of India Rules prohibits an advocate from stipulating for a fee contingent on the result of litigation or agreeing to share the proceeds of litigation. The monthly retainer, appearance fee, drafting fee or matter-specific fee should therefore be structured consistently with those professional rules.
Separate litigation engagement: A general advisory retainer may expressly exclude court, tribunal, arbitration or regulatory appearances. If litigation is later entrusted to the advocate, the parties can agree upon separate professional fees, expenses, briefing arrangements and authority documents such as a vakalatnama, subject always to applicable professional rules.
Confidentiality and conflict checks: The agreement may record the advocate's duty to preserve confidential information and to avoid acting in a matter where professional rules create a conflict. A client should also provide sufficient information for the advocate to conduct a conflict check before accepting a new matter.
TDS and GST on professional retainership fees
Tax treatment depends on the nature of the professional, client, service and applicable tax law. Under the Income-tax Act, professional fees may attract tax deduction at source where the relevant TDS provision applies. Section 194J includes fees for professional services and expressly includes services rendered in the course of the legal profession within its definition of professional services. The payer should verify the current threshold, rate and applicable provision for the relevant financial year before deducting tax.
GST treatment should also be checked separately. The CBIC has clarified that legal services supplied by an advocate firm can fall under the reverse charge mechanism in circumstances prescribed under GST law. The agreement should therefore avoid a blanket statement that GST will always be charged by the advocate and should instead provide that GST will be dealt with according to the law applicable to the particular supply and recipient.
Sample Retainership Agreement Format
The following specimen can be adapted for appointing a lawyer, advocate or professional consultant. Clauses dealing specifically with advocate professional conduct should be retained where the second party is an advocate.
RETAINERSHIP AGREEMENT
THIS RETAINERSHIP AGREEMENT is made at ____________________ on this ______ day of ____________________, 20__.
BETWEEN
____________________________ Ltd. / LLP / Firm / Institution, having its registered / principal office at ________________________________________________, through its authorised representative ________________________________, hereinafter referred to as the "Client", which expression shall, unless repugnant to the context, include its successors and permitted assigns;
AND
Mr. / Ms. / M/s ________________________________, Advocate / Lawyer / Professional Consultant, having office at ________________________________________________, hereinafter referred to as the "Retainer", which expression shall, unless repugnant to the context, include the person or professional entity lawfully entitled to perform the services agreed herein.
WHEREAS the Client requires continuing professional assistance in relation to ________________________________________________.
AND WHEREAS the Retainer has represented that the Retainer possesses the professional qualifications, experience and authority required for the agreed services and has agreed to provide such services on the terms recorded below.
NOW IT IS AGREED AS FOLLOWS:
1. Appointment
The Client appoints the Retainer to provide the services described in this Agreement with effect from ____________________. The Retainer accepts the appointment subject to applicable law and professional rules.
2. Scope of Services
The Retainer shall provide the following services:
(a) legal / professional advice on ________________________________________________;
(b) drafting and reviewing notices, replies, agreements, correspondence and routine documents relating to ________________________________________________;
(c) correspondence with authorities, customers, vendors or other persons where specifically instructed and legally permissible;
(d) meetings, consultations and other advisory assistance reasonably falling within the agreed scope; and
(e) such other work as may be agreed in writing from time to time.
3. Services Excluded from Monthly Retainer
Unless separately agreed in writing, the monthly retainer does not include court or tribunal appearances, arbitration proceedings, major investigations, extensive due diligence, statutory filings, registration charges, stamp duty, third-party professional fees, travel outside ____________________, or detailed opinions / projects materially outside the regular scope.
4. Retainer Fee
The Client shall pay a professional retainer fee of Rs. ____________ (Rupees __________________________________ only) per month, plus applicable taxes, if any, in accordance with law. The fee shall be payable ____________________ [in advance / against monthly invoice / within ______ days of invoice].
Where the Retainer is an advocate, no part of the professional fee shall be construed as a fee contingent upon the result of litigation or as an agreement to share the proceeds or subject matter of litigation.
5. Additional Assignments
Work materially beyond the agreed scope, including litigation or special assignments, shall be undertaken only after the parties agree upon the additional professional fee or applicable fee schedule. Acceptance of a litigation matter remains subject to conflict checks and applicable professional obligations.
6. Out-of-Pocket Expenses
The Client shall reimburse reasonable and properly supported out-of-pocket expenses actually incurred for the Client's work, including approved travel, copying, filing, courier, registration, court or tribunal charges and third-party expenses, to the extent applicable. Prior approval shall be obtained for any material expense exceeding Rs. ____________.
7. Invoices, TDS and Taxes
The Retainer shall issue invoices containing the particulars required by applicable law. The Client may deduct tax at source where legally required and shall provide the appropriate TDS certificate / credit. GST, including any liability under reverse charge, shall be dealt with in accordance with the law applicable to the particular service and recipient.
8. Professional Independence
The Retainer shall perform the services as an independent professional and shall exercise independent professional judgment. Nothing in this Agreement shall require the Retainer to take any action contrary to law, professional ethics or duties owed to any court, tribunal or regulatory authority.
9. Confidentiality
The Retainer shall preserve the confidentiality of information and communications received from the Client in connection with the engagement, subject to applicable law, professional obligations and disclosures authorised by the Client or lawfully required.
10. Conflict of Interest
The Retainer shall not knowingly accept an engagement that creates a conflict prohibited by applicable professional rules. The Client shall disclose all parties and material relationships reasonably required for a conflict check. Where a conflict arises after commencement, the parties shall deal with the matter in accordance with applicable professional obligations.
11. Client Instructions and Records
The Client shall provide timely, complete and accurate instructions and documents reasonably necessary for the services. Original documents received from the Client shall remain the Client's property and shall be returned on completion or termination, subject to applicable law and professional obligations.
12. No Guarantee of Result
The Retainer shall exercise reasonable professional skill and care but does not guarantee the outcome of any advisory, regulatory, litigation or other matter. Decisions of courts, tribunals, regulators and third parties remain outside the Retainer's control.
13. Term
This Agreement shall commence on ____________________ and shall continue until ____________________ / until terminated in accordance with Clause 14.
14. Termination
Either party may terminate this Agreement by giving ______ days' written notice to the other party. The Client shall remain liable for professional fees and approved expenses properly accrued up to the effective date of termination.
Where the Retainer is an advocate and a court or tribunal matter has been accepted, withdrawal from such engagement shall also be governed by applicable professional rules and court procedure. The parties shall cooperate in returning papers and making reasonable arrangements for transition of pending work.
15. Notices
Notices under this Agreement shall be sent to the addresses and email IDs stated below or to any replacement address notified in writing.
16. Governing Law and Disputes
This Agreement shall be governed by the laws of India. Any dispute concerning this Agreement shall first be discussed in good faith. Subject to any mandatory professional or statutory forum, the parties may pursue such lawful dispute-resolution remedy as is available under the agreed jurisdiction and applicable law.
17. Entire Agreement and Amendments
This Agreement records the understanding between the parties concerning the retainership. Any amendment to the scope, fee or other material term shall be recorded in writing and accepted by both parties.
IN WITNESS WHEREOF the parties have executed this Agreement on the date first written above.
For the Client
Name: ________________________________
Designation: __________________________
Signature: ____________________________
Retainer
Name: ________________________________
Professional / Enrolment details, where applicable: __________________________
Signature: ____________________________
Witnesses
1. Name and address: ________________________________________________
Signature: ____________________________
2. Name and address: ________________________________________________
Signature: ____________________________
Stamp duty, execution requirements, dispute-resolution clauses and professional-regulatory requirements can vary according to the State, nature of the parties and services. The specimen should therefore be adapted to the actual engagement rather than executed without review.