“I can keep honest counsel, run, ride, mar a curious tale in telling it and deliver a plain message bluntly. That which ordinary men are fit for, I am qualified in, and the best of me is diligence”
The Earl of Kent, King Lear’s faithful old retainer, King Lear, Shakespeare
Client retainers are an oft misconceived, poorly executed and under utilised strategy. At face value, the development and deployment of retainer arrangements across suitable parts of the client base is predominantly a business development issue, which indeed it is. However, it is also a pricing issue because we view retainers as not simply a method of service delivery but as a discrete pricing methodology in its own right.
All of the credible research shows that when it comes to price sensitivity, quantum in an abstract sense is a comparatively unimportant issue when compared with budgetary certainty, manageability and predictability, price transparency and perceived value for money. Depending on how it is structured, a retainer arrangement can effectively tick these boxes.
However, the benefits are by no means confined to the client side. So, let’s begin by asking...
What is so great about retainers, for the client and the firm?
(1) Avoids a contact vacuum - sometimes contact with the client is virtually continuous and other times there is a significant hiatus between instructions. All relationships need regular attention to sustain them. Nature abhors a vacuum and if you don't talk to your client for 18 months, you are leaving a wide-open opportunity for somebody else to do so.
(2) Mop up revenue leakage - it may be appropriate to simply absorb in the broader interests of the relationship, the time and effort involved for clients who regularly ring for a quick bit of advice. Conversely, even a modest retainer may be more appropriate.
(3) Early intervention/instructions = risk mitigation for the client - as the saying goes, ‘an ounce of prevention is worth more than a pound of cure.’
(4) Cashflow & budgetary certainty - anything that improves cash flow and budgetary certainty for your clients will be appreciated but the firm's finance director will also heartily endorse such arrangements.
(5) Trusted advisor status - if you are a disciple of David Maister’s concept of ‘trusted advisor’, the framework of a retainer can be a very effective way to help migrate the relationship towards that goal.
(6) Deepens knowledge of the client - clients score highly those firms that invest the time and effort to deeply understand the inner workings of the organisation, not simply the legal stuff but the clients commercial drivers and the market context in which the client operates.
(7) Deepens knowledge of the clients’ industry – ditto
(8) Deepens the clients’ dependency - none of us knew that we couldn't function in the modern world without a smart phone until Steve Jobs told us so. The very best retainer arrangements are ones that through high levels of trust, dependency and interaction, each realises that they really, really need the other.
(9) Can be presented as a low risk ‘entrée’ - as a business development strategy, targeting a prospect and inviting them to put in place a modest ‘lite/low-fat’ retainer can be a very productive thin the end of the wedge.
Which clients are potentially amenable to a retainer?
This will vary considerably but a quick review of your client base will reveal a potentially significant number of clients who have many of the following attributes. They are all potential candidates for a discussion.
• Where ‘a quick bit of advice’ is a frequent occurrence
• Blurred boundaries between gratis advice and ‘a job’
• Clients with a poorly resourced legal/HR function – or none at all
• One or more of the senior management is out of their depth
• A client that is expanding/acquisitive
• Clients that use panels – deepen the relationship
• You are starting to get ‘signals’ from the client about unacceptable cost surprises
The ability to apply retainer arrangements will vary across practice areas significantly. There are obvious potential candidates such as employment, corporate and commercial. However, areas where the application of a retainer is less obvious such as litigation which can be seen as ‘one-off’ could for example give consideration to a litigation retainer that is designed to prevent disputes arising in the first place; the fence at the top of the cliff rather than dispute resolution's traditional role which is the ambulance the bottom of the cliff.
We know from the many retainers we have orchestrated and helped firms implement, from modest £2,000 a month arrangements to very large, international preferred/sole supplier status and consortium relationships, that retainers, in one or other of their many potential manifestations are a squandered opportunity.