California Retainer Agreement Law: Requirements and Fee Disputes

Under California retainer agreement law, an attorney generally must give you a signed, written fee agreement whenever your total legal costs are reasonably expected to exceed $1,000, and that agreement has to spell out how you’ll be charged, what work the attorney will do, and each side’s responsibilities. If the agreement doesn’t meet the statutory requirements, you get to decide whether to void it. The rules come primarily from Business and Professions Code section 6148 for standard fee agreements and section 6147 for contingency arrangements.

When a Written Agreement Is Required

The trigger is low. If it’s reasonably foreseeable that your total fees and expenses will exceed $1,000, the attorney must provide a written agreement and hand you a signed copy at the time it’s created, not later.¹ A few hours of work at typical billing rates will push most representations past that threshold.

Contingency fee arrangements have their own separate rulebook under section 6147 and must be in writing regardless of the dollar amount involved.

Situations That Don’t Require a Written Agreement

Four exceptions apply even when fees will exceed $1,000:¹

Emergency services, where the attorney has to act immediately to protect your rights and pausing to paper the agreement would cause harm.
Repeat engagements, where the attorney has previously done the same general type of work for you and you paid for it.
Corporate clients, which are exempt from the written agreement requirement entirely.
Client waiver, which is valid only after the attorney fully explains the statutory requirement, and only if you sign the waiver in writing.

Even when an exception applies, a written agreement is still the safer arrangement. An informal understanding leaves both sides exposed if a dispute develops.

What a Standard Fee Agreement Must Contain

A compliant agreement under section 6148 has to cover three areas:¹

Every basis of compensation the firm will use — hourly rates, flat fees, statutory fees, standard charges. If different attorneys and paralegals in the firm bill at different rates, each rate needs to appear.
A general description of the legal services to be provided. Not every motion or phone call, but enough for you to see the scope. “Represent you in your divorce proceedings” rather than “provide legal services.”
The responsibilities of both the attorney and you as the client.

What a Contingency Fee Agreement Must Contain

Contingency agreements — where the attorney is paid a percentage of your recovery instead of by the hour — carry stricter requirements under section 6147. Every one must be in writing, signed by you and the attorney, with a copy delivered to you at signing. It has to include:²

The specific percentage the attorney will collect.
How litigation costs affect your recovery, meaning whether expenses like filing fees, expert witnesses, and depositions come out before or after the attorney’s percentage is calculated. This single detail can shift your net recovery by thousands of dollars.
Whether you could owe additional compensation for work that grows out of the relationship but sits outside the contingency arrangement.
A statement that the fee percentage is not set by law and was negotiated between you and the attorney.

That last point matters more than most clients realize. There is no standard contingency fee in California. An attorney who describes 33% as “the standard rate” is describing a common market practice, not a legal requirement. Percentages, sliding scales tied to when the case resolves, and caps on total fees are all negotiable.

Medical Malpractice Is the Exception

Professional negligence claims against healthcare providers are the one area where California caps contingency fees by statute. Under section 6146, an attorney cannot collect more than 25% of the recovery if the case settles before a lawsuit or arbitration demand is filed, or more than 33% if it resolves afterward.³ Higher percentages are possible only if the court approves them for good cause after trial or arbitration. In these agreements, the contract has to state that the statutory percentages are the maximum limits, not just that fees are negotiable.²

“Recovered” for purposes of the cap means the net amount after litigation costs are deducted, but the client’s own medical care costs and the attorney’s office overhead cannot be treated as deductible costs.³

Where Your Retainer Money Sits

Money you pay up front doesn’t belong to the attorney yet. Under California’s Rules of Professional Conduct, advance fee payments must be deposited into a designated client trust account, kept separate from the firm’s own funds.⁴ The attorney draws from that trust account only as fees are actually earned or expenses actually incurred. If the representation ends before the retainer is used up, you’re entitled to a refund of the unearned portion.

Flat fees are handled a little differently. An attorney can deposit a flat fee directly into the firm’s operating account, but only after disclosing in writing that you have the right to require the fee be held in trust and that you’re entitled to a refund of any unearned portion if the work isn’t completed.⁴ For flat fees over $1,000, that disclosure and your agreement to the arrangement must be in a signed writing. No disclosure means the money should be in trust. Ask where it’s being held.

Your Right to Clear Bills

Section 6148 also governs what happens after the agreement is signed. Every bill has to state how the charges were calculated — the amount, the rate, and the method — plus an itemized breakdown of costs and expenses.¹ If you ask for a bill, the attorney has 10 days to provide one. You can make follow-up requests every 30 days. That’s a useful tool when costs feel like they’re getting away from you. You don’t have to wait for the attorney to decide to send an invoice.

What Happens If the Agreement Doesn’t Comply

An attorney who fails to meet these requirements — a missing written agreement, an incomplete contingency contract, or an agreement that omits required information — faces a single consequence: the agreement becomes voidable at the client’s option.¹ You decide whether to enforce it or throw it out. The attorney doesn’t get that choice. The same rule applies to noncompliant contingency agreements under section 6147.²

If you void the agreement, the attorney can’t hold you to the hourly rate, the contingency percentage, or any other original term. The attorney is limited to collecting a reasonable fee for work already performed.¹ What counts as reasonable depends on factors like the complexity of the work, the time invested, and the result achieved, not on whatever the defective contract said. In a contingency case, voiding an agreement that promised the attorney 40% of a large settlement can produce a dramatically smaller fee.

Firing Your Attorney

You have an absolute right to fire your attorney at any time, for any reason. California case law is settled on this, and the Rules of Professional Conduct list client discharge as a mandatory ground for the attorney to withdraw.⁵ No retainer agreement can take that right away. A clause claiming to prevent you from ending the relationship is unenforceable.

Ending the relationship doesn’t mean you owe nothing. The attorney is generally entitled to compensation for work already completed, and in a contingency case, a discharged attorney may have a lien on any future recovery for the reasonable value of their services. Still, you’re never locked in.

When representation ends, whether you fired the attorney or the attorney withdrew, the departing lawyer must take reasonable steps to protect your interests: enough notice for you to find new counsel, your files and documents handed over, and any advance fees not yet earned refunded.⁵ If the case is already before a court, the attorney generally needs the court’s permission before withdrawing.

Disputing the Bill Through Mandatory Fee Arbitration

If you believe your attorney overcharged you, California gives you a tool most clients don’t know exists. Under Business and Professions Code section 6200, when a client requests fee arbitration, the attorney must participate. It’s voluntary for you, mandatory for them.⁶

If your attorney sues you or threatens to sue you over unpaid fees, they first have to send you a written notice of your right to arbitration. You then have 30 days to request it. Miss the 30-day window and you lose the right to use the program. Once you file the request, any lawsuit over the fees is paused until arbitration concludes.⁶

The arbitration award becomes binding 30 days after you receive notice of the decision unless either side requests a trial within that window. An attorney who doesn’t appear at the hearing forfeits the right to a trial afterward. The program runs through the State Bar and local bar associations and is faster and cheaper than fighting a fee dispute in court.

1
California Legislative Information. California Business and Professions Code 6148
2
California Legislative Information. California Business and Professions Code 6147
3
California Legislative Information. California Business and Professions Code 6146
4
State Bar of California. California Rules of Professional Conduct Rule 1.15 – Safekeeping Funds and Property of Clients
5
State Bar of California. California Rules of Professional Conduct Rule 1.16 – Declining or Terminating Representation
6
California Legislative Information. California Business and Professions Code Article 13 – Arbitration of Attorneys Fees