Worked Estimates and Hiring Checklists
Lawyer retainers in Canada: how trust deposits work and when you get money back
What a lawyer's retainer deposit is in Canada, how trust accounts and evergreen retainers work, a worked trust ledger, refunds and the questions to ask before you pay.
In Canada, a "retainer" usually means two things at once: the agreement under which a lawyer acts for you, and a deposit you pay in advance. The deposit is money held in the lawyer's trust account and it still belongs to you until the lawyer earns it and bills you for it. Law society trust accounting rules generally allow the lawyer to move money from trust to pay fees only after delivering an invoice to you. Any unused balance at the end of the matter must be returned. The amount of the deposit is not the price of the case; it is a cushion the lawyer draws against as work is billed.
This guide is part of the hiring a lawyer cost checklist. Figures are illustrative examples.
Retainer agreement vs retainer deposit
| Term | What it means | What to check |
|---|---|---|
| Retainer agreement (engagement letter) | The written contract setting out scope, fees and terms | Scope, rates, estimate, billing and termination clauses |
| Retainer deposit (money in trust) | Funds paid in advance and held in trust | Amount, when it can be used, top-up rules, refund |
| Evergreen retainer | A deposit you must keep topped up to a set level | How fast top-ups are required and what happens if you cannot pay |
| Flat fee paid in advance | Payment for a defined task | Whether any part is refundable if the matter ends early |
In Quebec, the deposit is commonly called an advance on fees (avance d'honoraires), and it is held in the lawyer's trust account under Barreau du Québec rules.
How trust money moves: a worked ledger (illustrative)
A client in Ontario pays a $5,000 deposit for a contract dispute. The agreement is an evergreen retainer: the client must top up to $5,000 within 14 days of each invoice. Rates and HST at 13% apply.
| Date | Event | Trust in | Trust out | Trust balance |
|---|---|---|---|---|
| 1 March | Deposit received | $5,000.00 | $5,000.00 | |
| 31 March | Invoice 1 delivered: fees $2,400, disbursements $150, HST $331.50, total $2,881.50 | $5,000.00 | ||
| 1 April | Transfer to pay invoice 1 | $2,881.50 | $2,118.50 | |
| 10 April | Top-up received | $2,881.50 | $5,000.00 | |
| 30 April | Invoice 2 delivered: fees $1,200, HST $156, total $1,356 | $5,000.00 | ||
| 1 May | Transfer to pay invoice 2 | $1,356.00 | $3,644.00 | |
| 15 May | Matter settles; final invoice: fees $900, HST $117, total $1,017 | $3,644.00 | ||
| 16 May | Transfer for final invoice | $1,017.00 | $2,627.00 | |
| 20 May | Refund of balance to client | $2,627.00 | $0.00 |
Checks: total fees and disbursements billed are $2,881.50 + $1,356 + $1,017 = $5,254.50. Total paid in is $5,000 + $2,881.50 = $7,881.50. Refund $2,627. $7,881.50 - $2,627 = $5,254.50, which matches what was billed.
Notice the order: invoice delivered first, transfer from trust second. If money leaves trust with no invoice, ask why.
How big should the deposit be?
There is no rule. Lawyers often set the deposit to cover the next stage of work or the next month or two of expected billing. As a rough sense check:
- A deposit equal to the whole estimate for a long matter is unusual; ask why.
- A deposit that is tiny compared with the next stage may lead to frequent top-up requests.
- For flat-fee work, payment in full in advance is common, but ask what is refundable if the matter ends early.
You can ask for a smaller deposit with monthly billing instead. Lawyers can decline, but many will discuss it.
Interest on trust money
Money in a lawyer's general (pooled) trust account usually earns interest that goes, under provincial law, to the provincial law foundation, which funds legal aid, clinics and public legal education. If a large sum will sit in trust for months, you can ask whether it can be placed in a separate interest-bearing trust account for your benefit; the lawyer may charge an administrative fee to do so.
What happens when you end the retainer
You can usually end a retainer at any time. The lawyer can then bill for work done to that date and pay the invoice from the trust deposit. The rest must be returned. If you dispute the final invoice, the lawyer may hold the disputed amount while the dispute is resolved under your province's procedure. The lawyer may also have a right to keep your file until paid in some circumstances, subject to law society rules that protect your interests, such as an urgent court date. See how to challenge a lawyer's bill.
A lawyer can also withdraw, for example for non-payment, but law society codes of conduct require reasonable notice and steps to protect your interests, and a court's permission may be needed close to trial.
Questions to ask before you pay
- Is this deposit held in trust, or is it a non-refundable fee?
- When can you transfer money from trust to pay yourself?
- Will I receive an invoice before each transfer?
- Do I need to top up, and how quickly?
- What happens to the balance if the matter ends early?
- Will a large balance earn interest for me?
Red flags
- A request to pay a deposit into a personal account or by a method that does not go to a trust account.
- No written retainer agreement.
- Transfers from trust shown on a statement without matching invoices.
- A demand for the whole estimated cost of a multi-year case upfront.
If you suspect money has been misused, contact the law society promptly; see trust money and compensation funds.
Frequently asked questions
Is a retainer deposit tax-deductible?
The deposit itself is just money held for you. If the legal fees it pays are deductible, the deduction relates to the fees billed. See tax and disbursements on a legal bill.
Can I pay a retainer by credit card?
Many firms accept cards, sometimes with conditions. Ask whether any card fee is passed on to you.
What is a general retainer for a business?
Some businesses pay a lawyer a periodic amount to be available or for a set package of work. It is a contract like any other; read what it covers.
Do I get a statement of my trust account?
You can ask for one at any time, and you should get an accounting at the end. Lawyers must keep detailed trust records under law society rules.
Sources
- Law Society of Ontario — By-Law 9 on handling client money and trust accounts
- Law Society of British Columbia — trust accounting rules
- Barreau du Québec — trust accounts and advances on fees
- The Law Foundation of Ontario — how interest on pooled trust accounts is used
- Federation of Law Societies of Canada — Model Code of Professional Conduct
