What is a retainer agreement in Australia and how does it differ from a standard service agreement?

A retainer agreement is a form of service contract under which a client pays a professional — typically a solicitor, accountant, financial adviser, or management consultant — a fixed monthly fee in exchange for the professional's ongoing availability and the provision of specified services within an agreed scope. Unlike a project-based service agreement (which is tied to a defined deliverable or completion date), a retainer arrangement is continuous: the client pays for access to the professional's expertise each month, whether or not the full scope of services is used in any given period. The monthly retainer fee is consideration for the professional's commitment to prioritise the client's work and to be available within agreed parameters. Work that falls outside the agreed scope is typically charged separately at an agreed hourly rate. In Australia, retainer agreements operate within the framework of general contract law, the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), and — for legal practitioners — the Legal Profession Uniform Law (in New South Wales and Victoria) or the Legal Profession Act in other states and territories.

What conflict of interest obligations apply to solicitors and accountants retained in Australia?

Conflict of interest rules for retained professionals in Australia depend on the profession. For solicitors, the Legal Profession Uniform Law Australian Solicitors' Conduct Rules require a solicitor not to act for a client where there is a conflict of interest — including where the solicitor has a personal interest in the matter or where the solicitor acts for two clients whose interests conflict. If a conflict arises, the solicitor must cease acting or obtain the fully informed consent of all affected clients. For accountants who are members of CPA Australia, Chartered Accountants Australia and New Zealand (CA ANZ), or the Institute of Public Accountants (IPA), the relevant code of ethics (based on the IESBA Code) requires identification, evaluation, and management of conflicts. For non-regulated consultants, conflict obligations are governed by the retainer agreement itself and general duties of good faith. A well-drafted retainer agreement should specify the disclosure obligation (the professional must immediately disclose any actual or potential conflict), the consent process (client must provide informed written consent before the professional acts in a conflicted matter), and the consequence of an irresolvable conflict (cessation of the retainer and referral to independent advice).

How does GST apply to a monthly retainer fee in Australia?

A monthly retainer fee paid to a GST-registered professional is a taxable supply for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), and GST at 10% is payable on the fee. The professional must issue a valid tax invoice before the client is obliged to pay the GST component. The retainer agreement should clearly state whether the agreed monthly fee is GST-inclusive (i.e. the GST is built into the quoted figure) or GST-exclusive (i.e. the client pays the stated fee plus 10% GST on top). This distinction has a direct impact on the client's cash flow and budget. If the client is registered for GST, they can generally claim an input tax credit for the GST paid on the retainer fee, reducing the effective cost. Professionals with an annual GST turnover of $75,000 or more must register for GST. For legal practitioners, GST on legal services is a taxable supply; there is no GST exemption for professional services generally (unlike some health services or educational courses, which may be GST-free).

Can a service provider unilaterally increase a retainer fee in Australia?

Whether a service provider can unilaterally increase a monthly retainer fee depends on the terms of the retainer agreement and the Australian Consumer Law's unfair contract terms provisions. Since November 2023, the unfair contract terms regime applies to standard form contracts with consumers and small businesses (employing fewer than 100 persons or with annual turnover below $10 million). A term that gives the service provider the right to unilaterally vary the fee without a corresponding right for the client to exit the contract — and without adequate notice — may be declared unfair and void under s 23 of the Australian Consumer Law. A well-drafted retainer agreement addresses this by giving the service provider the right to adjust the fee on reasonable advance written notice (typically 30–60 days), coupled with a right for the client to terminate the agreement within that notice period if the revised fee is unacceptable. This approach balances the service provider's legitimate commercial interest in keeping fees current with the client's right not to be locked into a significantly more expensive arrangement without the ability to exit.

What happens to work in progress when a retainer agreement is terminated in Australia?

When a retainer agreement is terminated, the entitlement to payment for work in progress (WIP) depends on the terms of the agreement and the circumstances of termination. Generally, the service provider is entitled to payment for all work performed and disbursements incurred up to the effective date of termination. For solicitors, the Legal Profession Uniform Law and applicable conduct rules govern the entitlement to a lien over client documents as security for unpaid fees. Solicitors must also comply with their professional obligations on ceasing to act — including facilitating the transfer of the client's file to a new adviser if requested. For accountants and other professionals, the common law entitlement to payment for work performed is the primary basis for WIP recovery. A pre-paid monthly retainer fee for the period during which termination occurs is generally not refundable, unless the termination is due to a material breach by the service provider. The retainer agreement should expressly address these entitlements to avoid disputes.

Retainer Agreement (Australia) — Australia

Create a professional Retainer Agreement for Australia covering ongoing professional services — solicitor, accountant, consultant, or other adviser retained on a monthly basis. Includes retainer fee and GST treatment, hourly rate for out-of-scope work, scope of services, conflict of interest provisions, confidentiality, Privacy Act 1988 obligations, limitation of liability, fee adjustment mechanism, and termination rights. Compliant with the Australian Consumer Law and applicable professional standards across all states and territories.

What Is a Retainer Agreement (Australia)?

An Australian Retainer Agreement is a legally binding contract under which a client engages a professional service provider — typically a solicitor, accountant, management consultant, or specialist adviser — on an ongoing basis in exchange for a fixed monthly retainer fee. The retainer arrangement differs fundamentally from a project-based engagement: the client pays for the professional's ongoing availability and commitment within an agreed scope, regardless of the volume of work in any particular month, with additional work outside the scope charged at an agreed hourly rate.

In Australia, retainer agreements operate within a layered legal framework. The foundational law is the common law of contract, which requires offer, acceptance, and consideration. The Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), overlays mandatory consumer guarantees and unfair contract terms protections. Under the ACL, services must be rendered with due care and skill (s 60), must be fit for any particular purpose disclosed (s 61), and must be supplied within a reasonable time (s 62). These guarantees cannot be excluded by contract.

For legal practitioners, retainer obligations are also governed by professional conduct rules under the Legal Profession Uniform Law (NSW and Victoria) or state-equivalent Legal Profession Acts. These rules impose additional duties of disclosure, conflict management, and costs notification. The Legal Profession Uniform Law requires solicitors to provide a costs disclosure to clients before commencing work, and a retainer agreement incorporating this disclosure satisfies that requirement.

For accountants and financial advisers, professional standards issued by CPA Australia, CA ANZ, and the Institute of Public Accountants impose ethical obligations that overlay the contractual retainer. Financial services licensees engaging in financial product advice must also comply with the Corporations Act 2001 (Cth) and Australian Financial Services Licence (AFSL) conditions.

GST under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) applies to retainer fees paid to GST-registered professionals at 10%. The retainer agreement must clearly specify whether the monthly fee is GST-inclusive or GST-exclusive, and the service provider must issue valid tax invoices including their ABN.

The Privacy Act 1988 (Cth) and the 13 Australian Privacy Principles (APPs) govern the handling of personal information disclosed during the retainer. Professionals handling significant volumes of client personal information — including health, financial, and identity information — must maintain appropriate privacy policies and information security measures.

When Do You Need a Retainer Agreement (Australia)?

A Retainer Agreement is appropriate whenever a business or individual in Australia wishes to secure ongoing access to professional services without the cost and delay of negotiating a new engagement each time advice or assistance is required. The retainer model is particularly valuable in the following circumstances.

Legal retainers are common for businesses that require regular access to solicitor advice on commercial matters — contract drafting and review, employment law queries, lease negotiations, regulatory compliance, and day-to-day corporate governance. A monthly legal retainer provides budget certainty and ensures the solicitor is familiar with the client's business, reducing the time and cost of getting a new adviser up to speed for each matter.

Accounting and tax retainers allow businesses to access ongoing bookkeeping, BAS preparation, management accounts, tax planning, and compliance advice under a predictable monthly fee. This is particularly valuable for growing businesses that need regular financial guidance but do not yet have the volume of work to justify an in-house finance function.

Management and strategic consulting retainers are used by businesses that wish to access specialist expertise in areas such as strategy, marketing, operations, IT, or human resources on an ongoing advisory basis. The retainer model allows the consultant to build deep knowledge of the business over time, making advice more valuable than it would be from a one-off engagement.

A written retainer agreement is essential in all of these circumstances. Without it, there is no documented evidence of the agreed scope (leaving both parties exposed to scope disputes), no agreed fee-review mechanism (leaving the professional unable to increase fees without risking a contractual dispute), no documented conflict of interest protocol, and no agreed notice period for termination. The ACL's unfair contract terms regime also makes it important to use a balanced written agreement that does not give one party excessive unilateral rights.

What to Include in Your Retainer Agreement (Australia)

A well-drafted Australian Retainer Agreement must address the following key provisions to provide comprehensive legal protection and comply with applicable law and professional standards.

Scope of Retainer Services — The scope clause is the most commercially critical provision. It must define precisely what is included in the monthly retainer fee and what will be charged separately. An ambiguous scope almost invariably leads to disputes: the client believes a service is covered, the professional believes it is out of scope. The agreement should specify the services included, the types of matters covered, any volume limitations (such as the number of contracts reviewed or meetings attended per month), and the services expressly excluded.

Retainer Fee and Hourly Rate — The agreement must state the monthly retainer fee, the GST treatment, the due date for payment, and the hourly rate for out-of-scope work. The billing increment for out-of-scope time (typically 6-minute units for solicitors, hourly or part-hourly for others) should be specified. A fee-review mechanism, allowing the professional to adjust fees on notice with a corresponding client exit right, is commercially important for long-term retainers.

Conflict of Interest — A dedicated conflict of interest clause is essential, particularly for legal and accounting retainers. It should require the professional to conduct a conflicts check before commencing work, to disclose any actual or potential conflict immediately upon discovery, and to either obtain informed written consent or cease acting where a conflict cannot be managed.

Confidentiality and Privacy — The agreement must impose mutual confidentiality obligations covering all Confidential Information exchanged during the retainer. Given the sensitive nature of advice typically provided on retainer (strategic, financial, legal), the confidentiality obligations should survive termination for an appropriate period. The professional's obligations under the Privacy Act 1988 (Cth) and Australian Privacy Principles should be acknowledged.

Termination and Transition — The notice period for termination for convenience, the grounds for immediate termination, and the parties' obligations on termination (payment of accrued fees, return of documents, transfer of files) must all be clearly documented. For legal practitioners, the conduct rules impose specific obligations on solicitors when ceasing to act.

Limitation of Liability — A cap on aggregate liability, expressed as a multiple of the annual retainer fees, protects the professional from exposure that is disproportionate to the fee charged. The cap must comply with the ACL's restrictions on limiting liability for statutory consumer guarantees, and cannot limit liability for gross negligence, fraud, or personal injury.

What Is a Retainer Agreement (Australia)?

When Do You Need a Retainer Agreement (Australia)?

What to Include in Your Retainer Agreement (Australia)

Frequently Asked Questions

Related Documents

Service Agreement (Australia)

Consultancy Agreement (Australia)

Heads of Agreement (Australia)

Non-Disclosure Agreement (NDA) (Australia)

Independent Contractor Agreement (Australia)