AdvanceFee

An advance fee is money paid upfront to a professional for future services. It is commonly used in legal, accounting, and consulting engagements. The funds are typically intended to cover anticipated work and expenses and are applied as the professional invoices time and costs.

In practice, an advance fee is often called a retainer; however, distinctions exist. A retainer may be a deposit to secure ongoing representation, while an advance fee may be earned or replenished as work progresses. In many jurisdictions, advance fees are held in a trust or client account and are charged against earned billings; unused portions must be refunded upon termination, subject to the contract terms.

Ethical and legal considerations: Fee arrangements must be disclosed in writing and comply with professional conduct rules. Some agreements permit nonrefundable retainers if clearly stated, but many jurisdictions require portions to be refundable and clearly itemized; misappropriation of client funds can be a violation.

Variations exist by jurisdiction and profession; for non-lawyer professionals, advance fees may be called retainers or deposits and are governed by consumer protection and contract laws. The exact treatment, whether funds are held in trust, earned upon receipt, or credited as work proceeds, depends on the contract and applicable rules.