n11 The Court in McDonald identified three types of retainers typical to fee arrangements. Although different terminology may be used by other authors, the concepts remain the same.

A "classic" retainer insures an attorney's availability over a period of time; it is considered earned upon receipt, whether or not services are actually provided.

An "advance payment" retainer is a present payment compensating an attorney for services to be performed in the future; it is also considered earned upon receipt. It may be a "flat fee," or it may be paid with the expectation that there will be further compensation sought once the retainer is exhausted. The determination whether the client retains an interest in an advance payment retainer is unsettled in California as the California Supreme Court expressly declined to answer whether the funds are characterized as money "received or held for the benefit of clients." Baranowski v. State Bar, 24 Cal. 3d 153, 164, 593 P.2d 613, 618, 154 Cal. Rptr. 752, 757 (Cal. 1979).

A "security retainer" is aptly named because the purpose is to secure payment for future services; it remains property of the client until applied to charges for services actually rendered. The unused portion of a security retainer is refundable to the client. A security retainer fee agreement should provide that:

(1) the retainer is deemed a trust fund, subject to deposit in the firm's client trust account . . .; (2) any interest accruals on the retainer amount are added to the retainer; (3) the firm has the right to apply against the retainer amount all accrued time charges and reimbursable costs on a monthly basis upon the submission to the client of detailed statements of such time charges and reimbursable costs . . . and (4) if either the client or the firm notifies the other party in writing of its decision to terminate the agreement, the balance of the retainer amount may be applied to all accrued but unpaid charges . . . and any remainder will be returned. . . .

Bernstein, Collier Bankruptcy Compensation Guide, P 2.03 at 2-13 (1989)