Retainer Fees

[Elliptic5]

Hi, wonder if anyone can help with this. DH is retiring and setting up a consultancy in his field, however his company is reluctant to lose him and have asked if they can arrange a contract with him in which they pay him an annual retainer and then a reduced day rate for the times they use his services. This has thrown us a bit and we're not sure what to charge.
DH thinks the retainer should be a percentage of his salary at the date he leaves the company, can anyone give an idea of what this percentage should be? And by how much he should reduce his day rate?
At the current moment his company have given him no idea how many days they may need his services but have given him a list of things they are likely to want him to do but with no guarantees.

You need to see their proposals in writing before you make a decision.

On the surface, a retainer is a great idea - money for being available, right? But I would check very carefully that there isn't a non-competition clause which will significantly restrict the other organisations or companies he can work for.

Otherwise what would be the point of them paying him a retainer, they'd just pay him to work the days they need?

Interesting regarding the non-competition clause, hadn't thought of that, we'd assumed the retainer was so they knew he would be available to them and also the advantage of reduced day rate.

They are waiting for him to make the decision about the retainer and day rate etc before they make any proposals themselves. Seems to be a bit of a minefield and we can't think where to go for advice.

yeah, but availability and a reduced day rate doesn't seem like a big positive compared to shelling out a substantial retainer. And even within a retainer he'll have to set some ground rules. For example, if he's booked for client B (non retained) for this week, can client A (on his retainer) insist he drops everything and goes to them tomorrow? Because (obviously) this will mean he loses client B.

Does he want to do the retainer? He can just say no, just book me like a normal person!

And while the day rate will be reduced, it should only be reduced to the fee he would give them anyway. So if he would normally give this company 10% off his day rate (because he used to work for them so he's cutting them a good deal) I would suggest his retained day rate would only be 10% off, minus the retainer.

Does that make sense? Does he have an accountant, could be worth picking up the phone?

useful

We haven't got as far as an accountant yet but that might be worth doing as the last thing we want is to be tied to a contract which will limit his ability to work for other clients.