When a client pays his retainer, it's not yours until you complete the work for which you received it. Because of this, it can't be deposited into your regular business account. Doing this is called comingling of funds, and it is prohibited. The solution is to open a separate account where the retainer is held in trust for the client. Once you have worked the retainer, you're permitted to transfer funds from the trust account to your business account. Any unused portion must be returned.

When you comingle a retainer with regular funds, the possibility of spending it is very real. If the client decides to close the case or it's completed before the retainer has been expended, you may be unable to return the unused portion. Nothing will destroy your reputation more. Some states have laws specifying what must be done with interest earned on a trust account, so check with your state. Even if you don't reside in a state that regulates PIs, use trust accounts anyway. They are a mark of professionalism.

Investigators often try to bypass the costs of these accounts, but the results can be more costly than the minimal fees charged. You may have the same inclination. You look at the well-dressed professional client writing the check and cannot imagine being stiffed, but it happens. When you deposit that check at the conclusion of the investigation, insufficient funds or a stop payment may have rendered it useless. The myriad excuses given by clients for refusing to honor these checks, even after receiving excellent service, boggle the mind. Although it doesn't happen often, don't allow anyone to put you in the position of shelling out attorney and court fees in order to be paid.