- Corporate
What does a legal retainer cover for a company in Malaysia, and how is the fee set?
Legal retainer for a company in Malaysia: the short answer
In Malaysia, a company's legal retainer is a fee agreement with a law firm, binding if written and signed for the company (Legal Profession Act 1976, sections 114 and 116). It covers only the work it lists, and no law fixes the fee: it must be fair and reasonable, and court cases and scale-fee documents are usually extra. A firm registered for service tax adds 8%.
A scale fee is a fee that the law sets for a type of document, such as an office tenancy or a bank loan secured on property.
Firms use the word "retainer" for several arrangements. Common ones are:
- a fixed monthly fee for an agreed list of routine work;
- a block of hours each month;
- an availability fee, paid each month to keep the firm on call;
- money paid in advance, from which the firm takes its bills.
To compare quotes, use the ten questions near the end of this article.
In Malay, yuran retainer peguam is a lawyer's retainer fee, and yuran guaman means legal fees. In Chinese, a retained legal adviser is 常年法律顾问, and legal fees are 律师费. This article covers Peninsular Malaysia; Sabah and Sarawak have their own laws for lawyers.
Key facts (Peninsular Malaysia, as at 3 November 2026):
- Service tax: 8%, if the firm is registered for it.
- Discount on a scale fee: at most 25%, on some property sale and loan fees only.
- Asking the court to check a bill: apply within 6 months of the bill.
- Suing the company on a bill: not until 30 days after the firm delivers it (since 9 May 2025).
- Price lists: since 1 January 2026, no law firm may publish its fees.
What does a monthly retainer usually include, and what costs extra?
A monthly retainer includes only the routine work on its agreed list; court cases, scale-fee documents, disbursements and service tax usually cost extra. A small company's list often includes:
- quick advice by phone, email or a short meeting;
- checking or drafting routine contracts with customers and suppliers;
- staff letters, such as offer letters, warnings and show-cause letters;
- letters of demand for unpaid invoices, and replies to letters received.
For the price of one letter, see what a lawyer's letter of demand costs in Malaysia. If a customer still does not pay, the steps to recover a business debt come next.
These usually cost extra, even under a retainer:
- Court cases: any case before a court, a tribunal or an arbitrator, such as a former employee's dismissal claim in the Industrial Court. A fee agreement for court work must be signed by the company.
- Scale-fee documents: an office tenancy, a property purchase, security documents for a bank loan, and forms to register a company charge (RM500 a set). These are normally charged at the scale. The firm's legal fees calculator estimates the scale fee for a property purchase.
- Disbursements: sums the firm pays to others for the company, such as stamp duty, registration and search fees, and travel.
- Work beyond the list or the hours, such as a share sale or an urgent job.
Is a monthly retainer worth it, or should the company pay per job?
A retainer is worth it only if the company uses enough of the agreed work each month. A company that needs a lawyer only a few times a year may pay less job by job.
To compare, list last year's legal jobs and what each cost, and ask two or three firms to price that list as a retainer and job by job. A retainer's yearly cost is 12 monthly fees plus any service tax; set it against last year's cost of the jobs it would cover. Court cases and scale-fee documents are usually extra either way. If the quotes are on different bases, compare their yearly totals for the same list, with tax and disbursements.
With a retainer, one firm learns the business, and a quick question costs nothing extra when advice is on the list. Under the Bar Council's rulings, while the retainer runs, the firm normally cannot act for someone else against the company, even in an unrelated case.
How is a legal retainer fee set in Malaysia?
The company and the firm agree the fee: no law fixes it for advice, contracts, staff letters or letters of demand. For work with no scale, the Solicitors' Remuneration Order 2023 says the fee must be fair and reasonable. It lists factors such as the matter's importance, the skill involved, its complexity, the money at stake and the time spent.
That fee is negotiable. It can be a monthly sum, a block of hours, an hourly rate or a fixed fee for each job, with or without disbursements.
Negotiation stops at the scale. A fee agreement may not set a fee below the scale. The Order allows a discount of at most 25%, only on some property sale and loan fees, and none on tenancy fees. A lawyer who accepts less than the scale commits improper conduct, unless they charge nothing at all for a special reason.
Get the agreement signed for the company by a director or another person the company authorises. No law firm may publish its fees, so we give no fee of our own here.
Can the company challenge the fee, and how does it avoid surprise bills?
A written fee agreement binds the firm to its terms, and a court can still reduce a fee that is unfair or unreasonable. To avoid surprise bills, ask for a monthly statement of the work and the hours, and a written quote before any work outside the list starts. For a court case, the firm can claim nothing beyond the agreement, except items that the agreement expressly says are extra. For other work, such as a monthly retainer, both sides are bound by what the agreement says, so check its terms on extra charges before signing.
With no signed agreement, the company can ask the court to check the bill, item by item. Lawyers call this taxation, and it has nothing to do with service tax. Apply within 6 months of receiving the bill, and before paying it if you can. After 6 months, or after payment, the court acts only in special circumstances, and never after a year.
Since 9 May 2025, a firm cannot sue on a bill until 30 days after it delivers the signed bill, unless the court allows it.
What happens to money paid in advance, and is there service tax?
Money a company pays in advance towards future bills is client's money: the firm keeps it in its client account. A client account is a bank account in the firm's name with the word "client" in its title. The firm may take the money for its fees with the company's authority. Otherwise, it must first deliver a bill or a written note of its fees and tell the company it will use the money. Unused disbursements must be returned, less a reasonable sum for small expenses. Pay only into the firm's own account, never a personal one.
A fixed monthly fee or an availability fee may be different. Some agreements say the firm earns the fee when it is paid, and the rules do not say clearly whether such a fee is client's money. So ask, in writing, where money paid in advance is held, and whether unused hours or money carry over or come back.
Service tax is 8% of the fee, added only by a firm registered for it. A firm must register once its taxable services pass RM500,000 in 12 months. Disbursements paid at cost for the company, with the other party's invoice attached, are not taxed. Ask whether a quote includes the tax, and when the firm charges it on money paid in advance: when the money is paid, or only when the firm bills it.
Can the company cancel a retainer, and what happens to its files?
Whether the company can leave a retainer early depends on what its agreement says. Worried about a lock-in? A 12-month retainer binds like any contract, so before signing, check the notice period and what is payable on leaving early. Ask for a short first term, and for a notice clause if there is none. The firm, too, should not normally stop acting without good reason and fair notice.
In a court case, the company may change lawyers at any time, even under a signed fee agreement. If the court checks the bill, the old firm gets the full agreed fee only if it gave no good reason for the change, such as negligence or improper delay. Our guide on choosing and changing a lawyer covers the steps.
The old firm may keep the company's documents until a billed sum is paid. This right is called a lien, and it is narrow. The Court of Appeal held in 2025 that it covers only documents the firm already holds, for sums due under a bill. The firm cannot keep the file if the new firm undertakes to pay its fees. When a file is closed, the company is entitled to the original court papers, the correspondence and the documents it signed.
Who is the client: the company or its directors?
The client is the company, not its directors or shareholders: in law, a company is a separate person from its members. A director or manager instructs the firm on the company's behalf, so list in the agreement who may do so. A director's own matters, such as a personal guarantee or a dispute with the other shareholders, are not covered unless the agreement says so.
Watch for conflicts. A firm that drafted an agreement for both sides, such as a shareholder agreement, cannot act for either side in a later dispute about it.
What the company tells its outside lawyer is confidential: the lawyer may not disclose it without the company's express consent, unless it was for an illegal purpose. As far as we found, no Malaysian court has decided whether this protection, called legal privilege, covers an in-house lawyer.
Retainer, in-house lawyer, company secretary or "legal consultant": what is the difference?
A law firm on retainer gives legal advice and can act for the company in court; an in-house lawyer, a company secretary and a "legal consultant" do different work.
An in-house lawyer is a full-time employee. They may act for the company in its own matters, but may not represent it in court or in chambers. In the ordinary civil courts, a company must act through a lawyer, not a director or an HR manager. A small claim and the Industrial Court have their own rules.
A company secretary keeps the company's statutory records and makes its filings, and every Sdn Bhd must have a qualified one. A secretary's retainer pays for that work; legal advice is a lawyer's work. Our article on choosing a Sdn Bhd or an Enterprise covers the secretary's role.
As a rule, an unlicensed "legal consultant", one who is not a practising lawyer, commits an offence by advising on law, or doing other lawyers' work, for a fee. Their fees cannot be recovered, and the company can claim back what it paid. In 2025 the Court of Appeal applied these rules to a "consultant", not a full-time employee, who advised a company and drafted its contracts. Before hiring an HR or "legal" consultant, check their name in the Malaysian Bar's Legal Directory. If they are not a practising lawyer, use them for HR work, not for legal advice or for drafting the company's contracts.
What should the company ask before it signs a retainer?
Before the company signs, get written answers to these questions; they also make three quotes comparable.
- What work is on the list, and what is not? If the fee is an availability fee, what work does it include, or is every job billed on top?
- Is the fee a monthly sum, a block of hours or an hourly rate? What happens to unused hours? What is the rate for hours over the block, urgent work or work beyond the list, and will the firm quote before that work starts?
- Who in the company may instruct the firm, how many matters a month are covered, and are any directors' own matters included?
- How quickly will the firm respond, and is that in the agreement?
- Which work is charged at the scale or quoted separately: court cases, tenancies, loans, charge forms?
- Which disbursements are added, and will each appear on the bill with its receipt?
- Is the firm registered for service tax, and when is the 8% charged?
- Is money paid in advance held in the client account until it is billed? Does unused money come back?
- How long is the term, how much notice ends it, and what is payable on leaving early?
- Who signs the agreement for the company?
If a court paper or a staff claim has already arrived, do not wait for a retainer: get advice on that matter now. This firm also agrees ongoing work with companies, with the scope and the fee set out in writing first. To ask it for a written quote, send last year's list of legal jobs and the ten questions above; see its page on corporate and commercial law for business owners.
This article is general information about the law of Peninsular Malaysia as at 3 November 2026. It is not legal advice on your situation, and reading it does not make you or your company a client of the firm. Laws, tax rates and fees change, so check the current position before you rely on a figure.
Frequently asked questions
Is a lawyer's retainer fee fixed by law in Malaysia?
No. No law fixes the fee for advice, contract reviews, staff letters or letters of demand. The company and the firm agree it. Under the Solicitors' Remuneration Order 2023, it must be fair and reasonable, judged by factors such as the skill, time, complexity and value involved. The law does set scale fees for some documents, such as tenancies, property purchases and secured loans, and those are normally charged at the scale. Get the agreed fee in writing, signed for the company.
Can a retainer include our office tenancy agreement at no extra cost?
Normally not. The Solicitors' Remuneration Order 2023 sets the lawyer's fee for a tenancy or lease on a scale, and it allows no discount on that scale. A fee agreement may not set a fee below the scale. A lawyer may not accept less either, except by charging nothing at all for a special reason. Expect the tenancy to be billed at the scale, outside the monthly fee, and ask the firm to confirm this in writing.
Does a legal retainer cover court cases?
Usually not. Work in a case before a court, a tribunal or an arbitrator is "contentious business" under the Legal Profession Act 1976, and that includes the Industrial Court. Firms usually quote it separately, and a fee agreement for it must be in writing and signed by the company. In the ordinary civil courts, a company must also act through a lawyer; a small claim has its own rules. Ask each firm how it would charge for a typical case, and whether advice given under the retainer before the case is charged again.
Can we agree "no win, no fee" with a lawyer for a court case?
No. A Malaysian lawyer may not agree to act in a court case on terms that pay them only if the case succeeds. Lawyers also may not pay anyone for bringing in clients, or share their fees with people who are not lawyers. A fee agreement for court work may still set a fixed sum, or another agreed amount. It must be in writing and signed by the company, and a court can set it aside or reduce it if it is unfair.
Is unused retainer money refundable?
It depends on what the money was paid for and on the agreement. Money paid in advance towards future bills is client's money, kept in the firm's client account. The firm may take it only after billing the company, or with the company's authority. Unused disbursements must be returned, less a reasonable sum for small expenses. A fixed monthly fee or an availability fee may not be refundable if the agreement says the firm earns it each month. Before signing, ask whether unused hours or money carry over or come back, and get the answer in writing.
Do we pay 8% service tax on a monthly legal retainer?
Yes, if the firm is registered for service tax. Legal services are taxed at 8%, the rate since 1 March 2024, and a firm must register once its taxable services pass RM500,000 in 12 months. A smaller firm that is not registered does not charge the tax. Disbursements the firm pays at cost for the company, with the other party's invoice attached, are not taxed. Ask whether each quote includes the tax, and when the firm charges it on money paid in advance: when the money is paid, or only when the firm bills it.
Can we cancel a 12-month retainer before it ends?
It depends on what the agreement says. A fee agreement binds the company like any contract, so its notice period and any charge for leaving early apply. Read both before signing. Ask for a notice clause if there is none, and a shorter first term if you are unsure. In a court case, the law lets a client change lawyers before the case ends, even under a signed fee agreement. The old firm is then paid for its work, and it gets the full agreed fee only if it gave no good reason for the change.
Can the old law firm keep our files if we have not paid?
Only within narrow limits. A firm has a lien: a right to hold the company's documents that it already has, until sums due under its bill are paid. The Court of Appeal held in 2025 that the lien is passive. It gives the firm no other way to enforce payment, and it does not cover fees not yet billed. Under the Bar Council's rulings, the firm cannot keep the file if the company's new firm undertakes to pay the old firm's fees.
Does the company's retainer also cover the directors personally?
No, unless the agreement says so. The client is the company, which in law is a separate person from its directors and shareholders. A director who calls the firm acts for the company. A director's own matters, such as a personal guarantee, a personal tax question or a dispute with the other shareholders, need their own engagement. Before acting for a director, a firm should check that this does not conflict with its duty to the company.
Is a company secretary's retainer the same as a legal retainer?
No. Every Malaysian company must have a qualified company secretary, who keeps its statutory records and makes its filings. A secretary's retainer pays for that work. A legal retainer pays a law firm for legal work, such as advice, contracts and letters of demand. A practising lawyer may also act as a company secretary, and the secretarial fees then go to the law firm. Legal advice is a lawyer's work, so check what each retainer covers before the company relies on it.
Can a legal consultant who is not a lawyer advise our company for a fee?
As a rule, no. In Malaysia, a person who is not a practising lawyer commits an offence if they advise on law, or do other work that lawyers customarily do, for a fee. Their fees cannot be recovered in court, and the company can claim back what it paid. In 2025 the Court of Appeal applied this to a "consultant" who advised a company and drafted its contracts. The ban does not apply to proceedings in the Industrial Court or to an arbitration, which have their own rules on who may appear.
Why does a law firm's website not show its retainer price?
Because the rules do not allow it. Since 1 January 2026, the Legal Profession (Publicity) Rules 2025 bar a lawyer or a law firm from stating its fees in any publicity, or comparing other lawyers' fees. The same rules bar publicity likely to create an unjustified expectation of results. So ask each firm for a written quote for the same list of work. Then compare what each includes, what is extra, and the notice needed to end it.
Sources
- Legal Profession Act 1976 (Act 166), sections 3, 37, 37A, 38, 40, 112, 114, 116 to 118, 120, 126 and 128
- Legal Profession (Amendment) Act 2025 (Act A1755), new sections 124 and 125, and amended section 120
- Bar Council Circular No 149/2025: the Legal Profession (Amendment) Act 2025 in operation from 9 May 2025
- Solicitors' Remuneration Order 2023 (P.U.(A) 207/2023)
- Bar Council Circular No 057/2025: the Solicitors' Remuneration Order 2023 and discounts
- Legal Profession (Practice and Etiquette) Rules 1978, rule 52
- Rules and Rulings of the Bar Council (as at 14 October 2026), Rulings 6.05, 6.07, 9.02, 12.02, 14.08, 14.23 and 16.01
- Solicitors' Account Rules 1990 (P.U.(A) 301/1990), rule 2
- Solicitors' Account Rules 1990, rule 7
- Legal Profession (Publicity) Rules 2025 (P.U.(A) 462/2025), rules 5 and 7, in Bar Council Circular No 471/2025
- Rules of Court 2012 (P.U.(A) 205/2012), Order 5 rule 6 and Order 64
- Rules of Court (Amendment) 2020 (P.U.(A) 351/2020), Order 93 rule 1 (a company sued in a small claim appears by an authorised full-time employee)
- Companies Act 2016 (Act 777), section 20
- Companies Act 2016, section 235
- Companies Act 2016, section 241
- Evidence Act 1950 (Act 56), section 126
- Service Tax Act 2018 (Act 807), section 11
- Royal Malaysian Customs Department, MySST: registering a business for service tax (Group G)
- Royal Malaysian Customs Department, MySST: service tax FAQ (rate of 8% from 1 March 2024)
- Royal Malaysian Customs Department: Guide on Disbursement and Reimbursement
- Dato' Dr Abd Wahab Abd Ghani v Mohd Rashid Mohd Noor & Ors and another appeal (Court of Appeal, 25 March 2025): a solicitor's lien
- Bhavanash Sharma Gurchan Singh Sharma v Jagmohan Singh Sandhu (Court of Appeal, 2 September 2025): an unlicensed consultant