Not entirely true. My wife is a family lawyer running her own business and I know first hand she is more than fair when it comes to fees. There are several here on CR that can vouch to that. She as other attorneys do have to make a living though.
Lots in the OP thread that can lead to fees changing. I will say if the attorney tried to turn such a case into a flat fee situation they were either dumb or misunderstood. These cases are most always billed hourly. Often time just one change in the case can extend the time needed for it and thus increase costs.
The retainer is there to insure payment. It goes into a trust account. Anytime an attorney puts in time they bill the client and collect from the trust account. To continue billing when there is no money in the trust account is risky and IMO foolish. My wife has done it but rarely if ever gets paid on time for the amount she provides after that. It's most always a struggle. Thus why its rare and again foolish.
Sounds like variables in this case caused the attorney to reevaluate the time needed and thus he/she is being upfront about what it's likely going to cost ahead of time. Clients are protected too as they can walk at anytime and be reimbursed any unused trust money.
My insight is to consider the work that's been done and if you are happy with it. Understand that the attorney likely has quite a bit of work yet to do. They also likely know your financial situation and honestly are just being wise to collect a retainer. They are running a business after all.
If you are not happy with their work, you mint want to consult another attorney, however most everyone, based on the info you provided, are going to ask for at least 8-10 hrs upfront. That's easily $2,500-$5,000.